Good afternoon, everybody. Thank you for joining us. This morning, our board of directors approved the new business plan, and we looked at the preliminary figures for the budget we'll be closing in a few months regarding 2023. We're here together with our CEO, Mr. Iacono, our CFO, Mr. Moroni, and our Head of Planning and Group Regulation, Mr. Berti . And then, of course, we have the mastermind behind the meeting, Mr. Hansen. Let's begin with the forecasts we drafted regarding the end of 2023. Our forecasts show that we are targeting a figure above EUR 1.48 billion, which is the largest growth ever that we have seen during the various interim reports during the year. This is a growth worth EUR 185 million.
Roughly, it is a sizable growth linked to all of the levers we used, which worked well. That includes M&A, organic growth, the development of markets. Everything is going well, everything went into the right places, and we also were able to seize certain opportunities, such as the end of the 110% bonus. We closed all of the construction sites by the end of December, and we also had some good results in the last instance markets, where between the end of 2022 and 2023, we had good margins. So we had a number of levers which allowed us to achieve this result.
The other important element, as you can see, is the reduction in the net debt to EBITDA ratio, which was supported by the good EBITDA result on the one hand, and on the other, it is linked to the reduction in debt. We were able to cash in the entire investment we made during the 2022-2023 thermal season for gas storage, to guarantee that we would be able to cover our customers' needs, even in the absence of gas. We also had to protect our margins. The commodity prices also declined, which freed up working capital, plus the good cash we were able to make from our ordinary activities. So we have a reduction in debt, an improvement in EBITDA, an improvement in the net debt to EBITDA ratio, which had reached its highest peak in September 2022.
It was up at 3.6 times. It went down to 3.3 times at the end of the year. It would improve during 2023, and our target is to go below 2.6 times. Now, what do these results mean? Well, with the EUR 70 million growth in 2022, plus the EUR 180 million growth in 2023, we have reached the growth target that we had set for 2026 in the old business plan. So we achieved that target three years in advance, compared to what we had expected. We were able to achieve this by seizing certain opportunities on the market, which means that we are now ready to abandon the old business plan and to look at the new one, which will be defining our strategies and targets to 2027.
Now, what are the pillars that we built our strategy on for the business plan? Well, certainly creating value is especially important, especially in this moment in time, in which the growth of interest rates means that we have a higher cost of money compared to the past, and therefore, creating value and increasing the company's ROI is essential. But we also want to work on sustainability. We want to create sustainable value, and for the past 20 years, we believe that sustainability is one of our targets. It is part of our DNA, and we will continue in our growth path.
We also want to enhance resilience, both in terms of our infrastructure, which means we have to be resilient to the extreme events linked to climate change, but we also want to increase the resilience of our economic stemming from any possible turbulence, such as the ones we've seen in the market in recent years. We have given you some examples of resilience in the past. Vis-à-vis major changes on the external context, our results grew. Now, let's give you a flavor of what these pillars mean to us. Let us just look at some of the details, and we'll be going over the next few pages. We mentioned value creation. Well, we focused on selecting the right investments, with the idea that we want to increase profitability. We worked on developing markets.
We worked on how we can be efficient as a way of curbing inflation, and we also allocated capital in the various business areas that we have built over time, and which are a part of our multi-business structure. Now, what we can see here is that ROI is up by 160 basis points. From 2022 all the way up to the end of the business plan, with the WACC average in this sector is stable, which means that we will increase value creation from 220 basis points to 370 basis points at the end of the business plan. Let's also consider our dividend policy. We'll be giving you more details later, but we can compare it to the current share value, and we can see that the dividend yield is roughly 5%.
We will have a post-minority growth above 7% in terms of EPS, which means that the total shareholder return on average per year will be above 12%. Now, sustainability. We're showing you some of the targets we look at. Of course, our focus is much broader compared to the elements you see on the screen here, but it's just a way of giving you an idea of the three main items. Beginning with carbon neutrality, we stand at 31% of our investment plan, which contribute to the improvement and to the reduction of emissions. Our target at the end of 2027 will be that of reducing our emissions and our customers' emissions by 29%, according to the path that we had defined together with the Science-Based Target certification.
As far as circular economy is concerned, we will be having roughly 40% of our business plan, which will cover these topics, and the target here is to increase recycling, reuse, and regeneration of materials from all points of view, but we also want to work on water, meaning that we want to recover, the water, repurify so that we can reuse it. Resilience and innovation is the other axis, with 40% of our investment plan, and our target here is to increase digitization and, the remote monitoring of our networks. We also want to renew our networks and assets so that we can, improve resilience and the reliability of our assets, also with extreme climate conditions.
Now, if we measure these efforts on the topic of sustainability, if we look at the shared value that we certify every year, you'll see that the target we had set in 2022, equal to EUR 670 million EBITDA, generated by activities which offer benefits vis-à-vis the sustainability or the sustainable development targets set by the UN, we will be up at 64%. In absolute terms, that means that we will be increasing the shared value by 55%. This is a figure that allows us to identify the quality and the intensity of our efforts, and we are on track with our commitment, which is that of achieving 70% of the EBIT by 2030. So again, we're going in that direction very well. We were saying we want to improve resilience.
To us, that means implementing a number of initiatives, investments, and policies, so that through our multi-business portfolio, we can guarantee the soundness of our assets, despite the adverse conditions brought about by climate change. But we also want to preserve our results, also in light of the volatilities of commodities, inflation, interest rates, and the cyclicality of the economy. In a nutshell, all of the elements that can have an impact, a negative impact, on our company's figures. And we've been able to prove our resilience over the past 20 years, because whenever we had major crises, think of Lehman Brothers, or COVID, or the energy crisis, each time, we saw that our figures continued to grow with a major resilience compared to these external events.
So again, that's the direction we'll be working in, with very careful policies in terms of of risk management. Let's look at some figures. After explaining the drivers of the business plan, let's look at some figures. You saw that we have a number, EUR 1.65 billion, which is the growth we're targeting as far as EBITDA in 2027. This is a EUR 350 million growth compared to 2022. And, that, takes into account some of the initiatives that contributed to our results in 2022, and throughout the business plan years, they may, disappear or be reduced. The first is, of course, the opportunity we had with a 110% bonus, which gave us plenty of opportunities, in terms of profit.
It expired at the end of the year last year, and therefore, it will have to be replaced by further growth. We also have the last resort markets, last instance markets, in which we had good results in 2022, and even there, we are expecting a lower contribution in a precautionary way at the end of the business plan. So the overall growth that we will have to post from the structural standpoint is equal to EUR 445 million, which as far as our group business is concerned, is divided into organic growth, EUR 375 million, plus a hundred million, a hundred million euro growth coming from M&A, which is almost structural, since we do it every year, but we'll be going back to this later as well.
Now, the growth of EBIT is, even more sizable.
CAGR.
In terms of percentage, because we have a CAGR of the organic growth linked to M&A, equal to roughly 9%, vis-à-vis the 7% in terms of EBIT and profit. We'll be seeing over the next few slides that creating value, as far as we're concerned, means transferring the growth of EBIT in terms of the profit that we will be generating for our shareholders. Now, this growth is based on our multi-business portfolio, which has specific characteristics for each of our businesses. Each of the business contributes almost identically to the organic growth. We have roughly EUR 110 million from waste, networks, and energy.
Which means that we will continue to have a very balanced portfolio between the regulated businesses and the liberalized ones, also at the end of the business plan in 2027. Moving on to our investments. We expect to invest EUR 4.4 billion, 50% of which is focused on the maintenance of our assets and on renewing our existing assets, and roughly EUR 2.1 billion are linked to development CapEx. Which means that we have a sizable level of development CapEx, with an overall growth compared to the previous business plan, bringing EUR 1.8 billion to our organic development and investment on M&A. Now, how have we allocated this EUR 4.4 billion CapEx plan on the various businesses?
