Good morning, ladies and gentlemen, and thank you for being here at the presentation of Snam 2023-2027 strategic plan. First of all, I want to thank you for being here with us in Milan or connected remotely. Let me introduce today's speakers: Mr. Stefano Venier, Snam CEO, and Mr. Luca Passa, Snam CFO. Today, our agenda is the following: Stefano will start with a quick introduction of Snam and its key feature. Then he will provide an update of the recent and future evolution of the energy system, followed by an in-depth analysis of our ambition and strategy. Then Luca will take you through a full overview of CapEx plan, financial projection, and targets. And then, back to Stefano for the vision to 2027 through 2032, and the closing remarks. At the end of the presentation, there will be a Q&A session.
This is the first physical event of Snam this year, and from now on, we will have a new policy. So all our events will be sustainable, meaning that we will calculate the carbon footprint through our B Corp Renovit, and we will compensate at the end of the year the emission through our reforestation company, Arbolia. Now let me hand over to Stefano.
Thank you. Thank you, Francesca, and thank you all for being with us, also on my side. Let me start this presentation from the title, because this title represent the ambition the company has, Energy Infrastructure for a Sustainable Future. It completes our value pyramid that we have developed and puts it into connection with the ambition we have and the purpose that is energy to inspire the world. Ambition is represent what we aspire to and where we want Snam to be in the long- term. So now, let me drive you through some few features of Snam that we thought might be, let's say, important to recall. First of all, I want to quickly remind of our current footprint.
Snam is the leading European gas infrastructure player, with more than 37 km of transportation length, more than 20 BCM of storage capacity, and 20 BCM of regasification capacity. It is fully integrated and regulated player, operating along the whole value chain of the industry with a very capillary and well-performing and digitalized network. With the energy crisis, the European energy system gravity center has partly shifted towards south and Mediterranean area. Thanks to 16 BCM of reverse flow capacity, Italy can be a gas transit country, supporting security of supply to the entire European countries. Snam, through its associate, play a pan-European role as its assets are located along key gas and H2 future corridors.
At the end, we provide an efficient, safe, resilient infrastructure to secure the stable energy supplies in Italy and Europe, and we support the transition toward a decarbonized energy system through the new corridors and regional infrastructure. Few figures on Page 4 to, let's say, recap the business size of the company. The Italian tariff RAB is equal to more than EUR 21 billion. Our associate portfolio has a book value equal to EUR 3 billion as of September 9, 2023, and an EBITDA pro quota of about EUR 560 million. Moving for a while to 2023, it has been a year of achievements and delivery for Snam.
We have seamlessly managed our assets in a volatile environment, brought on stream the first FSRU on schedule, and started the works for the second, reached a record level of storage, and offered new opportunities and new, let's say, output services to the system. Many of our projects has progressed significantly. The Adriatic Line was finally approved, defined as a strategic asset, and eligible to receive REPowerEU funds, and the Sout H2 Corridor, of which our H2 backbone is part of, and our CCS project, named Callisto, has been included in the European projects of Common Interest. In 2023, natural gas emissions were down a remarkable 55% year-on-year.
Overall, Scope 1 and 2 emissions were down by 8%, and sustainable finance reached 80%, three years ahead of the schedule, that was 2026. Let's now move to energy context, because we thought it was important to recap the environment we operate in to better fit the Snam strategic framework. On Slide 6, 2022 has been a turning point for a Global Energy System. The structural underinvestment in the sector, with the consequences of the war in Ukraine, completely reshaped priorities, particularly in Europe, with an increased focus on security of supply. The energy crisis has eased in 2023, but energy markets, geopolitical and global economy remain unsettled.
We think it's more important than ever to continue investing in infrastructure to secure reliable, affordable, and in the future, decarbonized energy supply. Decarbonization is one of the biggest challenges we have to cope with. The State of Climate Action 2023 report provides a comprehensive roadmap of what's needed by 2030 and 2050, to limit global warming to 1.5 degrees. The window to cap global warming at 1.5 degrees is rapidly narrowing, and as a consequence, all the decarbonization levers and technology must be pursued. To this end, decarbonized molecules complement electrons. Biomethane is already a viable and mature option.
CCS is gaining momentum, and hydrogen is globally targeted as a new energy feedstock, which, with infrastructure as a key enabler to scale it up and to access to competitive production. Clear policy and incentives, along with a visible regulation for a level playing field, are all prerequisite to unlock large-scale investments. And we have to say that in the last 12 months, significant progress has been made. Both at European and national level, of course, further definition are still needed. If I had to summarize in a sentence, the key trends in the energy space in 2023, I would borrow it from the last COP 28, from ambition to transition. Page 7. Now, in just 2 years, Europe has completely changed its gas mix.
Gas imported from Russia, both via pipe and LNG, has been reduced from 45%- 14%, or let's say 42 bcm. The European gas system managed to overcome the challenges faced in 2022, thanks to sharp increase of LNG, up to 133 BCM , higher import from sources, and flexibility provided by storage. This shift means that now Europe is structurally more reliant on LNG market, which is expected to remain quite tight in the next years to come, leading to a foreseeable price volatility. Moreover, several elements of uncertainty remains. As such, The Residual Russian Pipe Supply Sustainability. Second, as well, Norway ability to keep up recently supply levels, and finally, the Russian LNG supplies. Long-term EU gas demand displays an up-down curve, with some near-term recovery driven by weather, like happened in January, and price normalization.
Future, future gas demand scenario has large range of outcome, which will also depend on timing and execution of actions linked to climate goals. Uncertainty over future scenarios and flows implies importance to continuing investing, to invest into infrastructure, to secure reliable and flexible coverage of peak demand, expected to maintain high levels, and to balance the increasing intermittent renewable generation. These investments should be done with a multi-molecule perspective, we think, to to ensure reaching decarbonization as an ultimate goal at competitive cost. That is key. Next page. As well, as well known, the decarbonization targets are challenging. You can see an analysis which shows the global cumulative energy CO2 emissions reductions by technology to reach the 1.5 degrees target.
While 50% of the reduction will come from higher penetration of renewables and further electrification of energy consumptions, the rest is set to come from energy efficiency by 20%, which drove the largest part of the emission avoidance in the past decade. And finally, 30% will come from decarbonized and green molecules. This, for us, has two clear implications. First, green electrons and decarbonized molecules are jointly, jointly essential to achieve Net Zero, and synergies between the two need to be efficiently leveraged upon, leveraged upon. Secondly, infrastructure development will be a key enabler to make this happen. No transition is feasible without enhanced networks, which need timely planning. According to the IPCC and IEA, CCUS will play a pivotal role in achieving the Net Zero emissions by 2050.
CCS is gaining momentum in Europe, and not only Europe, also thanks to the policy support. With 14 EU PCI cross-border projects and a 2030 injection target of 50 million tons of CO2 per year, that has become more and more important. Considering also non-EU countries, the continent is set to target more than 100 tons per year of CO2 capture by 2030, and in the United States, on the back of the Inflation Reduction Act, more than 70 projects have been announced.
Of course, CCS cost varies significantly across sites and industries, but high CO₂ prices in the carbon trading schemes, such as the European ETS, suggest that industrial players will require limited support, especially when efficient logistic hub are present, like, for the Ravenna project, that we are leading together with Eni, and which we'll cover later in the presentation. CO₂ transport is needed, again, to give industry access to geological storage and to give producer of synthetic fuel access to sources of CO₂. Regulation and business model are still under definition, but the hub-based model is emerging as a standard, giving its greater cost efficiency.
Indeed, the majority projects in operation or under development in Europe rely on regional pipeline transport, which requires relatively upfront capital cost, but can provide a cheaper transport for larger volumes first, and much more effective net contribution on CO₂ reduction, according to recently published scientific studies. Let's now move on to the situation in the hydrogen. Significant progress was made in the course of 2023. Incentive schemes and consumption target has been set, has been introduced. Several European H₂ corridors, promoted by different TSOs, has been announced and achieved PCI status. The gas package is going to be finalized soon, and the ENNOH, the new EU body, will be in charge for the H₂ infrastructure planning coordination since next September.
Based on European hydrogen backbone estimates, hydrogen demand by 2040 by country is supposed to be significant, with relevant role of import, export, particularly from south to north and to south and north to Central Europe. In this context, the Snam infrastructure can play a key role. There is more and more recognition that infrastructure are needed to scale up a hydrogen, and they have to be planned well in advance, and Germany is leading to that extent. The centralized model is the most cost-effective option, as it provides large volumes at lowest level. Transport and logistic represent less than 20% of the final hydrogen cost, but they can give access to most competitive production areas through cross countries interconnections.