Well, you can see that the lion's share is represented by the network, which also with the increase of the regulatory WACC that we saw at the end of the year, which we were expecting, following the regulators' decisions. Then we have EUR 3 million on waste collection, which is also regulated. The remaining portion is divided equally between the waste treatment sector and the energy sector. Let us give you another point of view that we had never shared in the past, which allows us to look into our business portfolio in greater detail. What is the cash flow generated by the businesses, and how this cash flow can be then used for our development CapEx policies? Let's begin on the left-hand side of the slide.
You'll see that all three business areas have an operating cash flow throughout the business plan years, which is identical, EUR 1.7 billion in operating cash flow. If you look into the various businesses, we'll see how this operating cash flow is partly used in working capital in the waste sector, and partly on maintenance. So we have a free cash flow before our development CapEx equal to EUR 900 million. In energy, we have the major liberalization of working capital, which we have partly seen this year, and that we will continue to see, which allows us to have a positive contribution worth EUR 1 billion in terms of free cash flow.
As we were commenting the results of 2022, we had said that, once the storm would have subsided, once prices stabilized, although, they were still higher compared to the pre-crisis period, we would have, recovered in terms of, net debt over EBITDA, and we're seeing the tangible effects of this freeing up of the cash. Then we have a contribution equal to EUR 2 billion before development CapEx. Networks is pretty straightforward. We have 1.7 in free cash flow, and an operating cash flow of EUR 500 million. You'll see that all the businesses contribute positively to creating cash, by investing on maintenance. And then, let's see how we allocated the EUR 2 billion in the development of our business as well. We allocated them to protect the three main pillars, which is value creation, sustainability, and resilience.
From this point of view, we allocated EUR 1 billion on networks. We also used the cash generated in energy. We allocated EUR 600 million in the waste sector, and if we consider the debt of the target companies, we will be making the acquisition of.
The business.
The business' cash is pretty stable. We reinvest all of the cash we generate in the business. In energy, we have reduced investments. We have an activity in supply for the most part, but we also have some investments on assets, which means that we will have a use of cash in investments and development, roughly equal to EUR 500 million. Therefore, we decided to allocate cash so that we can preserve the profitability of the group, but also the balance of the businesses, in terms of a stable contribution they can make over time.
This choice we made in terms of allocation, plus all of the development we're focusing on in the various markets, especially in energy and in waste, gives us an average ROI at the end of the business plan equal to 9.5%, with a 160 basis point growth, which I was mentioning earlier. Now, the ROI growth is accompanied by the growth of the invested capital, moving from EUR 8 billion to EUR 9 billion, which means that having increased profitability, having generated cash to increase the invested capital, and since we haven't increased debt, obviously, you can get a flavor of the elements which then allow us to create value and to amplify the effectiveness of this business plan on the following lines.
Now, on the other side of the slide, you can see the evolution of the profitability of our businesses, or business areas, rather. You'll see that, due to the regulators' decisions made in December, the regulated part of the business increases by 1.1 points, the regulated WACC. Even in the waste collection sector, we are expecting an increase in profitability worth 0.7%. Waste treatment grows in terms of size, but also in terms of profitability and specific ROI. Within energy, given the improvement of results, and also given the reduction in working capital, has a profitability which goes from 11%-18%. So here you have a breakdown of the mix of our portfolio.
I hope you appreciate this information, which allows you to better understand the soundness of this business plan, which is built on the various business areas, but also by allocating our capital on these areas with a focus on our strategic targets. The overall cash flows show stability in our debt. Before going into the details of the graph, let me just say that the debt compared to 2022 is pretty much stable, roughly EUR 300 million in cash absorption for the entire business plan. We funded the EUR 4.4 billion in investments. We also funded all of the operating activities, plus the payment of dividends.
Now, just to give you a comparison with the old business plan, in the previous one, we had EUR 4.5 billion in operative cash flow, compared to EUR 5.2 billion in the cash flow generated at this time, plus EUR 700 million to implement investments, but also to reduce our debt compared to the previous business plan. In terms of net debt to EBITDA, we will be well below three times throughout, throughout the business plan, with a target of 2.7 times at the end of 2027. And since we're talking about debt, I think it's important to underscore the fact that all of our net financial position is covered by fixed price structured debt with an interest rate, as you saw in the various interim reports, which is below 3%.
During the business plan years, 60% of the debt will continue to be effective at a, an interest rate below 3%. Therefore, we will have to be making accruals even at the end of the business plan period, so that we can cover the debts that will be expiring with interest rates that hopefully will be positive, better than the ones that we already have. Well, then, after this quick overview of the business plan structure and of the overall figures in the businesses, let's look at the various business areas, beginning with energy. You will see the structure in the various businesses. Basically, we give you the various industrial elements that support the three strategic targets we have.
As far as value creation is concerned, well, you know that we are a company that works for the most part energy supply, which means that to us, the main asset is our customers' asset, or our customers, rather. We started from 700,000 customers, going up to 3.5 million customers in 2022. The margins in this area grew, and that is the asset that we create value, and the results of this area on. We are able to achieve this by managing our customers in a very effective way, with a very good and positive commercial development, even during ordinary periods. That allows us to be effective and to have a churn rate, which is well below the market average.
One of the elements that allows us to have this sizable growth in our customer base, allowing us to have more electricity customers compared to the gas customers, which will be at the 2.3 million level at the end of the business plan period, whereas gas customers will be stable at 2 million. The reason we were able to achieve that is the temporary awarding of the tenders for the end of the Maggior Tutela market. We were awarded 7 groups of customers, and we will be giving you a specific focus on this topic later on, just to analyze the scope of this tender in greater detail. Sustainability.
Well, as you know, our mission is to help our customers decarbonize their consumption, and we do this by selling renewable energy, and also by helping our customers to be more energy efficient in their consumption. We have also included some very important production activities based on renewables linked on the production of hydrogen, for instance, in 2027. We will have 2 plants by 2027 to produce green hydrogen in the hydrogen valleys in Modena and Trieste. And Trieste, in fact, also includes Slovenia and Croatia, along with the Friuli-Venezia Giulia region. It is. It'll be one of the largest hydrogen valleys in Europe. And then we also want to install 300 MW worth of photovoltaic panels.
Our assets, we want to reduce the consumption of soil, and we also want to install these assets on our customers' property as well. So this is a business model that won't allow us to be exposed to price volatility risks, because we will be giving this energy to customers.
W ho have these assets close to them. Which brings me to another topic, the resilience of this market. To us, this means being hedged from energy and climate risks. We have a 15-year tradition of activities on the energy and gas wholesale market, where we are able to buy what we sell in real time. Which means that we can be in line, both in terms of amount and the formula between buying and selling, allowing us to offset any possible risks. We have also made some corrections, some amendments, on transferring shipping costs to customers, which made us suffer a little bit during 2022, but which are now behind us.
We also have a small position on production, and that, of course, depends on commodity prices, but we also focus very much on managing working capital and on customers. These are the.
Elements which I think define this sector. What are the results in terms of growth? Well, earlier we saw that our overall growth was worth EUR 110 million. The effects and the opportunities we were able to take advantage of in 2022 are entirely in the energy sector. Of course, these opportunities will be reduced. We have the contribution of the 110% bonus. We also have the last resort market contribution, excuse me. As you can see, for the time being, we are pretty much the only Italian player on the last resort market in gas, and in energy, electricity, we have 25% of the overall value.
Which means that at the end of the business plan, we expect to reduce this position conservatively, cautiously, and therefore, we've reduced the contribution from these areas. However, for 2024 and part of 2025, this is already covered by the tenders we were awarded, which means that we have a reasonable amount of certainties. Which brings us to what will allow our results to grow. Well, we will continue to work on the value-added services sector for all of our customers, with a EUR 30 million contribution. We will also continue to focus in the energy sector on M&A that can allow us to integrate both horizontally and vertically, with EUR 50 million in terms of EBITDA, and we'll also be having a EUR 150 million growth in organic growth.
Now, this margin is supported by 3 elements. First of all, the recovery of the shaping costs we had in 2022. Secondly, our typical commercial activities. And thirdly, the major contribution coming from the tenders we were awarded, which we entered into 7 lots, 7 groups of customers, and on July 1, we are expecting 1.1 million customers, which means that this is an acceleration of our growth process. Obviously, having made the acquisition of these customers reduces acquisition costs, it speeds up our dimension, allowing us to really make a major leap forward in terms of growth. The costs that we expect to have in this activity are costs that we will be able to offset through organic growth on the markets. And our assessment of this participation.
is equal to a tier above 20%, with value creation, which is made explicit in the plan and which is already very sizable. Now, what are the elements which led us to make the offers we made? Well, all of the things we can do in efficiency and achieving economies of scale, and then all of the offers we can give to our customers. Value-added services, gas cross-selling, so that we can increase customer retention by integrating the already many services they already have with us. Which means that through this offer, we can make a major leap forward, which also underpins a growth of the customer base, which we saw on the previous slide, and which allows us to create value through this unique liberalization process.
You may remember that, customers are awarded through this tender, definitively, and therefore, they will be staying with us even in the upcoming years, even after the regulated period. I will take a break now and, hand the floor over to our, our CEO, who will be discussing our industrial strategy in waste and networks.
Thank you, Cristian. Good afternoon. Let us comment to slide number 16: waste. The waste sector has been going through a very positive trend, in recent years on the market, and we will continue being market leaders, in a moment in which there is a great deal of demand, on the businesses side. They want to close the circle, with an approach to circular economy. This is something that we and a few others can offer.
We have the three different pillars, the ones we saw earlier. We want to begin by creating value. We want to create plans and assets. We want to develop our activities commercially, beginning with concessions. Let's just focus on concessions. The waste value chain is integrated with the urban waste collection, thanks to the long concessions we have all the way up to 2037, with a remuneration which is set by the regulator. The second value creation assets is expanding our assets. Of course, our leadership is also due to our broad asset base. We have 110 different assets. We want to continue expanding our asset base so that we can guarantee continuity and the excellence of our service to all of our customers, so we can close the loop.
We want to make sure that we analyze our capacity constantly, so that we can develop our activities further. This is extremely important, especially given the fact that Italy is marked by undercapacity, a topic that we'll be covering later on as well. The third asset in value creation is how we can expand our customer base, even throughout. Our strategy envisages a number of actions to increase our market share by increasing our customer base. Currently, we have over 4,000, and we can take advantage of the commercial synergies that were made possible with the acquisitions we made last year, such as the acquisition of ACR. We will also be developing new offers to broaden the volumes of waste we treat with the global waste management approach, also through partnerships with major players on the European level.
To us, the truly important thing is to be able to manage our customers, not so much the waste. We want to be able to manage our customers, since that is the most important thing for us. Moving on to sustainability. Let me just mention the fact that as far as urban waste is concerned, in the very first 3 years of our very long concessions, we have made most of the investments required to improve the quality of our service. We have increased how we recycle packaging. We will be reaching 72% in 2027, which is well above the EU's target, which is equal to 70% in 2030. Also, as far as sustainability is concerned, the second pillar, as you know, we are European leaders in the mechanical recycling of high-quality plastics.
We have 8 plants in Italy, France, Spain, and Poland. We have 100,000 tons of plastic we recycle, which we then sell every year. It is a market which is growing constantly, and within the business plan years, we are expecting to broaden our commercial offer, with a focus on new polymers that we will be mentioning, in a few minutes with the next slide. The last point referring to sustainability is the soil remediation business. One of the actions that we took to focus on UN Sustainable Development Goal number 15. Hera Group wants to take advantage of its experience and of the capacities of ACR, the company we recently acquired, so that we can focus on soil remediation and regenerate soil. Moving on to the final pillar, which is resilience.
Even here, we have three focuses, beginning with energy. All of the energy we produce in our waste energy plant is based on mitigation of price volatility without speculations. We also want to diversify the market abroad as well, so that we can increase the resilience of our portfolio. We have been able to build up a number of skills over the years, and we are focusing increasingly on the markets which are above and beyond our traditional ones, with a focus on areas that have shortcomings in waste treatment assets. We focus on handling, logistics, waste treatment, both in Italy and abroad.
When it comes to our international dimension, before we go on to the figures, we will be further developing the flows of recycled plastic destined to customers abroad. As you can see on the graph, on the right-hand side, all of the initiatives that we have seen so far feed into our granular growth, which is equal to EUR 76 million, made up of both volumes and prices. Then we also have, as Cristian was saying earlier, a EUR 50 million EBITDA target, linked to our typical M&A transactions, which we did in 2023. We will certainly be continuing this year, which means that, generally speaking, the waste sector will be growing by 7% annually on average. Moving on to the following slide.
You have an overview of our organic growth, which is supported by the increase of our asset base and our commercial development. You may remember that our asset base is the largest in Italy, with over 100 different assets. Here we have the broadening and revamping of the main ones. We have the waste energy plant in Padua, with a EUR 120 million investment, with an increase in capacity up to 215,000 tons, with improved capacities and performances, which will allow us to strengthen our leadership in the sector with a 20% market share nationally, which is something we're very proud of. Secondly, the revamping of the F3 oven in Ravenna, which you are already aware of, worth 50,000 tons for hazardous waste.
We are very well positioned in the commercialization and treatment of hazardous waste, with a 10% market share nationally. Let me just conclude with some tangible examples on how we can recover and recycle waste. We are focusing on new polymers, and we will be soon building a new plant in Modena, and we will be broadening the plant we already have in Novara, in Borgo Lavezzaro . So we have two plants. One in, one will be treating 30,000 tons of rigid plastics with a potential market in Europe, which is quite sizable, more than 12-15 million tons of recycled and virgin plastics, EUR 250 million.
Then we have the second plant in Novara, in Borgo Lavezzaro , which is being broadened to focus on the low-density PE polymer, with a further 25,000-ton capacity, which will double the already existing one, with a potential worth almost 9 million tons in Europe. Even here, we have an investment worth EUR 25 million. In this case, with these investments, we will be consolidating our leadership in the plastic recycling market, where Aliplast, the company we own, has a national market share of just about 20%. All this development will be leading to an increased capacity to treat this waste over 500,000 tons, which means that we will be consolidating our leadership when it comes to waste treatment. The other growth in the waste sector is based on our commercial improvement.
We are the market leaders in Italy with a volume which will go from 4.8 million tons to 5.9 million tons. This development will also be boosted by the recent acquisition of the ACR Reggiani company, which focuses on the soil remediation business. Finally, we also want to use the experience and the skills of this recently acquired company, which is a leader in the remediation sector, to develop new models and new technologies. Let me also add that we want to focus on the oil and gas sector, which is very resilient to economic cycles. It is less dependent on industrial production. This is a new business line which allowed us to make the acquisition of.
We were able to become market leaders in this market segment, and as you can see from the last figure on the slide here, we will be going from 36,000 tons to 225,000 tons in 2027 in terms of soil regeneration. Moving on to networks now. We expect an increase in the five-year EBITDA equal to 4.4% per year, with a +EUR 112 million in EBITDA. Our strategy for the next few years will be focused on consolidating the profitability of our assets, guaranteeing an increased performance, which is consistent with our sustainability and resilience policies, as Christian was saying earlier, compared to climate change, extreme climate events, and even when it comes to the digital challenge, our goal is to create value.