On regulatory and policy front, a significant news flow came throughout the past 18 months, both in Europe and in Italy. Here, you have a quick summary of those. In Europe, besides the gas emergency measures, the hydrogen production support has started with the Hydrogen Bank, while other decarbonization measures have been announced. While in Italy, the Asset Health Methodology and ROSS-based regime has been finalized together with the biomethane regulation, and the recent National Energy Decree has filled some gaps in the domestic CCS regulation, specifying preparatory aspects for licensing and/or the authorization of CO₂ storage and transportation. Hydrogen decarbonized gas package finalization, the European CCUS strategy to be released on the next 6th of February, and the approval of all national energy and climate plans by mid of this year, are key focus for us going forward.
Let's now move to the, let's say, Snam integrated strategic framework, because all these teams that I have just described contribute to shaping this strategic framework that, as shown on Page 12, is founded on its key distinctive factors. The first one is that Snam has a unique geographical position as Med-EU bridge, located close to energy and natural resources reaching South Africa and East Med, and infrastructurally connected to Central European demand. Moreover, thanks to the Italian ports, developing LNG or H₂ derivatives liquid molecules import terminals as a substantial potential. Our presence across the whole midstream value chain with a resilient, flexible, and cost-effective infrastructure made by parallel and repurposable lines able to support a multi-molecule transmission.
Third, eight years of experience in building and maintaining critical infrastructure, delivering large projects on time, coupled with an early mover status among TSOs with solid R&D programs and energy transition platform. Let me now move on to the Energy Infrastructure for Sustainable Future. That is, let's say, the core part of my presentation before leaving the floor to Luca for the financial projections. I will now explain in detail all the elements of our core ambition. Our gas infrastructure and energy transition business are synergistic and progressively interconnected. Our aim is then to become a pan-European multi-molecule operator, managing a modular, flexible, and repurposable infrastructure to secure energy supply across Italy and Europe. This will be delivered leveraging on two main strategic levers: sustainability on one side and innovation on the other side.
We plan to realize our ambition by investing EUR 11.5 billion over the period 2023-2027. That makes, in reality, EUR 12.4 billion gross of grants, of which EUR 10.3 billion on gas infrastructure and EUR 1.2 billion in our energy transition business. Those are by 37% investment taxonomy aligned, and by 58% investment SDG aligned. We have powered up our sustainability strategy, adopting an all-round framework based on seven pillars with a distinctive ambition, which I will explain later. On innovation, we are deploying dual track approach, and we will invest EUR 350 million on proven innovation and EUR 50 million on over innovation over the plan horizon.
On Slide 16, an overview on the EUR 12.4 billion investment that, as I said, are gross of grant, EUR 6.5 billion or almost EUR 8 billion of which will be to deliver green and decarbonized gas molecules. In fact, 20% will go on emission reductions, and we can make some examples like, electric compression station, leak detection and repair, and so forth. And green molecules, like biomethane plant and connection, hydrogen, CCUS, and energy efficiency. And the 44% in H2-ready gas infrastructure, meaning replacements done with H2-ready technical standards. The remaining amount will be supporting LNG for security of supply and maintenance by 25%, and the rest, of course, on ICT and corporate staff. On Slide 17, it becomes evident the broad array of investment opportunities we have in asset resilience with flexible solutions.
We will invest about EUR 1 billion in four dual fuel compression station and biomethane connections. EUR 3.5 billion will be dedicated to H2-ready gas infrastructure, of which EUR 1.4 billion, EUR 1.4 billion net will go to the first phase of the Adriatic Backbone to increase the capacity of import from south to 10 BCM of gas per year. This project has been, as you know, included in the REPowerEU funding program, and it will benefit from EUR 0.4 billion euros of grants. North of EUR 2 billion will be invested in the replacement of 900 kilometers of pipes, according to the Asset Health Methodology that has been introduced in 2023, agreed with the regulator.
EUR 1.8 will be invested in the new FSRU, including all the related works to connect it to the, let's say, the national network and, for the relocation of the first terminal from Piombino to the, as you know, to Vado Ligure. While the vessel of Ravenna will be completed by year-end, and we will launch its capacity auctions by the first quarter of 2025 . Verifying our transport and storage assets as compatible with hydrogen to a hydrogen-proof action plan. Firstly, we are working to define operating technical standard, which is a prerequisite for kicking start the H2 market. Secondly, we are moving to physical assessment, such as testing within the European Pipeline Research Group, pipes taken from the operating network to understand how it works.
On storage, we will execute a pilot project dedicated to a dedicated layer of the Fiume Treste gas field that is located in the central part of Italy, while our associate, dCarbonX, is developing a storage platform in UK and Ireland. Moreover, we are part of several projects, some of which in partnership with other players, such as the Modena Hydrogen Valley, that recently received almost EUR 20 million of grants from, as you know, the PNRR program. Moreover, through our decarbonization unit, we provide a containerized, I don't know, an electrolyzer, for H2 testing for the hard-to-abate industries. Finally, we have been awarded by ARERA, EUR 7 million of grants, within the new innovation and sandbox program for projects, including power to hydrogen and hydrogen separation membranes.
I mean, this long list aims to give you a concrete flavor on how we are progressing on this field. We have also framed a long-term view on how our infrastructure could evolve to support the transition to hydrogen while continuing to grant the gas security of supply. That is fundamental. This can be achieved by repurposing one of our three parallel lines post the completion, the Adriatic Line. This is part of the Sout H2 Corridor, a 3,300 km pipeline connecting North Africa to Germany, passing through Italy and Austria. E nabling to support the enabling the supply of low-cost renewable hydrogen produced in the southern part of Med to European industrial clusters.
One of the key H2 corridors envisaged by the REPowerEU and the most cost efficient as it maximize the repurposing and enjoys a significant embedded line pack storage flexibility, corresponding to 60%-70% of expected 2030 daily demand. This storage flexibility related to long and capable lines also offer an additional opportunities for long duration energy storage to renewable production. Over the last 12 months, several steps forward have been made. In November, it has been included, as we said several times, in the list of the Project of Common Interest, thus eligible for possible grants. We are now working to extend the same status to Sout H2 corridor, the part that connects Sicily to Algeria, to complete the end-to-end corridor.
In 2024, we also will start the engineering investment, and we will launch a market test to assess the appetite of domestic industrial clients, mostly hard-to-abate, of course, towards different decarbonization options, either CCS or hydrogen. Let's now move on to the CCS project that we are jointly developing with Eni in the Ravenna area. It will be the first and largest project in the Med area, with a total estimated capacity exceeding 500 million tons, and possibly one of the most efficient due to its geographical location, with the storage facility at a short distance from the coastline, less than 7 km, and in close proximity to large and concentrated industrial clusters located in the Pianura Padana. CO2 will be stored in depleted gas reservoir offshore of Ravenna, in shallow waters.
The project is modular and can be progressively scaled up. In the planned period, we envisage EUR 350 million of investments, net of grants, to deliver first, the startup phase that will start in 2024 to capture the first 25,000 tons of CO2 and then test the storage performance. The industrial phase, operational from 2026, to store up to 4 million tons per year, supporting the decarbonization of the hard-to-abate industries in the northern part of Italy, with the optionality to receive a volume via shipping from the Med, including the south of France, that is part of the Callisto project. Final investment decision on the industrial phase will be subject to supportive market and regulation.
From 2030 onwards, the significant capacity of reservoir will allow to increase the capacity to 16 million tons per year, depending, of course, on market demand. Snam's role will focus on transport first, also capitalizing on existing infrastructure, and we will work with Eni on the storage facilities. We will have a third-party access model that is expected for transport and storage services. The project has made significant progress in the last months. Works for startup are targeting few months to be for the completion, and the project has gained the PCI status, as we said, while the recent national energy decree has set the context for the national CCS market design. Let's move now to another piece of our energy transition platform that is Biomethane.
That is the most mature and rapidly scalable green gas available today and is compatible with existing infrastructure and equipment, so it's the easiest to deploy. Its potential is relevant according to the drafted energy National Energy and Climate Plan by 2030. Rising cost and lack of clear development scheme has slowed down the growth in the last two years, but those has been overcome in the last months. Snam is progressing on a twofold role by promoting and optimizing the interconnection of plants to the network, that where the requests are rapidly ramping up, and by building a solid platform with about 41 MW of biomethane capacity and biogas plants in operation at the end of 2023, acting in this way as industrial developer.
With regard to the production, the Italian biomethane decree provides a compelling semi-regulated regime, relying on the PNRR funds, covering part of the CapEx and offering a 15-year feed-in tariff, updated by inflation. We successfully participated to the first auction, four auctions in 2023, and we are ready to submit 5 new projects in the upcoming one. The plan envisages EUR 400 million of investments, net of EUR 80 million of grants, to reach approximately 80 MW by 2027, based both on upgrades of biogas and new, and new Biomethane, Biomethane plants. There is one peculiarity, extremely important on this platform, that is the concentration of those assets in the northern part of Italy, with some few spread all across the country, specifically on, let's say, west, waste, organic waste, feedstock.