This will be supported by the sound 5-year investment plan, which is slightly above EUR 2 billion. This is a very challenging plan that will allow us to increase the RAB by almost EUR 1 billion, so that by 2027 we will have a EUR 4 billion value without ever losing sight of efficiency. In our business plan, we want to create value by improving our efficiency in managing our networks, thanks to digitization, automation, and by introducing even more what we've already been doing with digital twins to come up with a real-time simulation. We have EUR 9 million, which is equal to 41% of the overall CapEx plan in networks, which is focused on innovation and digitization. Performance, when it comes to premiums, as you know, this is important for those who manage networks and assets such as ours.
Our investment plan is focused on guaranteeing the resilience of the entire system. Keep in mind that we have 90,000 km of networks. We want to continue being efficient. We are currently the best in class nationally, which is also a way of achieving the premiums expected by the various tariff systems set by the regulator. Moving on to the second strategic axis, sustainability. Our strategy is that of allowing our networks to be efficient, innovative, and digitized, so that we can be sustainable, and therefore, we want to focus on sustainability by safeguarding resources. Let me just mention one. We expect to increase the use of purified water, moving up from 7.4% up to 14% by 2027, vis-à-vis an overall volume of treated water, which is over 330 million cubic meters.
So, we are facing a potential reuse of water equal to almost 50 million cubic meters, but we are also developing projects in the production of green gases. Besides biogas and the digestion of sludge, we also have the so-called sector coupling, which means that we want to take advantage of the extra electricity being produced in the Power-to-Gas, for instance, in our purification plants in Bologna, for instance. Which means that our projects are focused on the asset readiness, on how we can make sure that our networks can be able to take in green gas. And this is very much important to be in line with European taxonomy when it comes to our capital, which is invested, especially in gas distribution networks.
Speaking of that, 80% of the CapEx, which is admissible to EU taxonomy, equal to EUR 2 billion, belongs to the network sector. Along with people, of course, and the focus on the cultural, digital, and sustainable transition that we will be focused on with the over 10,000 workforce we have, so that we can convey data and know-how, so that everybody can participate in this wonderful growth that the group is targeting. Thirdly, resilience. In networks, we have EUR 1 billion, 4.46% of the overall networks CapEx, which will contribute to the resilience of our assets, so we can guarantee continuity and quality, despite the things we were saying earlier, namely climate change and the digital change.
In our business plan, we expect to have a major increase in our resilience, and we had proof of that last year, when we had the flood, which hit Emilia-Romagna, we proved how resilient our assets were. And of course, digitalization has to be used to become more resilient with IoT systems that can allow us to monitor our network, both the electrical and the gas ones. When it comes to water networks, we are committed to improving even more the quality of our service with our Water Safety Plan. All of this technology, the enhancement of this technology, will obviously have to lead to an increase in cyber security. Let me just make a brief comment on the right-hand side of the slide, where we have the EBITDA growth drivers, the WACC, the organic growth.
So we have EUR 35 million referred to the increase in the WACC in water, gas, and electricity between 2023 and 2027. Then we have the EUR 78 million in terms of organic growth. That includes inflation and the growth of our RAB, plus the energy efficiency, which is also imposed on us by the regulator, along with other business dynamics. Moving on to the final slide for networks. Very briefly, I think it's important to underline two elements which underscore the development of the networks. Throughout the business plan years, we expect to increase our RAB by EUR 1 billion, moving on to an overall RAB worth EUR 4.1 billion.
The second element is the increase in all businesses compared to 2022 and 2023, and the profitability, for the entire business plan years, and in all three of the business areas, we have, the return from 3% upwards. Then we have, some characteristics of the regulation. As you see, we have some concessions as far as water is concerned, which, go well beyond the end of the business plan period. The same goes for electricity. As far as the distribution networks are concerned, or the distribution concessions are concerned, for the time being, we don't have any acceleration in sight for the tenders. We are expecting, a, ministerial decree, which will implement the, contents of the so-called Competition Decree.
As far as water is concerned, the news is that the authority has made a waiver for 2023, given the macroeconomic context that we've seen over the past 2 years, whereas for the other businesses, we have a yearly review. The news for the regulatory period refers to water. As you may have noticed, there was a 6-year extension, which is important for us, because this will certainly give a boost to the regulatory certainty so that we can better implement our investments, given the fact that we will have more visibility in the water business. And that is further proof of how mature the regulation we have on this asset is. And in fact, we very much appreciated this most recent news I was mentioning. I'll leave it at that for the time being.
Thank you very much for your attention. Back to you, Christian.
Thank you, Orazio. We have reached the very last slides. Just, let's go over the bottom line. As I was mentioning earlier, with this business plan, we will be seeing a significant growth in ROI, which then leads to a growth in EPS. You'll see that overall, the earnings per share will move from 0.22 EUR in 2022, to 0.31 EUR per share in 2027, with an average growth of CAGR equal to 7%. Given the fact that our business plan increases the group's revenues or profits, given the fact that our debt is under control, we decided to improve our guidance when it comes to the dividend policy, too, beginning with dividends referring to 2023, which will be increased.
We will be asking the board to approve a further growth equal to EUR 0.015, a growth equal to 12% compared to 2022, which is even higher compared to what we had envisaged in the previous business plan. We will be improving the guidance every year, all the way up to an expected dividend in 2027 equal to EUR 0.16 per share, with a 5% CAGR growth and a yield which stands at 5%. Which means that you have the average total shareholder return, which is 12-year percent yearly on average. So this is a growth and profitability, which goes all the way down to the bottom line, with a dividend plan which is has an enhanced performance compared to last year's.
So that is yet another yet further proof of the what we have in mind in terms of value creation. Moving on to some conclusions before we take some of your questions. We wanted to give you plenty of details in this presentation. Of course, with some time for Q&A. This is a business plan that we worked on for six months. We worked very intensely. We worked at the profitability of all projects, initiatives, how we can invest our capital, the choices we made in terms of developing markets and energy and waste, the competitive advantage we have on the various markets with some targets in mind.
This is a fundamental activity, because I think it traces the way in which we want to develop up to 2027, and it also gives you some clear visibility as to what we want to do and what we want to achieve in terms of results. At this point, over to you for any questions you may have. Thank you.
Our first question is by Javier Suarez, Mediobanca. Over to you, Javier.
Yes, good afternoon, everybody. I have a few questions, in fact. The first is, the starting point at the end of 2023, in terms of financial soundness. In your plan on, page 13, you have a net working capital, a positive contribution of the net working capital worth EUR 1 billion. Now, my question is: will we be seeing this EUR 1 billion already at the end of 2023, or will there be a recovery in the following years, too? Can you elaborate on that? What is that due to? Most of you are the guests, you. But I would assume, but is there anything else we have to consider, if we are to understand the starting point of the business plan?
Is it safe to say that with this EUR 1 billion cash assumption recovery, the net working capital, do you think that the net debt to EBITDA ratio at 2.7 times in 2027 is a little conservative? I think it should be lower than 2.7 times. So is your target a little bit conservative? The second question is on the supply business. Slide number 15. You are planning to make the acquisition of 1 million customers, roughly, which is something you've already achieved with the electricity tender. You already have those customers. And then, of course, in the business plan, there will be a loss in the last resort gas customers, of course, but can you help us understand.
Additional EBITDA in the supply business?
These 140 million EUR in additional supply, and what are the actions that can lead to this increase in profitability? I'm saying this because initially these new customers will have a very low profitability, and then over time, over the five-year period, that will increase. The third question is on the waste business. Today, the authority published its deliberation. Now, the question is, what are your assumptions for the remuneration for urban waste treatment? I think I saw 6.6%. That is a figure that ARERA approved. And will this still be approved in 2024 and 2025 as well? There was a discussion on essential treatment plants . What is the assumption you've made, and what is the risk that this can be applied to 2024 and 2025? Then I have a final question on water.
There was an increase in the maximum increase allowed by ARERA, but there will be a recognition of inflation linked to the previous years, and there will be a need to increase remuneration significantly, also given CapEx. Is there a risk that there will be a negative contribution in terms of net working capital in the water business? Thank you. Thank you. Good evening, Javier. Let me begin before I give the floor to Orazio.
Well, let's begin with the 1 million customers compared to the targets in the business plan. Your question is, well, you have a growth target equal to 800,000 customers. You've already achieved 1 million, so maybe you were a little cautious. Well, as you know, we tend to be conservative in our forecasts.
Based on the experience we already have of the tenders for the gradual safeguard services, what we know is that we were already awarded lots in the two previous sessions. And that was a test to see how customers behave, basically. We know that, as soon as customers switch, they have a higher churn rate, and therefore, that is something that we have taken into account. That's why we were so conservative and cautious in our hypothesis, in terms of these customers leaving us. What we've imagined is that the end of the business plan, we will have roughly half of those customers staying on with us, in terms of size. Then, of course, in a few months' time, after we start, we'll understand if the churn rate will be lower. Now, how will we be working on these customers?
Well, of course, we can improve our efficiencies in terms of cost, thanks to these new customers. Without any acquisition costs, we can really grow a great deal. In the tenders we were awarded in recent years, we will be doing the same thing. We will be offering free market offers to our customers gradually. We will be making cross-sale offers as far as gas is concerned, too, because the tenders we were awarded, and that we'll be seeing after the sixth of the month, are very interesting areas; they cover interesting areas. Therefore, the various tests we performed with the micro companies that have a similar size compared to households, those tests allowed us to design the offers. They allowed us to give value to our various activities.
This is a macro activity, of course, so now I'm not going to go into the details of all of our all of the choices we made. I'd rather keep our decisions to ourselves. But basically, we're building on the experience we've acquired in recent years. We participated in the previous sessions, the previous tenders, just as a way of making sure that we were ready for this tender, which was a one-off possibility. Because it really was an opportunity to grow by 500,000-700,000 customers, all at once, without any acquisition costs. Had we conquered those customers on the market, which is what we did in recent years through M&A, of course, we would have had a slower and lower growth, with a much higher cost.
The supply side has always been positive for us. You may remember that every year we have a positive growth of our customers linked to our commercial offers. These are customers that we conquer. They have a value. That activity has a cost, of course. In this case, beginning at the end of Jan-June, we'll be having this new activity. We started working on the project on the fourteenth of January. We celebrated the result, and then we immediately started working on the project because we're preparing some things so that we can be very effective from the get-go on July first. So that was the activities we've already done.
And then when it comes to the contribution to 2027, that's a figure that I wouldn't want to go into for the time being, because it is part of the strategy that we will be implementing, commercially. And it is a, Let me just say that it will be a sizable and very visible contribution. Moving on to the CCN at the end of 2023. Well, we shared a couple of figures with you, or three, rather. We shared our dividend policy ideas, and now we are working on finalizing the figures for 2023. We will be presenting the year-end results in a couple of months, so we still have some operational things to take care of.
In two months' time, we'll be showing you the major reduction of our debt and the working capital, allowing us to benefit partly from that EUR 1 billion I mentioned. We will be seeing some benefits even in the years ahead. That just gives you an idea of the size, and we're also working on optimizing the network and capital. We're introducing new invoicing systems, a project that was very effective during the crisis. It is still giving us some good results. We completed the project at the end of last year, and therefore, this allows us to be more effective in invoicing. It only takes us a very limited number of days to invoice. We're working on all of our customers to further optimize the cycles in invoicing, to improve our cash flow.
Along with the good quality of our customers and the quality of our collection,
We are doing quite well. When it comes to the net financial position at the end of the business time period, well, we made our assessments, and if you consider the investment plan, and if we also consider the fact that we still have to continue optimizing part of the working capital. So for the time being, we're able to be effective, to take advantage of any opportunity for further growth. It may be somewhat conservative, but we'll be seeing how things evolve throughout the business plan years. Orazio, over to you.
Okay. We have two topics: one is waste and the other is water. Well, as far as waste is concerned, yes, we did read the deliberation number seven, the State Council rulings, which recognizes the effects of the rulings for the past. It scraps the ARERA method for waste in 2022, 2023, allowing it to come into effect as of 2024. This does not have an impact on us. In fact, it has a positive impact, because throughout the business plan period, we use the regional regulation method, which is more stringent compared to MTR-2, the one ARERA uses, that applies to waste, and it applies to the WACC, the 6.6% you were mentioning.
As far as the past is concerned, the previous two-year period, even here, there won't be an impact. So all in all, there is no impact. In fact, there may be something positive beginning in 2024, and.
We should.
for the future years. That goes for deliberation number seven. As far as your question of water is concerned, we've made some major investments in the water business. As far as the cap you were referring to is concerned, that won't be an issue. We are transferring all of our CapEx into the tariff. We also know that, in the cluster we're looking at, we have a maximum increase equal to 9.95%. You may remember that we are the second largest player in the country. So, let me just say that it won't be a problem. We will be transferring all of the CapEx into the tariff.
Thank you very much.
The second question is by Emanuele Oggioni, Kepler Cheuvreux. Over to you.
We cannot hear you, Emmanuel, you have to.
Perhaps you have to unmute yourself. Yes, we can hear you now.
Thank you for the presentation. Thank you for the very detailed presentation, and, congratulations for the results posted in 2023. My first question is on energy supply. A question on the number of customers. You mentioned, roughly 500,000 customers, half of the 1.1 million customers you were awarded with the tenders, that you are looking to retain. In slide number 14, though, if we look at the first 9 months in 2023, with 3.7 million customers, which means +200,000 customers, mostly in electricity, that would mean, higher increase in fact.
So the 900,000 customers you were mentioning earlier, so basically, you are looking at increasing your market share from other groups, from other lots of customers that were awarded to other players, maybe looking at customers who would migrate from other suppliers to you, perhaps? Otherwise, the numbers wouldn't match. Then I have a second question on the profitability of your customer base. You mentioned earlier that you've only given us some preliminary results, but can you mention, in slide 15, how the EUR 148 million adjusted EBITDA growth, compared to the adjusted values in supply? How can we remove the effects of 2023 from that figure?
In other words, out of the 900,000 customers in electricity that you expect to add to your customer base, what further EBITDA would be attached to that part alone, without considering the Salvaguardia market or any other market? I have a third question on acquisitions. Can you give us some details regarding the business areas that you will be targeting? Also in financial terms, you mentioned EUR 300 million and further CapEx for a EUR 100 million EBITDA. Just to understand, what is the EV expected for these acquisitions, and which sectors, and which businesses, in which regions maybe, and what potential synergies you expect within the business plan period? And finally, I have a question on the financial lever.
Besides the improvement in 2023, which was a very significant one, congratulations for that, the business plan, more than self-finances itself, even with the growth in dividend. So I was wondering, were you to overperform compared to your business plan targets, which is what you're used to doing, do you think there can be further room, further space, to add a, a larger buyback compared to what you typically do with your stock, besides the dividend? They can then, use opportunistically were there to be any weakness in the market or in the sector. Thank you.
I'll take your questions in order. Well, the situation we currently have, is that we have 3.7 million customers, according to the more recent reports, that be even abundant.