While on the energy efficiency, on next slide, over the past years, we have built a leading player in energy services and delivered a strong project pipeline in deep renovation. Going forward, the strategy is to reshuffle the business portfolio towards public administration and industrial clients, capitalizing on Snam's national presence abroad and sound balance sheet. By focusing on energy performance contract, we aim at increasing the overall backlog and the average duration, thus further gaining revenue visibility. As you can see on the chart, we project backlog to move from EUR 2 billion in 2022 to more than EUR 3 billion by 2027, having more than 60% of which in public administration, with average duration from 7-12 years. Let me now move to the strategic levers and first, the sustainability approach.
In this slide, you see our comprehensive sustainability framework. We made a decision. We moved from a traditional approach to an all-round approach, fully integrated in the strategy of the company and in our operations. This strategy is based on seven distinctive pillars and seven distinctive ambitions. The first two pillars are those more related to our core business, and are more in line with the former approach, and these are, of course, the multi-molecule infrastructure and the green transition that will help to reach the system decarbonization and sustainable growth throughout the inclusive pathways. The other five are related on how we manage our operations, and first I like to mention the carbon neutrality: Decarbonize the core business in line with our path to Net Zero. Second, a new one, biodiversity and regeneration.
Leverage new infrastructure projects to positively impact on natural and local environment following a science-based approach. The fifth is People, of course. Empowers Snam people, fostering professional growth and providing comprehensive care. This while we keep working on our core targets, such as D&I and Safety. The sixth is Local Communities, as we are spread all across the country. Keep generating value for local communities, strengthening the listening of the territory needs in cooperation with the Snam Foundation .A nd the 7th, the Transformative Innovation. So the innovation culture to maximize the technology effectiveness, thus enhancing asset safety, reliability, sustainability, and the value chain capabilities. In line with the framework, we have also updated the ESG scorecard with relevant KPIs to measure progress across all the pillars in line with the plan horizon by 2027.
You will find in the presentation a sustainability annex that lists all the different aspects of the seven pillars and will provide you an update on our progress on regular basis. Let's focus for a while on the emissions. On emission reduction, our commitment remain firm, even in the current challenging scenario that is characterized since 2022 by a reversal of gas flows and higher use required for storage facilities. On Scope 1 and 2, we commit to a 40% reduction by 2030, and 50% reduction by 2032 on the regulated business perimeter, taking 2022 as a baseline, and a carbon neutrality by 2040. Our enhanced efforts on methane emission reduction led us to outperform our target by some years.
As I mentioned at the beginning of the presentation, by 2023, we reduced by 55% those emissions, and we have and we are following, strictly following the recommendation by United Nations, that once again, 2023 awarded the company with a gold standard. On Scope 3, we are reinforcing our commitments, moving to targets in absolute terms, with emission reduction of 30% and 35% respectively by 2030, 2032. Scope 3 emissions mostly come from our associates, on which we have promoted specific decarbonization programs, and of course, from suppliers, of which for which we introduced an ESG criteria in tenders while working on data gathering. I have to say that more than 130 suppliers that are basically 66% of them are complete, have completed the CDP questionnaire.
An interesting example on how we partner with them is what we call it Green Worksite, in which we promote the adoption of green and best practices by our contractors, like waste and water reuse and recycling, electrification of machineries, use of biofuels to reduce the emissions. But more important, we add a very relevant new commitment to be Net Zero across all emissions by 2050. All the targets are aligned to the SBTi general methodology, and we are committed to be validated by SBTi as soon as the sector-specific methodology will be available. Page 25. Conserving and restoring natural space and the biodiversity they contain is essential for limiting emissions and adapting to climate change. We started our impact assessment on nature in a more comprehensive way.
We have been the first pure infrastructure player globally to join the new SBTn Corporate Engagement Program, and we carried out a detailed analysis based on available science-based target for nature scientific approach. We got to two findings: material impact is related to realization of large works to build new pipelines, and thanks to the already high technical standard and innovative technologies used for executing, for execution monitoring, we minimize the impact by design. We operate already zero net conversion by remediating all not available conversion, restoring 100% of the impacted areas. By 2027, we commit to net positive impact, meaning that on specific hotspots, we will implement initiatives to regenerate, rewild, and protect the landscape.
We also pay the same attention to sea and oceans, more and more in general to water, and we see the blue carbon as a new frontier to explore. The targets, as I said, are aligned with the SBTn guidance. As part of the engagement program, we will contribute to the definition of the sector-specific guidelines and submit our targets as soon as the methodology is finalized. Also, I like to announce that in the third quarter, we want to organize a dedicated event on sustainability, in where we will also introduce our forthcoming transition plan. The second lever, as I said, is innovation. On innovation, we have a dual-tracked approach, exploring both open and proven technologies.
On proven technologies, we are continuing to invest on the SnamTEC program that started some years ago, accounting for EUR 350 million investments over the plan horizon, involving more than 50 projects in that, to that extent. And the key enabling technologies, using all of them, like the IoT and sensor installation, like increasing the computational capacity through distributed edge computing and cloud computing, data platform to manage and display effectively integrated data and information, and finally, the artificial intelligence that we will use. We will use it firmly for the predictive maintenance of our assets and massive analysis on big data from field sensors, as well as in the projections of the gas flows that are more and more less predictable after the 2022 crisis. On top of this, we are developing the Asset Control Room.
You see on the chart, one page of this Asset Control Room. That is a single point of entry, all the operating activities, which is giving a full end-to-end view of our processes across the whole system we manage. The program enables, among others, the predictive and optimized maintenance, supports the staff safety and security, helps and support the energy efficiency and CO2 emission reduction, but specifically contributes to reduce the transport and storage OpEx indexes, respectively by 10% and 20% over the plan horizon. My last chart is on open innovation, just to close the loop on the different strategic levers. On that field, we are planning to invest EUR 50 million, including EUR 10 million of grants that has been already awarded. We are pursuing 35 projects, of which five obtained the EU or ARERA grants.
On the right-hand side of the slide, you can see an overview that clusters according to various applications, maturity level, and relevance for us. We leverage on both internal and external skills via R&D and open approaches. We have two open innovation programs called Snaminnova and HyAccelerator, that scouted more than 3,000 startups, 28 of which are under pilot, and one has been funded and works on, and is active on biogenic CO2 valorization. Finally, we have also some investment on CDP Venture Capital and Hy24 Fund. Let me now turn to Luca for the business plan projections. Thanks.
Thank you, Stefano. Good morning to everybody. Looking at the regulatory framework on Slide 29, our business plan is underpinned by visible and supportive regulation. The trigger mechanism for the annual WACC update provides for an uplift in 2024, already approved by the regulator, ARERA, which implies a + 80 basis points on transport and + 60 basis points on storage and LNG. In addition, the base ROSS will be introduced from 2024 to transport, with positive change, such as the recognition of CapEx and OpEx capitalization rates based on average and historical forecast data, a shorter time lag for D&A from 2025, and an updated deflator recognition and a better work-in-progress remuneration. All in all, these changes provides a faster cash conversion over the plan horizon. Moving to the business plan projection on Slide 30, we can see a sound and improved growth.
Our CapEx for the period 2023-2027 has increased by 15% versus the previous business plan to EUR 11.5 billion, net of grants, which amount to approximately EUR 1 billion, mainly driven by the acceleration of the Adriatic Backbone. We foresee more than 6% RAB CAGR, 2023-2027, a 100 basis points increase versus last year plan, thanks to higher investment and the deflator contribution. EBITDA CAGR is over 7% and is driven by RAB growth, WACC update, base ROSS introduction on transport, and the energy transition businesses contribution. In terms of net income, to start, we improve our 2023 guidance to EUR 1.14 billion, mainly due to a better-than-expected associate performance.
Net profit CAGR in the plan horizon is approximately 4%, + 100 basis points versus last business plan, reflecting a sound EBITDA contribution, which mitigates rising D&A and higher interest expenses. We will be able to deliver solid growth while keeping financial strength and flexibility. Net debt will increase to approximately EUR 90 billion in 2027, with credit rating metrics to remain with ample flexibility within the thresholds of our current rating positionin. In the Annex, you will find underlying macro scenario assumption that underpin these projections, and for the sake of clarity, there is no material M&A included in the business plan. Let's now look in more detail to the CapEx plan, and on Slide 31. Our total 2023-2027 CapEx plan amounts to EUR 11.5 billion, net of about EUR 1 billion of grants.
The plan is backed by high level of visibility, with around 55% of total CapEx that are already fully authorized. Total investments in our multi-molecule infrastructure amount to EUR 10.3 billion, of which EUR 7.4 billion related to transport, which increased by around 17% compared to the previous plan, mainly due to the acceleration of the Adriatic Backbone. EUR 1.4 billion on storage, mainly attributable to the performance upgrading of existing fields, installation of dual-fuel compression station, and a small contribution from the early phase of Alfonsine new site development. One point five billion euro related to LNG due to the second vessel acquisition, all the mooring infrastructure of the Ravenna and new FSRU, and investments for the relocation of the Golar Tundra from Piombino.
Investment in the energy transition business account for EUR 1.2 billion, +20% versus the previous plan, and are related to the development of our Biomethane platform, the startup, and the first industrial phase of the Ravenna CCS project, the refocus of our energy efficiency business on long-term contracts with public administration, and the engineering of the Sout H2 Corridor. Our CapEx plan is future-proof, thanks to H2-ready replacement investments to reduce emissions and investment in the energy transition. Around 37% of our CapEx are taxonomy-aligned, and 58% are SDG-aligned. Moving to EBITDA evolution analysis on Slide 32, EBITDA annual growth will be 7.4% in the plan horizon.
This increase will be mainly driven by the contribution of gas infrastructure, which will benefit from regulatory items for a total of around EUR 110 million, mainly from the WACC uplift on the back of the trigger mechanism. The effect of ROSS on transport is overall neutral over the plan horizon, as the positive effect from shorter time lag for D&A is offset by the fast and slow money effect, equal to 15-85% in the first two years, 2024, 2025, and 13%-87% in the following two years, 2026/ 2027. As it depends on the CapEx profile and the capitalization rates, fast and slow money has a positive effect in the first years of the plan and a reversal in 2027.
Finally, organic growth for around EUR 590 million, driven by the investments and the impact of the deflator, which account approximately 50% each. In terms of energy transition business, the contribution will increase to around EUR 140 million of... by 2027. The increase will come from the ramp-up of our biomethane platform, as described by Stefano, and the consolidation of our energy efficiency businesses. All in all, the energy transition business target a slight slowdown compared to the previous plan, due to a more selective biomethane platform development plan. By 2027, we will reach EUR 3.2 billion of EBITDA and EUR 2 billion of EBIT. Let's now look at the details of net income evolution on Slide 33. We project 4% CAGR over the plan horizon, starting from 2022, improved guidance of EUR 1.14 billion.
This will be mainly as a result of the sound EBITDA performance, as previously explained, partially counterbalanced by D&A increase due to the new assets entering into operation, the rise in interest expense, with the cost of debt increasing to 2.9% at the end of the plan. Clearly, we will actively look at opportunities to reduce it over the plan period. In terms of contribution from our associates, we project a slight increase over the plan horizon that will be mainly driven by TAP and the Italian associate performances. On the Financial Structure, Slide 34, we remain committed to keeping our balance sheet financially solid. Credit rating metrics are expected to remain with ample flexibility, with a threshold of our current ratings by Moody's, Standard & Poor's, and Fitch over the plan horizon.
In particular, leverage will remain well below the 75% Moody's threshold of net debt to fixed asset plus book value of associates, and FFO to net debt will be on average around 12% in the plan horizon. Average cost of debt is approximately 2.6% over the plan, which is 60 basis points higher than compared to the previous plan. We will continue to focus on sustainable finance, with a commitment to rely on energy financing, and an improved target of 85% from the current 80% of total funding by 2027, which is one of the highest in the sector. Moving to our portfolio of associates on Slide 35. Our main goal is maximizing the value creation from our associates by supporting their business and growth initiatives, also in the transition space.
Some of our associates went through a regulatory review, and we have a full final outcome in terms of WACC update for DESFA and Teréga for the next regulatory period. On TAG, we are progressing in the dialogue with the regulator to neutralize volume risk in order to reflect the change in gas flows. The new regulatory framework should start in 2025. We are also making significant progress on the energy transition side. In particular, European associates are moving forward with the H2 readiness assessment of their assets and achieving stronger traction for their initiative. As for the latter, projects presented by Teréga, DESFA, TAG, and GCA have been included in the PCI list, three for H2-related and two in the CCS segment, confirm the strategic role in the energy routes.
Falling volume from Austria were mitigated by a rising volume from Algeria and Azerbaijan, highlighting the diversification benefits embedded in our portfolio and the strategic position of our assets. The overall associates contribution in the plan increased by 7% to around EUR 320 million by 2027, mainly driven by TAP and our Italian assets with a higher level of visibility. Moving to Slide 36, we confirm our cluster presented last year, where we indicated as value enhanced industrial assets with direct or virtual connection to the Italian infrastructure, enablers of business optionalities, associates with no connection to our assets, providing and reinforcing market intelligence and business development potential, and in the last cluster, companies with a more opportunistic angle. In the last 12 months, we've implemented an active portfolio management across the three clusters to maximize value extraction.
On April 4th, along with the other co-shareholders, we successfully placed 5.7% De Nora shares via an accelerated book building with a market-friendly deal to increase free float and promote the stock re-rating. Last September, we successfully issued a bond exchangeable into Italgas shares, proactively leveraging on our participation to contain cost of debt while keeping voting rights and expected dividend flows. We are now exploring portfolio rotation opportunities with regards to Interconnector UK. We will continue to operate according this active portfolio management approach during the plan horizon. Moving to our financial targets, now Slide 37. 2023 full year, we confirm our financial targets while improving net income adjusted guidance to EUR 1.14 billion.
Now, looking at the 2024 outlook, CapEx will reach EUR 2.9 billion, mainly driven by gas infrastructure investment, which include, among others, the start of the Adriatic Line CapEx and mooring and connection investment for the second FSRU in Ravenna. Tariff RAB is up around 6% year-on-year at EUR 23.8 billion. We expect EBITDA of around EUR 2.7 billion, mainly driven by WACC uplift, deflator impact, ROSS effect on transport, and RAB growth. In terms of net income, we expect around EUR 1.18 billion, with EBITDA positive performance, partially, partially counterbalanced by higher D&A and financial expenses and lower contribution from associates. Net debt will increase to approximately EUR 17.6 billion, with an expected average cost of 2.6%.
Finally, at the end of the plan horizon in 2027, we see RAB growth of more than 6%, EBITDA adjusted growth of more than 7%, and net income adjusted CAGR of 4%, while keeping net debt at around EUR 19 billion, underpinning the financial strengths of this business plan update. Moving to dividends, Slide 38. As already announced, 2023 DPS will increase by 2.5%, at EUR 0.2820. We just paid the interim dividend of EUR 0.1128 per share. The solidity of this business plan update allow us to improve our dividend policy going forward. We commit to a minimum 3% annual DPS growth from 2023- 2027, from the previous minimum of 2.5%.
The sustainability of this dividend policy is supported by the regulated nature of our core business, the higher level of visibility of the plan, and the accelerated EPS growth. This reflects our commitment to a compelling shareholder remuneration while keeping financial solidity and flexibility. Now, let me hand over to Stefano for the vision and closing remarks.
Thank you. Thank you, Luca. Just few, couple of slides to, let's say, wrap up and provides you with the vision we have beyond 2027. Snam vision and investments are linked to the expected evolution of mix of gas molecules, that will need to be transported over time. The progressive shift from natural gas to other molecules, such as hydrogen and CO2, will increase the overall volume that need to be transported throughout our network. Firstly, because of the energy content of the hydrogen with respect to natural gas. We expect a coexistence of different molecules throughout our infrastructure in the next future, some green and some decarbonized in their end use, and we can accommodate and support this evolution in a very cost-effective way.
Rising volumes on different gases will underpin our long-term investment opportunity, opportunities, and drives the choice we already make today. On page, on Page 41, you have some numbers. I will provide this brief update of projection to 2032, which is consistent with the scenario I've just illustrated. The overall investment opportunities we can tap into will be very significant, even beyond the plan horizon, driven by the completion of the security of supply investment and by the decarbonization process throughout green gases. We have a sizable ongoing investment program to maintain world-class reliability, reliability, and resilience of our assets while reducing their carbon footprint. In addition, we invest to enhance their flexibility. A key word, flexibility, a key objective to secure a safe transition. Significant investments will be required to evolve the energy system towards a multi-molecule setup.
The level and timing of the investments in the H2 backbone and CCS scale-up will be addressed on the back of the evolution of the regulatory framework and the availability of grants and financial support, as well as demand, of course. We foresee investment of approximately EUR 3 billion per year beyond the plan horizon, with a mix more skewed to green and decarbonized molecules, as you can see, from 65%-80%. Let me now move to some closing remarks. In conclusion, this is an updated strategic plan where we will accelerate by 100 basis points the RAB and EPS growth. With an improved visibility as regulation is set and policies are evolving in line with our strategy to become a multi-molecule infrastructure player. This allows us to upgrade the shareholder return.
We commit to a minimum DPS, minimum DPS annual growth from 2023- 2027 of 3% from the previous 2.5, while keeping a solid balance sheet, a flexibility, financial flexibility. We will do this remaining committing, committed to reducing our carbon footprint in line with the Paris Agreement pathway, and we commit to a net positive impact on biodiversity by 2027. Full digitalization of our assets and open innovation efforts to stay in the forefront of technological advances will support our strategy. So then, thank you very much, and now we are open to your question. Thank you.