That is also linked to the last resort market and the competitive tenders that we were awarded. These customers are factored in, although we don't include them in any plans we have that go beyond the duration of the tenders. So basically, this effect is linked to our caution. And since they are tenders, we only add them whenever we're awarded them. We don't put them in advance, because, of course, every tender has a different outcome, and therefore, we want to make sure that we only look at the euros in the bottom line. So we don't add possible customers or tentative customers. So we have to add 200,000 customers to that number, and we're referring to a further 800,000 customers.
As I mentioned, two-thirds are the ones that we expect to retain from the Maggior Tutela market, and one-third of that number is, the ones we've conquered commercially. We are net commercial acquirers. Typically, we have, good commercial, offers and with a lower churn rate compared to the market average. And we've been seeing that over the past 10-14 years. We've always had a positive growth of our customer base, which means that we have increased our market share. We are currently the third largest player on the Italian market, with a 7% or 8% market share, which means that, we still have plenty of room to grow, on the market. It's something we've done in the past, and it's something we expect to continue doing in the business plan period.
And our track record is certainly positive from this point of view. As far as the organic growth of EBITDA is concerned, I'm not going to give you the business by business breakdown, but a large chunk of that growth is linked to the recovery of shaping costs. That covers half of that figure. The remaining half is linked to our growth in the Maggior Tutela market and organic growth, roughly speaking. I'm not going to give you the exact numbers, because the numbers are linked to our commercial strategies, so I wouldn't want to give too much away. Sul tema delle M&A, as far as M&A is concerned, we have figures in the presentation. The part in investment refers to equity. We will be acquiring targets of 7x compared to EBITDA.
7x EBITDA means that EUR 100 million EBITDA would translate into EUR 700 million on the NFP. NFP to EBITDA is equal to 1, which means that we have -EUR 350 million in debt, as far as the acquired targets are concerned. You can see this in the slide, where we have M&A-to-debt at 0.4. But of course, it's always difficult to round up or round down these numbers, so we just included 0.4 over here. 7x EBITDA, debt, equity, and debt-to-equity is 1. That's the ratio. So these are the numbers you have as a reference. We are putting our targets here of the target EBITDA.
We don't include the synergies, but as you know, structurally, whenever we want to focus on transactions that can lead to two industrial synergies with our assets and with our commercial structures, as you know, we don't include synergies. We only take EBITDA into account when we make the acquisition. The size, EUR 100 million is equal to EUR 20 million per year. That's the size of the ordinary operations we concluded last year. The M&A transactions were over EUR 25 million. So roughly speaking, that's the amount we look at. But of course, keep in mind that the Italian market is very fragmented, and it does have plenty of opportunities.
And whenever the seller is also interested, that's where we step in, and take advantage of opportunities with models that are always very effective in the execution, without going into too many details, of course. We already have a good buyback policy. We still haven't filled it out completely. We still have further room to maneuver. It's something that we deal with naturally, and that we take into account on a case-by-case instance. So that's something that we'll be looking at based on the various overall situations we face. When I thought of using the financial lever to make investments, that wasn't exactly what I had in mind, but it is something we can do, as we have done in the past. I hope that covers all of your questions. I'll leave it at that. Thank you.
Thank you very much. The third question is by Davide Candela, Intesa Sanpaolo.
Good afternoon. I hope you can hear me. Congratulations for your presentation. Thank you very much. I have 3 questions for you. The first is on the development of renewables, so 300 megawatts you're expecting. I think that refers to the plans you already have, and a part of it refers to the solar generation. I was wondering, what is your approach when it comes to developing these assets, energy communities, and what investments are you expecting for renewables? In the energy sector, you're expecting to invest EUR 1 billion. So what are the amounts you expect to invest in renewables, and what are the profitability levels you expect? Then I have a second question on the waste sector.
In your press release, you mentioned some global services. Can you explain what the nature of those services is? And what the contribution can be of logistics or consulting activities brands, perhaps. And then the third question is a comparison with the previous business plan, in which your network's RAB was EUR 4.2 billion at the end of 2026. Now we're looking at EUR 4.1 billion at the end of 2027. Besides water, which doesn't have any differences, along with gas and electricity, what changes between this business plan and the previous one? Thank you.
Okay. Well, the last question is very easy. In one plan, we had district heating, and in the other, we did not.
Last year, we had included district heating, this year we didn't, simply because we don't have a very large presence there, but also because the regulatory system is currently being reviewed and changed. That's why we only have three businesses in the RAB, the ones that we have a well-defined regulatory system for. Just to give you a flavor of what is fully regulated. Just so you could interpret things better. As far as the development of renewables is concerned, of the 300 GW, that's the size of what we're doing at our customers' plants is roughly 150 MW. Megawatts, excuse me. And then as far as our assets are concerned, we're looking at landfills, or water plants, or areas close to our customers.
We're looking at 55 megawatts of installed capacity, roughly. We are focusing on a number of different initiatives. We have agrivoltaic. Some projects have been already started, we're in the authorization phase. In other areas, we're looking to understand the margin, even from the regulatory standpoint, before we proceed. The greenhouses are included in these activities, and we're imagining a model in which we would be the owners of the greenhouses plant, so we would work to support the greenhouse. We would produce power with our own assets. The real point when it comes to greenhouses is whether or not the plants are paid for by public funds. At that point, they would be easy to build.
But if we're looking at communities of, of, citizens, they would be funding those, those, CERs. Well, in that case, it would be a theoretical model, but it wouldn't be very easy to achieve in practical terms. So to overcome this, obstacle, we're looking at, making the initial investment with some higher spreads vis-a-vis the CERs, so that we can cover, the spread between the investments and the services that we can offer to support the renewable energy communities. So that's something we will be doing, but it will be complementary to the, supply sector. As far as investments are concerned, it'll be roughly EUR 130 million-EUR 140 million throughout the business time period. And I'll, hand it over to Orazio for Waste and Global Services.
Thank you, Christian.
Well, I was mentioning an important concept earlier, namely that, to us, the most important thing is to manage customers, not receiving the waste. That's what we excel in. We are one of the very few to cover the industrial market. We're currently seeing strong demand from companies looking for increasingly sustainable solutions, allowing them to guarantee the closing of the loop, and guaranteeing circular economy. Which means that global waste means offering integrated solutions. Which means that we go into our customers' plants, we place our containers there, and we teach them how to sort their waste, and we guide them towards the circular economy.
Consequently, we are then able to give value to the things that they are capable of, thanks to our huge asset base, and thanks to the partnerships and agreements we have with international players that see Hera and Hera Ambiente, specifically our waste company. They see us as sound and reliable interlocutors, capable of treating with any kind of solid and liquid waste. The industrial market, as you know, is very fragmented. We have a very strong position with 1.5 million tons in industrial waste alone, which allows us to manage over 4,000 customers, and over the business plan period, we expect to grow even more. Over the next few years, we are determined to double the number of customers we serve.
It's a very challenging target, of course, but honestly, I think that over the years, we have been able to equip ourselves with the right skills so that we can continue to offer sustainable solutions to our customers, without waiting for the waste to come to our gates. In fact, it is our intention to go out and fetch that waste with our equipment, with our technology, so we can become increasingly circular. That's something our customers are very pleased with. Whenever we go into their plants, they don't ever let us go.
Which is proof of the excellent work that we are capable of offering in the waste business. Thank you.
Thank you very much, indeed. So, energy, a very brief follow-up question, if I may, on energy.
What are the volumes of gas you expect to sell throughout the business plan period? What is your feeling as far as the evolution of consumption is concerned?
Thank you for the question, because it gives me the opportunity to go back to a point I didn't mention earlier. It's a reminder, in fact. We made an estimate linked to a constant reduction in consumption on the customer side. This plan already embeds a reduction in yearly consumption, which is in line with the trends we're seeing, linked to energy efficiency and linked to decarbonization targets. We ourselves focus on energy efficiency. We'll be seeing that when we give you the year-end presentation. We just don't want to give everything away today. We want to leave something interesting for that presentation, too.