Thank you much, sir. Ladies and gentlemen, if I can-
So thank you. We start the Q&A session. We will start with a question from the audience here in Milan, then we will open the line to question live. And finally, I will read remaining question coming from the chat. So first? I kindly ask you to say your name and company name.
Thank you, Francesca. Javier Suarez, Mediobanca. Three questions. The first one is on the general outlook and your view for the gas infrastructure network in 2025, 2027, 2030 and 2040. I'm interested on a bit of elaboration on slide Number 7, on which you are showing an expectation for higher utilization of natural gas in 2027, 2025, 2027. That caught my attention. So if you can elaborate on why Snam does see a scenario in which there may be an increase in natural gas consumption, and the implication that this may have for you, and the security of supply, and the necessity of strengthen further the network.
Then your vision, I think that you elaborated in the at the end of your presentation, but vision for 2040 and maybe 2050, how do you see the Snam network contributing to the decarbonization of Europe and maybe providing with different molecules, and the interaction between competition or maybe collaboration between your project and the H2Med project that seems to have a very strong support from several other Southern European countries? That is the first question. The second question is much bottom-up in terms of your business plan. It seems that you have less of an accent of investment on new energy efficiency themes, and it seems that you are the word "being more selective" has been said several times.
You can elaborate on why do you think that the company has to maybe invest less on these activities, be more, selective, and the implication that this has for, your growth pace or profitability or any other consideration? And the third theme that, I think is the first time we are asking this, is the impact on your cost base that new technologies may have. During your presentation, there has been several references to, artificial intelligence and this kind of consideration that goes beyond digital transformation. Do you envisage a future during your business plan's length, in which your cost base could be significantly different as a consequence of all these new technologies? And the very, very final thing is on the output-based incentive from regulation, if you are including any significant contribution from them. Thank you.
I'll take the first two, three, and then I'll turn to you. First, comments on Page 7 on, in terms of gas demand projections. Of course, now is pretty complex to make projections. Of course, you have two different scenarios, and are those we were referred to. The first one is, let's say, business as usual with respect to the commitments and pledges that has been taken. According to the report from United Nations and IPCC, of course, this will project the increase in the, let's say, global temperature by 2.4 degrees, and that implies a certain level of gas consumption. That is the upper end of the projections we made.
Then, you have the commitment to reduce to 1.5, and to be consistent to the 1.5, you have the second line, that is the lower end of the range. Of course, the message was, we have a sizable difference between the twos, and we will be probably closer to 1.5 or in the middle of this range, and this will have, of course, an implications in terms of flexibility. And that's the reason why I stress the word flexibility. We need to regain flexibility in the infrastructure. Flexibility is the core value we could play with, to tackle with the energy crisis. What does it mean? We use the spare capacity on LNG infrastructure, we use the spare capacity on transportation via pipeline, and we use the spare capacity on the contracting, and that, and the storage.
Those were key fundamental aspects we could play with, but now we are running at 100% capacity. So we need to structure the infrastructure with respect to, of course, the development of the gas demand, but also regaining some of this flexibility. Because, as we said, we are running into some years in where the LNG market, global energy market, will be tight, and we will need to have some flexibility to that extent. So that is one point. So we need to redesign and redevelop the infrastructure with respect to the development of gas demand, but also some flexibility. That is essential to drive the transition toward the multi-molecule, because if we don't have this kind of flexibility in the capacity and infrastructure, we will not be able to take one of the pipes and rededicate it for hydrogen. Okay, that's...
In the short- term, the development of the demand, of course, will be impacted by several aspects. Of course, weather, climate is one point. Of course, weather, cold and during winter, it's one aspect. The second is, the progressive, let's say, reshaping related to the phase-out of coal production that is taking ground all across Europe, Italy first. The second is the recovery in the industrial production. Of course, we are assuming, and everyone is assuming, that, the current situation in industrial production, especially the one that marked 2023 with some slowdown in consumption, will take some bounce back into that perspective.
I think one of the other aspects that came clear from the COP 28 was, gas is definitely the transition vehicle for the energy transition, and that will shift some of the consumption from other fossil fuel sources into gas. So we need to prepare the infrastructure to cope with different scenarios, with the adequate flexibility, and that's the point. I think it's important, especially to have a multi-molecular perspective, as we can play with considering this, the position we play in the entire market. And here it drives me to the second question, is how we cooperate. I think what is important to understand is, in the chart we showed you, it was on Page 10, is this specific peculiarity you have.
You have one, let's say, part of Europe that is asking for sizable hydrogen, and you can't supply that demand only with one—a single corridor. So I see a clear complementary role between the southern corridors and the northern corridors to supply the entire volumes. And we are referring to Germany as core part, with their plans on the hydrogen consumption, but also the surrounding countries, because, of course, the other countries has to go throughout the decarbonization process. Of course, there will be some competition between the corridors. I mean, the Sout H2 Corridor will be, in some way, in a slight competition with H2Med Corridor. That, by the way, as you know, we are part of, through the subsidiary, Teréga. And this will be played on the transportation cost.
The more you can repurpose a pipeline, the better is your competitiveness in these corridors. But part of this will be played by, let's say, the hydrogen sources. And to that extent, I think that the complementary role between pipes and shipping will play another part of role, well, since Germany is pushing very hard on projects overseas for hydrogen green hydrogen production and through ammonia, for shipping it, and some of the Eastern Med and Middle East projects, that, by the way, are in the forefront of the development. Interaction, it's essential. I mean, the great advantage we can put on the table is the fact that we have complementary pipelines, and we stress the fact that with the Adriatic pipeline, we will have three corridors in parallel.
That is the core flexibility we can play with in the perspective. Of course, we will use it in line with the development of the demand. And I don't know if you take the point, the importance—I mean, when you have such long corridors, like the one that goes from Africa to Germany, with repurposing a sizable pipe, you have plenty of pipe line pack capacity. Line pack is the capacity you can store in the pipeline. So in building the new hydrogen infrastructure system, you don't have to devote, in this case, investments to build up underground storages, because first, you have the line pack. That can work also in a complementary way with the renewable generation, because instead of curtailing, you can convert and store in the pipes, the hydrogen.
That makes the complementary role, not only with respect to the other corridors or the other infrastructure, but also with respect to the renewable development production. And then I'll turn to you. While we have been more selective on some of the investments, well, I have to, let's say, be more precise. We have slightly reduced from 100 MW- 80 MW, the capacity on biomethane. Firstly, because we decided to have a spin-off of part of the assets that were part of the former portfolio, okay? That counts for 8 MW on the total numbers. Second, we have been a bit more selective in some investments.
Because of the interest rates, we raised the hurdle rate, and consequently, some of the investments that were not more were not competitive on the high single-digit return we expect from these investments, were partly cut off. Of course, can be recovered over time. Okay, but for the time being, we have been consistent with a certain return we expect from those assets. Whilst the energy efficiency platform is in line with the former business plan, with a significant, with a significant development. Of course, the big challenge in there is, let's say, reshaping the portfolio, having overcome the, let's say, Super bonus contribution that happened in 2022 and 2023. Please, Luca.
Yes, just, just to add up, basically, energy efficiency is still contributing a gross margin of between 19%-20% over the planned period, and the same amount of CapEx. There are some adjustment, in terms of how we count Italian GAAP vis-à-vis IFRS, given the nature of the business, but the amount of CapEx is almost the same to the previous plan. While the decrease, as Stefano mentioned, in terms of, you know, both CapEx and contribution, is in biomethane by 30% vis-à-vis the previous plan. For the, fourth question, in terms of impact on cost base, the fixed cost, like for like of this plan, increased by 2%, over the plan period vis-à-vis, basically starting and ending point, which compares with a 4% inflation rate.
So basically, we already are seeing a benefit in that respect. Labor cost increase in line with inflation, so we're basically making efficiency on what is, you know, corporate staff, and all the technology that we are putting, in terms of how we deal with transport and storage, the two largest businesses. I can give you some details about 11% of efficiency on transport OpEx per kilometer, and about 20% efficiency on storage OpEx per capacity.
So already we are experiencing this trend in terms of reduction of cost. When it comes to the last question, output-based incentives, clearly we have a very benign 2023, with some also 2022 contribution, because it will be in and around EUR 120 million of contribution for 2023. Then, we are targeting a range of between EUR 80 million and EUR 100 million over the plan. And that comes from the fact that we are losing some of, the output-based services on storage, and there are no reversal from previous years. But the target is to reach EUR 100 million of output-based incentive contribution by 2027.
Good morning. Stefano Gambini from Equita SIM. Three questions, if I may. The first regarding the situation of TAP. This company should double the capacity to import gas from 10 BCM- 20 BCM by 2028. We expect the forthcoming auctions for this capacity. Do you see a risk there? Because the trend of gas demand is declining in the last two years, so why the shippers then now take such long-term contracts to import gas and to clearly justify all the investments now we need on the network? The second is regarding flexibility. What is your view regarding the government, Snam's approach on LNG?
There are new projects that could arrive that are already approved clearly by other players. But in theory, this could be also interesting for you, because if I'm not wrong, recently the energy decree also approved clauses for types that should be similar to what you receive for your plant, for your vessels. The third question regarding the EUR 14.5 billion CapEx that you expect in the long run. Could you help us which part is for multi molecule and the green molecule, clearly, and need grants? In the plan that you just show, you have less than 10% of grants out of EUR 11.5 billion CapEx.
When we move towards, and clearly, you know, the green molecule, do you need... Do you think that now these investments are needed more grants, and if you see a risk regarding the visibility on this investment? Thank you.
I'll take the first two, and you take the last.
Mm-hmm.
About TAP. TAP, of course, we—as you know, we got the confirmation of the first, let's say, increase in the volumes by 1.2 BCM per year, and we will go ahead. Of course, the further developments in the capacity and the transportation is related to the development on the upstream industry first. Okay. Coming to your question, why should shippers take longer-term commitment? Of course, what I see—I mean, the perspective of TAP has moved from, let's say, Italian or Greece and Italian perspective toward more European perspective. I mean, in 2022, 2023, we have seen more than one bilateral meetings between Azerbaijan and European Union, and that plays a role because of the export capacity we have.
In the introduction, I mentioned that Italy has EUR 16 billion of export capacity, divided via Switzerland or Austria, and we will increase those 16 BCM- 20 BCM to have 10 + 10. Okay, of course, TAP has changed the perspective, moving from, let's say, final domestic destination to European support for the energy supply, thanks to the reverse flow we can provide. In fact, that is, cannot be put in connection with TAP, but if we look at the auctions and the capacity sold in the export, we have sold the entire 6.5 BCM for the next two years. Okay, so that is, I think, the perspective we have to look at. When this will come?
Of course, not in the short- term, because as I said, depends on the development on the upstream, so it's more located in the region of 2027, 2028 or probably 2030. And that, that is, I think, the outlook we can have. But I—coming to your question, the main four is having a different perspective. Okay? The second question was about the new possible projects on LNG. Yes, according to the energy decree, those possible projects has been recognized as strategic, so they will take benefit of the guaranteed 64% of revenues. This will not influence at all our two FSRUs. Firstly, because the Piombino vessel has been sold by 90% for the next 20 years, so it's done.
Ravenna will be put on auction this year, and by the first quarter, as I said, at least as a first auction. I don't see competition between those assets. Of course, to benefit from that capacity, we need to complete the Adriatic Backbone and add up the 10 BCM that the Adriatic Backbone will bring into moving from 45BCM-55 BCM on the Southern Corridor.
Regarding the last question on grant, clearly, the increase in investment, there are some grants, but the run rate of grants in the second part of the 10-year plan, let me say, is less than in the first part. Because we are basically envisaging EUR 150 million of grants in the first part, while in the second part, we are not envisaging any grants on the regulated part, while only supporting both CCS development as well as the hydrogen backbone, the H2 south corridor, for a total over the plan period of 10 years of less than EUR 2 billion. So the run rate is actually reducing.
Clearly, we will see what it comes out for both two businesses, CCS, and the H2 backbone, but it's an assumption which I think is conservative, and can actually we can let me say, pursue several type of grants at European and national level.
Good morning, it's Chris Moore from Carbon Tracker. I have three questions, too, please. A year ago, I think you talked about the structural changes in the Italian gas market with the fall in Russian gas imports, and you saw quite a substantial increase in your carbon and methane emissions. But I think you just talked this morning about a 55% reduction in methane emissions for 2023 and some new targets for 2027. Can you talk about whether that is just simply a higher base you're working from, or have you taken some new measures to accelerate methane emissions? Maybe talk a bit about that. My second question is the Ravenna project. Can you give us some idea of the industries or companies which are going to provide your raw material, your CO2, who the industrial clusters are?
My third and final question is, it's really for the CFO, if you can break out the CapEx plan for us, please, between maintenance and growth CapEx. Thank you.
Okay. The first one about methane emission detection, I have to say, is not a matter of larger base, but because the total volumes we transported is lower than the years before. Of course, we made more long distance, but the major contribution came from new practices, new equipments we have installed, new solutions we have deployed. The control room we are setting up is providing a strong support in having real-time data from the field, and therefore intervening and reducing and also some practices. When we make the maintenance works, we are, let's say, capturing the residual gas in the pipes and not letting it to go into the atmosphere.
That is a clear, let's say, best practice we have applied to improve the percentage of the emissions. That, by the way, as you said, we have increased in terms of targets to 65% by 2026, and the numbers we have achieved in 2023 are three years in advane with respect to the former targets. Last one for you.
The Ravenna project, you want to comment on the companies that we see that can actually deliver CO2, you know, from what is going to be-
You do it. You do it.
Okay. Bas ically, with regards to the Ravenna project, Chris, we start with a pilot, which actually is a single sourcing in terms of CO2 emission from one of the Eni refinery sites. The developments will come clearly from an upgrading, and we said at phase one, we reach 4 million tons, starting, you know, from 2026 as a feed date. In terms of the sectors that will contribute, you know, that north of Italy has basically more than, I would say, 70% of the industrial part of the hard-to-abate industries of the country. So you basically are looking at steel and cement companies in the region.
To that extent, we are actually, as Stefano said, starting a market test in the first quarter of this year to see how much they're willing to contribute into this project. I don't know, Stefano, if you want to-
Yeah, I just got much better your question. First, cement industry is core counterpart onto that extent, and we will announce very soon and say in a partnership with Heidelberg to that extent, just to quote a name that is, let's say, a news that will be announced in a week or 10 days. The second is with one of the major players in the waste-to-energy industry. As you know, waste-to-energy assets benefited in the past from free allowances and soon will lose them.
The third is, petrochemical industry, along with Eni, that he is of course, the largest player in the chemical sector in Italy. We have several others, and the first one that is cooperating, and will be, will be part of the first step of development is, a fertilizer producer. We, just to spot you, in the northern part of Italy, we have at least, four major, refinery and petrochemical clusters, one in Ravenna, one in Ferrara, one in Mantua, and the other one is in Venice, just to quote the largest. And you have, as Luca was mentioning, the large cluster of steel producer, in the area of Brescia. Those are the major, let's say, target. And we don't have to forget power generation.
Of course, according to the European Union, power generation should not be part of those industries that benefit from CCS. But as a matter of fact, since we will need those, some of those assets, I think CCS can be a feasible solution, and to that extent, the Po River host a significant part of the thermal generation on the north part of Italy.
For the last question, i.e., the CapEx breakdown between maintenance and development, you have in the annex, Slide 46. 40% is development, and 20% is maintenance, and you also have the breakdown by business per year.
Good morning to everyone, Federico Pezzetti from Intermonte. A couple of questions. I wanted to go back to a general question on gas volumes. I'm wondering, it's a bit of a difficult question, but is there a level of consumption of flows in Italy, a minimum level that would mean that the current infrastructure will be needed—would still be needed in the future? I know it's difficult, also taking into consideration that clearly hydrogen has got a different density. But I'm just wondering if there is such a level, if you... What's your thought around that? The second question is going back to TAG. You mentioned there is interest in reverse flow.
I think you plan to increase to around 10 BCM in the future. There's a new regulation upcoming. I'm just wondering what are your expectations and what you have included in your business plan as a trend in the contribution from TAG? And then a final question, quick one on taxonomy. If I remember, the storage is still excluded from taxonomy. I don't know if there's been any conversation in Europe, and you think that something could change in the future. Thank you.
Mm-hmm.
Okay, I mean, defining what is the minimum level of gas need to be transported to maintain the infrastructure is not a comprehensive way to, let's say, understand how you need to set up the infrastructure, because there are at least three other dimensions you, you have to bear in mind. The first one, you size the infrastructure not only on total volumes, but specifically on peak demand. And the more you, the more you have some cyclicality in the demand, the more you need to have the infrastructure that work, that goes with flexibility concept. The second is export. What is gonna be the role that export will play? Of course, in the projections we are doing, we are, let's say, keeping a range, okay?
Because depends on how the, let's say, balancing in Europe will move, and that is the second dimension. The third one is the capillarity, because you don't have the consumption that are concentrated in a single or two points, but you have the different points that need to be reached with the infrastructure. So you need to maintain a certain regional capillarity because you need to serve the different points of consumption all across the country. So that makes, basically, the say, the dimensions to define the appropriate size of the network. And to that extent, the very strong capillarity and the high peak demand we have in Italy because of the residential and industrial consumption, that makes the infrastructure more, let's say, round with respect to other situations.