But, just so you know, we've been working on energy efficiency. Thanks to the 110% bonus, that bonus. Something we all remember very well, and that was a way of, making condominiums more efficient, because you need to be able to improve the building's energy class, by two levels to have access to that bonus, and therefore, all condominiums that, took advantage of that bonus, in all the condominiums we worked in, we increased efficiency by 35%-40% in terms of lower consumption. Of course, it doesn't affect our entire customer base, but in the business plan figures, we have already embedded a reduction in gas consumption. And, as we already saw, with the same levels of equipment, besides the increase in electricity consumption linked to electrification, we have already embedded an efficiency, in, our consumption.
Given the price, price hike last year, many customers already sped up the move from gas to electricity. That's something we're, we are offering ourselves, because to the customer, it means saving on the commodity. To us, it means losing a slight margin, but that's a margin we can recover. We can more than recover that margin in terms of the value of service we give. And it's more than increase in terms of customer retention, because, of course, if your energy supplier allows you to save money, you, as a customer, can trust that company, and you can become loyal to that supplier.
So what they save, in fact, is something that we are more than capable of offsetting with that value-added services and with the value of the customer, because a more loyal customer has a value very high value, in fact.
Thank you very much. That was very clear.
The fourth question is by Francesco Sala, Banca Akros. Over to you.
Good afternoon, thank you for the presentation, and congratulations for the 2023 results and for the growth in the business plan. I have two questions on waste. How do you see the recycled plastic market in terms of demand and prices? And secondly, are you seeing any different approaches on the regulator side, especially on the EU side, as far as this market is concerned, especially when it comes to chemical recycling?
Thank you. Thank you for the two questions.
As I was mentioning earlier, as far as recycled plastic is concerned, we are the European leaders in the mechanical recycling of high-quality plastics. I didn't mention this earlier. With our eight different plants in Italy, France, Spain, and Poland, what we noticed recently is that the events happening in the Middle East, the problems in the Red Sea and in the Suez Canal, has led to a hike in prices, because, of course, we're getting less plastic from Asia and from that part of the world, or if it does get to us, it reaches us with a significant delay. And therefore, we've seen an increase in 15%. Just last week, we saw that there has been a 15% increase in prices, which is positive for those who, like ourselves, sell recycled plastic.
So that covers your first question. As far as the regulations are concerned, the European regulations, specifically, we haven't noticed any negative effects. In fact, that regulation was approved by the parliament. There are some positive effects linked to the increase of recycled plastic in the packaging and automotive sectors. So as far as we're concerned, I think there are more pros than cons. I think that the draft regulation on packaging that we had read has plenty of pros as far as we're concerned, and I think that the net effect should be positive for our market. Thank you. Some amendments were made to that draft, although they didn't change very much as far as the things that we are most interested in.
In fact, they made things even more positive for us, so it's neutral, if not positive for us. Given the increased amount of recycled plastic and packaging and in the automotive sector, then of course, that can only increase the demand of recycled plastic, and that's positive for those who, like ourselves, sell that material. Thank you.
The next question is by Federico Pezzetti, Intermonte.
Si, Buonasera.
Good afternoon, I hope you can hear me. Two or three brief things which come to mind. The first is a question on waste. As far as ACR Reggiani is concerned, can you give us a flavor of what their contribution to 2023 is? EUR 20 million, I think the business is going well. What was their contribution in 2023? Like a EUR 100 million M&A. Second question: We have a EUR 100 million EBIT stemming from M&A, 50 from waste. Water should be zero, the rest refers to gas and electricity. Can you give us a split?
The third question, given the scenario regarding energy prices, we can all make our own assumptions, but traditionally, you're never very much exposed to the movements in electricity price, but what is your sensitivity regarding a ± EUR per megawatt hour on the EBITDA? And one final thing, as far as the energy business is concerned, can you give us an outlook for 2024? Can you tell us what you're seeing as being the main drivers, what the pros and cons are for 2024? Thank you.
Let me start. As far as ACR Reggiani is concerned, it was a great transaction. We're very pleased. And as we've always said, thanks to that transaction, we've been able to fit the last piece of the puzzle in our integrated services offer, site remediation, decommissioning.
So thanks to this acquisition, we exceeded our expectations, in fact. As far as 2023 is concerned, we were above the EUR 20 million that we were targeting, and, in fact, we're close to EUR 24 million, just to give you a flavor of the ACR Reggiani transaction is concerned. The M&A operation also refers to the waste sector. We have some very hot topics that we'll be covering very soon. Back to Christian.
Well, it's difficult to make a split between gas and energy as far as M&A is concerned, because that's a service that we offer. It's integrated, so it's not like we'll be buying gas or energy. What we typically make the acquisition of is companies with a customer base or companies that allow us to cover more of the market, even vertically.
Well, we began with services, allowing us to start the business up, and then with the growth and size we've had, we feel it is more effective and profitable to have an integrated value chain, allowing us to offer plenty of services. So those are the directions we'll be headed in. And then, of course, as far as M&A is concerned, we'll be looking at the opportunities on the market. As far as the energy scenario is concerned, well, we aren't energy producers. So as far as we're concerned, the higher the scenario, the better the impact is. It will have a marginal effect on the working capital, so for the business, and as far as margins are concerned, as we saw last year, with the huge increase in prices, we don't have a major impact on margins.
Keep in mind that the electricity production and waste is concerned, that's covered by our internal consumption, basically. So when it comes to hedging, we have a natural form of hedging. So, as the CEO was saying earlier, we hedge things in advance. So to us, the price scenario has a low impact in terms of margins and working capital, especially when you compare today's gas price, which is below EUR 30, with EUR 45 for 2024. If the price were to go up to EUR 350 again, of course, there may be an impact on cash, rather than on the economic side of things. But hopefully, that extreme scenario is something we won't be seeing for quite some time, so I don't see it as a topic for 2024.
Then as far as the guidelines for 2024 are concerned, we'll be looking at that during the interim reports. We don't offer any guidance for 2024, so we'll be seeing things over time during the year. We'll be seeing the results little by little in the various business areas.
Thank you very much. Just one final question, if I may, regarding the various PNRR contributions. It was EUR 500 million last year, EUR 400 million this year, but I think it's excluded from the EUR 4.4 billion. How much of that is regulated? How much of that isn't? Do you have any details on one or two of the main projects? Anything you may want to share with us?
Well, two-thirds regulated and one-third is on liberalized business areas, and it's a matter of understanding where district heating would fit in there. It's somewhere in the middle. District heating and waste, Orazio mentioned them earlier. We do have some projects which are partly funded by PNRR funds. That's the National Recovery and Resilience Plan. We didn't include those funds in the CapEx because it isn't anything we're cashing out, it's offset by a public contribution. We wouldn't want to create any possible confusion regarding the size of the cash flows. Although we did mention it, because it is a benefit. Part of our investment is funded publicly, so there is an element of profitability there. And it is included in the business plan figures. Thank you.
Thank you very much.
The next question is by Roberto Letizia, Equita SIM.
Good afternoon, thank you very much for the presentation. I, too, have some question. The first is on the 2023 target and the business plan target, too. There aren't any non-recurring effects. The negative effects, we had one year, the positive effect, the following year. Is that target. That target doesn't include any non-recurring effects. And as far as the majority of the customers are concerned, what are the short-term effects you're envisaging? Because, of course, this, the acquisition of these customers will have a negative impact in 2024 and 2025, which is just the acquired cost translation on EBITDA. Are there any effects that we would have to take into account for 2024, 2025? or for that 33-month period for the temporary offer.