When it comes to TAG, clearly, volumes in terms of imports are reduced dramatically from 14 BCM in 2022 to about less than 3 for 2020, basically 3. We are targeting, and there is clearly reverse flow bookings, which is healthy, at 90%, 80%-90%, as I said, up until basically 2024, 2025. In terms of contribution, we expect still negative contribution for 2024, and then starting a positive contribution from 2025 when the regulator will finally, I would say, issue the new regulations, which will avoid us to be exposed to volumes. But clearly, it's a conservative the same assumption, and we will define it once the regulation is finalized.
On the final questions, yes, storage is excluded from the taxonomy.
We are having several discussions not only on storage, on taxonomy, because clearly there has a lot of investment, which for us are, we call it transitional green, decarbonize investment. But, you know, I would say the interactions are difficult, because clearly these are, I would say, European-wide policies, and to reach the first agreement has been quite difficult. The revision, we will see whether there will be some opening, not only on storage but on other matters as well.
If I can add a single, additional information to my, to my answer. Thanks to the Asset Health Methodology and the substitution of pipes, we can progressively adapt the infrastructure, okay, deciding on the right sizing of the pipe. If you have to substitute a 42-inch pipe, and you see that the volumes have stabilized on lower level and peak demand requires certain capacity, you can then install a 28 inches pipe. So reducing implicitly and progressively throughout the, let's say, asset health substitution program.
Hi, good morning. Davide Candela from Intesa Sanpaolo. Thank you for taking my question. I have two question. The first one is on gas balances. Actually, it's a very short-term one. I was wondering if you can comment on which is the risk may be related to the long shipments related to the Red Sea situation, and which could be impact on also prices for the next year. I know that maybe there is no much pressure on the demand side, but the supply could be at risk. So just maybe if you can share your view about that. And the second one is on hydrogen and specifically on hydrogen supply.
I'm interested in this part because my feeling is that the need of the power system in terms of need of renewables and the flexibility might cannibalize the supply of renewable generation for the production of green hydrogen. So I was just wondering if you can share your view about that and in the context, of course, where the gas molecules and the electrons should collaborate for the transition. Thank you.
Okay, about the first question, I mean, I think, I think in the short- term, the Suez situation is not impacting significantly. I mean, the news that came out about the missing, let's say, arrival of one vessel from Qatar is not a sign of criticality. QatarEnergy has plenty of capacity on vessel for transportation of LNG in the short-term, so it can cope with the longer journey they have to take through South Africa. So, with respect to the Italian situation, European situation, I don't see major implication in the short- term because of that. Of course, we have to see in the long run, but in the short-term, I don't see, I don't see.
In fact, the prices, also thanks to the level of storages we have in Europe, are not reflecting any, let's say, expectation of shortage. In terms of what could be the development in 2024, 2025, of course, here comes back my point on flexibility. We don't have much flexibility in the, in the worldwide system, in the LNG. The additional capacity of LNG that will come on stream, expected capacity that will come on stream in 2024 is about 20 BCM, 20. That is very low. If you consider that the Asian consumption grew by 25 BCM only in 2023, 20 BCM of additional capacity is pretty short. So if demand will stay at current levels, okay, I see a certain tightness on the—to that extent.
Of course, mainly will depend on how the demand in Asia will go, European demand because of the weather. I mean, there are several aspects, but the point is, the system has not much flexibility, and we need to recreate this flexibility through new infrastructure. Okay. Otherwise, we have to implicitly consider volatility on prices as a component of our life for the next 2-3 years, and I think that's the point. Second question, I think need to be split in two parts. Of course, if you look at the Italian situation, the main use for the additional renewable capacity will go first for electricity consumption. But the more you install capacity, the higher is the percentage of possible curtailment.
Therefore, hydrogen can be a solution to store on long- term that electricity that might be cut off otherwise, because you don't have the full infrastructure to ship all this electricity from south to north. Of course, I'm starting from the, let's say, the point that the largest part of the renewable capacity will be installed in the south, okay? Where you don't have the largest part of consumption of electricity, so you need to ship the electricity from south to north. Okay, and the more you have the same quality of renewable solar, that makes the central part of the day more and more critical, okay?
And the way of storing on long- term, of course, short- term is batteries, but long-term means days, weeks, months, is converting into molecules that, by the way, are the cheapest to be shipped on long-term, on long distance. That is exactly the point when you look at North Africa. In North Africa, since you have to ship this green source of energy on long distance, it's much more convenient in terms of cost to convert it in molecules. So you don't have a clear direct competition when you look at North Africa. You might have, but I wouldn't say competition, because by definition, it's cheaper to deliver the renewable energy, but the green gases can be a vehicle for long distance, or first, a mean for storing that capacity that otherwise would be curtailed. Is that clear?
Okay, I think we got yours.
We do not have any other questions here, so I kindly ask to open the line for...
Okay.
Hi, I'll stand up since I'm back. Gonzalo Sanchez-Bordona from UBS. I have actually three questions and one clarification on the last point you made, which I thought was quite interesting. You used to, in presenting in previous strategic plans, your view on cost of long-distance transportation with hydrogen compared to other sources. I mean, you just said that you think this, the hydrogen transportation is the cheapest source. So I was wondering if you have some data on comparing that kind of transportation compared to, I guess, transporting electricity, and particularly thinking about North Africa to Northern Europe, which might be quite interesting on your side. And then three quick questions.
On your investments, I mean, the investments up to 2027, I think are quite clear. I'm thinking more beyond 2027, and particularly referring to the part up to 2032. First question here would be on, you have actually a decrease of CapEx in 2027 compared to 2026, but then ramping up on an average of EUR 3 billion. So I think if I got the number correct, it's EUR 1.7 billion 2027 and then up to EUR 3 billion. So I was wondering if you could provide some granularity on how you expect this ramp-up to happen, and in which specific parts of the business are you expecting the big step-up, which I guess it would be quite large.
Second question on this point is, I think probably we are still early stages, but I'm assuming that most of the hydrogen investments will be regulated. Most of this carbon storage and others on Biomethane and other technologies will not. But I would like to get your views on how, how did you see, not in the next five years, but maybe longer term, the business evolving? Whether you think it will be more of based on contract of contracted volumes over the long-term, or whether you will think—you think will be regulated in the same way as gas assets are. And then the last one, it's on the equity stakes.
I think it's quite clear what you think is non-strategic and could be disposed, but I'm thinking more of whether you could actually buy some or more stakes or increase your position in some of the stakes that you may consider strategic in the medium long- term. Thank you.
Okay, let's start with the first you made. I mean, we have made estimate on the transportation cost for through the Sout H2 Corridor, because, of course, we have a much more clear investment plan needed for it. Of course, it's an estimate in relation based on the, let's say, preliminary engineering we have developed, and the cost is in a region of EUR 0.4-EUR 0.6 per kilo. That is the cost we have estimated, and that is clearly, let's say, much cheaper, much cheaper than the electricity. But the point in the electricity is also, to ship it on a very long distance, like 2,000 km, you need to convert it into direct current. You can't transport it on alternating current, and therefore, you need to convert it in direct and then reconvert it in alternating current.
That makes 2,000 km, of course, not a feasible one. I mean, historically, if you take even the gas, I mean, the main decision has always been taken beyond 500km, 600 km. It's much easier, much more convenient to convert into molecules because of the losses, because of the technical aspects that makes. And because of the storage, you implicitly can have on live piping when you have pipes, rather than electric networks that don't have storage in itself. So these are these aspects. It's, of course, a matter of cost, but it's also a matter of management that makes things easier. I'll go to the second question. What, I mean, the tariff model was the second question, right?
Yeah.
I think, I think, we had a clear framework on the new German plan. They went for stamp tariff, third-party access, stamp tariff with a modularized accounting for depreciation, not to, let's say, implicitly penalize the first part of the period when you have lower volumes. So I think according to the conversations I had with some other colleagues from other countries, this is considered a well-balanced tariff mechanism. Of course, including the part related to the funding that is needed for supporting these investments in the first part of the period.
While, for CapEx, you know, while they go down in the last year of the plan, clearly all the security and supply CapEx is coming to an end in that period. So the ramp-up following is given by the fact that, in terms of only of dual-fuel compressor station, we move from 4- 19 over the plan. So that's a large increase of ramp-up in investment. And clearly, there is the H2 backbone, which we envisage to start from 2028 in terms of CapEx spending. Those are the two delta that bring us to have an average CapEx spending of EUR 3 billion on a yearly basis.
Then on the last questions, in terms of, you know, equity stakes, we remain, I would say, vigilant in what is happening across Europe, around, you know, potential disposal of regulated businesses. But clearly, we are already placed in, I would say, the most relevant corridors, so we will see whether there some opportunities might come up. As I said, we clearly have the financial flexibility to pursue acquisition, if clearly that brings value to our, to our business. The average financial flexibility over the first five years of the plan is north of EUR 2 billion, and this is calculated taking into account a lower percentage of 70% in terms of basically net debt to RAB plus associates. The limit is 75%.