You mentioned refinancing, the EUR 1.5 billion refinancing, which will be taking place at the end of the business plan years. What are your assumptions in terms of the cost of debt? Just to understand your view on the evolution of interest rates and the cost of refinancing. And finally, from a qualitative standpoint, just as a way of understanding, the loss of customers in Maggior Tutela, you're mentioning that, one-third of the Maggior Tutela customers will be lost. Is that because part of those customers aren't profitable for you? It is true that there is a higher churn rate in these structural changes we're seeing, but maybe there is a part of that customer base that you are less interested in. There may be some customers that aren't as attractive, they're less integrated in, Hera's, overall offer.
Well, thank you for your question.
And the first one can help us further clarify things. We have some very homogeneous assessments. We don't have that over-performance that you can see in slide one, the in the notes. I know we went through these slides very quickly. This doesn't see the benefit of the accounting benefits that we had, that was negative last year. So in commenting the notes, as in 2023, we had recovered those negative effects, which we were able to sterilize, and hopefully we won't be having that anymore. Because hopefully, the market will be more stable, so we're looking at homogeneous figures. We haven't changed the figures. We don't have a different approach. So the forecast 2022 to 2023 is homogeneous with the 2021 to 2023, so the business plan.
As far as the cost of debt is concerned, we included it in the annexes. Our hypothesis is an average cost of 3.5 at 2027, and implicitly, if you were to do the math, the new debt would stand at 4.5%, roughly. Which is consistent with the forward on the current debt, plus a basis point spread, which would be consistent with our, our usual sourcing policy for debt. Let me give you an interpretation of this.
We have the, the figures that we showed you in the press release, shows that we're looking at EUR 2.5 billion in investments, which, according to European taxonomy, are eligible, and therefore, that gives us a possibility of choosing green forms of funding whenever we will have to manage these investments, which again, stand at the tail end of the business plan. As far as customers are concerned. Well, thank you for that question, because we didn't mention it earlier. The fact that we have customers, the fact that we are able to see how these customers behave, is an advantage, because, of course, we can focus on the customers we're most interested in. Very simply, beginning with how they pay their bills.
Of course, their unpaid ratio is very good for us. The majority of customers are good customers, then we have a minority who aren't interesting. So we can choose the customers that we are most interested in, and we can also check how our customers pay whenever we make any acquisitions on the market. Of course, the whole value chain is complex, so the data we have may not be more effective, and therefore, we can be selective. It's important for us to be able to choose, also to understand their consumption levels for other services, and we can focus on increasing their value by adding gas, for instance.
We have 2.3 million customers in electricity and 2 million customers in gas, and if you consider that, in the north of Italy, we have more electricity customers than gas customers, and the difference is 15%-20%. That means that we have both services for most customers. Just to simplify things, that isn't altogether true, because we still have plenty of opportunities to cross-sell, since we have a very large customer base. Most of the upselling and cross-selling activities we do happen with our CRM, with our inbound customers, and therefore, we have some artificial intelligence tools that help us understand what offers to make to our customers based on their past behavior, based on their current situation. And we can do this for every single customer.
We have plenty of solutions, and we are able to understand what our customers' preferences are, and that helps us to be more efficient. We optimize our time, and we can be more effective commercially. So being able to choose customers and being able to offer the best things to each customer is something we also want to apply to the majority of customers, but it's to something we offer to our already existing customer base.
And I think that covers all of your questions.
Yes, thank you very much, indeed.
We have a follow-up question by Javier Suarez, Mediobanca.
Yes, I have a follow-up to Roberto's question on the cash flow statement on page 13. What is the rationale behind these EUR 400 million in cash absorption links to general provisions? Can you explain how you built that number, and if the cash absorption should be more visible in the first half of your business plan period?
This is where we have included a few effects. We have the postmortem period for landfills, we have some amortization or third activity, so it is a combined effect of a number of different effects. Maybe Jens and Luca can give you some further details as to what these effects are.
Perfect. Thank you very much.
We have a follow-up question by Roberto Letizia, Equita SIM.
Yes, apologies. I wanted to ask earlier, but I was a little too late. Also, as far as the price scenario is concerned, let's look at things from a positive slant. It isn't so much the size of the variation in the price scenario, but rather the speed with which that change happens. It is true that the price went up to 300 EUR, but the impact on our retail company isn't because of that price hike, but it's because it happened over a 6-month period. That's when companies can react commercially, they can recover margins. In this case, it's the exact opposite. We're already seeing price differences worth 30 EUR per megawatt on electricity compared to your business plan assumptions in a very short period of time.
Would this not be favorable for a retailer? If this happens over a 12- to 18-month period, what is transferred to the end customer is less than what a retail company is able to obtain on the supply side, on the procurement side rather. So, would a swift decrease in prices not have an impact, a positive impact, on you? Because it would have a positive impact on customers, but the sourcing price for you would be reduced significantly. So how do you see things?
Well, it depends on the commercial policies that companies implement. Obviously, we want to be able to seize any opportunities on the market for our customers, and we also want to always consider what the market conditions are at a given moment in time.
We were talking about waste earlier, and Orazio was mentioning the waste that we can dispose of on our platforms or that we can dispose of elsewhere. That depends on the conditions, which may vary every month. It depends on the market, the type of waste, or the prices, the discounts that you can obtain on assets which aren't running at full capacity throughout Europe. So it depends on the moment in time. Of course, lower prices are positive for everybody. Of course, it depends on the size of this decline, because if this decline is steep in a short amount of time, of course, this may have an impact on our churn for those who sold at fixed prices. Currently, we are very light on fixed prices, so any market variation is then transferred directly to customers.
Therefore, even these dips don't have any, any negative implications, because with a fixed price, if the price lowers, you can, rediscuss the contract for new customers, but if the price lowers in the market, you can find, offers that may be lower to the fixed price that you, buy the commodity at. This can be an opportunity from some points of view, for those who have plenty of fixed price, but it can also be a cost. We try to strike the right balance. We try to, work ahead of time, and then whenever we can, increase the margin, we always take advantage of it. But we always want to be respectful of our customers.
Let me just say that in 2022, in fact, when we had a significant growth in prices, we did not scrap a single fixed price contract before its natural expiry. The Antitrust Authority investigated us, too, and their investigations led to nothing, because we did everything in full compliance with the rules. Because we think that the reliability of a supplier is essential when it comes to establishing a positive relation with customers, and therefore, whenever we commit, we stand by our commitment. That's essential, and that is one of the reasons why our average churn rate is very positive. We always want to be reliable and transparent. In a complicated world, we want to be as transparent and as reliable as possible. Of course, it was challenging for us. Many other companies let go of customers who had a fixed-rate contract.
Others scrapped the contracts before their natural expiration, because the sanctions were lower compared to the benefits they obtained. Even for us, it would have been more profitable to stop those contracts and pay the sanction, but we decided to keep our promise, to be reliable towards our customers. The agreement we have with our customers is based on respect and trust, and that is of value for us. Of course, whenever you can sell an offer with a higher margin, well, that's something we always take advantage of. But as far as the customers we have are concerned, we don't touch the offers and the commitments we made with them. Of course, sometimes customers have a fixed price, and we give them a variable price by increasing the length of the contract.
It's a win-win situation, and it's consistent with our expectations. But it's always based on the attention we place to our cus tomers.
Mr. Fabbri, there are no further questions.
Very well, then. Since there are no further questions, let me thank you for your kind attention. We've been here for more than two hours. I do hope the business plan is interesting for you. It was very challenging for us. We worked hard to draft it. We are confident in the numbers of the business plan. We are confident that this is a solid business plan, underpinned by specific actions and solutions. Again, we think it's very solid. We'll leave the assessment to you, and I'm sure we'll be meeting many of you during our road show, which begins tomorrow morning.
Hopefully, we'll be meeting the rest of you with the presentation of our year-end results. Thank you very much indeed. All the best.