And beyond the plan, I mean, beyond 2027, up until 2032, we are hovering in excess of EUR 2.5 billion of financial flexibility to that limit. So clearly, we have the possibility if we want to pursue inorganic growth.
Okay, so I would now open the line for the questions from home. Please.
Thank you very much, ma'am. Ladies and gentlemen, if you'd like to ask a question by audio, please press Star one on your telephone keypad. So that is Star one if you wish to ask a question. Our first question is coming from Maike Becker of HSBC. Please go ahead. Your line is open.
Thank you so much for taking my questions, and congratulations on a very detailed presentation, which always gives us great insight. So thank you for that. Can I sort of like one question, but have it in three sort of like sub-questions, really trying to understand the probability of the H2 backbone investment moving forward? Because I think that's sort of like the big question in the room that sort of like makes or breaks sort of like the long-term vision or plan. So the three sub-questions would be the following under that umbrella. So in your—in the second part of the 10-year plan, can you give us some sensitivity around this H2 backbone investment if your best-case scenario happens? Like, how many more investments should we expect?
If it's sort of like the worst case and it doesn't happen, where do we land? Just a little bit of a feeling. I think you already mentioned you are mid-conservative, but if you can give any more information around that, that would be really helpful. Number two is on the timing and visibility of moving forward. I think when we were on the call for the nine-month results, and that was not only you, also your peers, there was a sense that everything related to hydrogen was delayed. There was a lot of positive will and movement, but sort of like in the actual execution, there was a sense that things were delayed.
What are the important milestones in this project, where we say when this has happened, there is such a high visibility that it's going forward? So any sort of like timeline or sort of like important points would be very helpful. And the last one is understanding a little bit the political will, and maybe coming back to the question of the Suez situation. I mean, clearly a geopolitical risk with Russia's invasion of Ukraine has brought us where we are today, and it has catalyzed, I would say, European ambition to clearly move away from that source. You know, do you already hear or perceive in sort of like political discussions or any discussions, a similar dynamic that could arise from the Suez situation?
Because, again, we have a political risk situation that might or might not have long, long-term impacts on the European energy security, i.e., with the LNG deliveries through the Suez Canal. Which we could take to mean that local production or pipelines to North Africa, anything that doesn't use those routes, is becoming more attractive. So I was wondering whether there is already sort of like first views emerging in that direction. Thank you.
Okay. Let me try to give you some more flavor on how things are progressing on the development of the Sout H2 Corridor and the development of the entire value chain that, of course, has the Sout H2 Corridor as a piece. Let me be more practical. I mean, this Sout H2 Corridor has been endorsed and supported by the three core governments: Italy, Austria, and Germany, and that allowed to get the PCI first. We have a stream of meetings between governments and companies set up for the forthcoming months. We had the first in Berlin, hosted by the, let's say, Chancellery of Germany. The next one is gonna be beginning of March, already convened by the Chancellery of Austria, and will happen in Vienna.
And the third one is scheduled by the first half of the year in Italy. So this is—these are events that happens every three months, in where governments, companies, convene and discuss about what need to be done and how things are progressing. That is the first. The second is we have a strong cooperation and coordination within Bayernets that, of course, is gonna be interconnected with the new, let's say, net H2 network set up by the German government and the rest of the, say, the TSOs, that, by the way, are largely participated with Snam. So we have, let's say, a two-head, let's say, development led by Bayernets and Snam on one side.
And next, in the next days, a delegation will go to Algeria to discuss with the Algerian government on a track, and the Tunisian government, how things are progressing and how to make a point on that, and how should these two countries create certain opportunities to install and develop the production. Then we have the works that the different developers are doing with respect to the setting up the opportunities in those two countries to install large production. And I have to say that Tunisia and Algeria appear particularly attractive in terms of sources, because everyone, when thinks about Algeria and Tunisia, think about the sun. But they have several areas that have very significant areas with high level of wind production possible production. So that is another important piece.
These are just to give you a flavor on what is going on in these weeks, to provide you, let's say, a feeling on that. Of course, there is another part that goes with the regulation and incentive schemes. European Commission is, of course, doing their part with the Hydrogen Bank initiatives, and other means are expected to come at, let's say, domestic level. The fact that this project has been recognized as a PCI will open the window to get access to other sources of financing. Is everything clear and set up? Not yet, of course. In fact, with respect to your point about delays in the hydrogen development, we are setting up this initiative with the perspective of beyond 2030. Is not something that we expect to come in the short-term.
Also, because, of course, we need to see demand growing in downstream, we need to see the production ramping up, and we need to see this progressive switching or mixing. To that extent, what we think will be... we are convinced will play a key role and will take ground, more and more, is the blending. Blending is a quick win. You can have the first, hydrogen production can be mixed into the gas transportation at percentages that Europe has set up at 2% of global volumes, and this is a quick win, cost zero. And that's the first mean for decarbonizing, what I say, horizontally on all the consumption, with any implication on additional CapEx that need to be done downstream at this percentage.
And if you put this percentage on the global volumes of gas transported, you end up with large numbers of volumes of hydrogen, and that is, I think, the first quick win that can support the startup of the production of hydrogen. Political risk was the third one, right? I don't know—I'm not sure I've got the point.
You have one on sensitivity-
Yeah, you do. You do.
Which I can address. So basically, in terms of sensitivity, while we have an average spending of EUR 2.5 billion in the first five years, it's over EUR 3 billion in the second one, including the backbone. If you exclude the backbone, the average will remains in and around EUR 2.5 million, also beyond 2027. So I would say that, you know, this is basically an upsize opportunity if it materialize, and we think it's going to materialize for the reason that just Stefano explained. So the run rate will remain pretty similar, also beyond 2027.
About the political risk and implications that can have this, let's say, unstable situation we have, we don't have to forget that-
he largest part of the LNG that was landed to Europe because of the crisis, Ukrainian crisis, came from U.S. U.S., of course, is setting up a very, let's say, sizable plans for developing the export of LNG. So if, Suez remains a critical bottleneck in the situation, and I have to say, in the long run, probably this, I expect, is going to be solved. But in case, the main source will remain for Europe, United States on LNG. And, and, as you mentioned, the pipeline infrastructure, that, by the way, is very, very sizable. And Italy, to that extent, is in a very favorable position because it's the sole country in, in Europe that has, five different access points from five different sources.
And last but not least, we have one area that can play a role in the next future. That is the Eastern Med, of course, offshore Eastern Med, Cyprus offshore, Egypt offshore, Israel, where you have this large field called Leviathan, that has large capacity to expand the production and the export of LNG from that area. I don't know if I got-
Thank you.
Entirely your point.
Thank you much, sir. Our next question will be coming from Bartłomiej Kubicki of Société Générale. Please go ahead.
Very much. Good morning, and thank you for taking my questions. Just there are a few questions which would be rather technical, I think. Firstly, if you can explain or bridge the increase in net debt between FY 2023 and FY 2024. The EUR 17.6 billion you were pointing to in your presentation is quite above consensus estimates. I can imagine partially it's explained by higher CapEx, but there must be some other items which make it to be reconciled. Secondly, a little bit on the biomethane activities. If you can perhaps tell us, what are your EBITDA assumptions in FY 2027, as well as what is the level of capital employed at that time? Because as far as I'm concerned, you are supposed to sell those assets at some point, so just to have some reference points.
Maybe lastly, on your dividend policy, you are again pointing to a minimum dividend DPS increase per which actually could trigger year-on-year change at 3% level. You are deciding the dividend by, for instance, 4% in a given year rather than 3%. Thank you very much.
Fine. Okay, let me start with the first one. In terms of bridging, clearly, the CapEx increase is the most relevant one. You have, as you probably recall, a negative effect on working capital that needs to be absorbed in 2023. We have basically, for 2024, a free cash flow that is or an FFO, operating FFO of EUR 2.1 billion that needs to absorb in the region of EUR 2.9 billion of CapEx, and that what is driving basically an increase of debt from the EUR 15.5 billion guidance that you have for full- year 2023. Let me address also the third one on dividend policy.
Clearly, it's a minimum 3%, and according every year, the board will decide whether, you know, to use a minimum or increase it. We have a 4% EPS CAGR. The increase from the previous business plan is 100 basis points from the 3% we delivered in the previous plan. So we thought it was correct, according to our both financial flexibility metrics, as well as the increase to share this increase half and half with commitment to shareholders. Clearly, every year we will see whether, you know, 3% is a minimum or we can actually increase it. And then on biomethane assumption, I don't know whether you want to comment, Stefano.
No, I mean, the question was about what is the EBITDA we expect in 2027, that if I do recall correctly, is EUR 70 million, right?
Correct.
That is the total amount. Of course, those assets, as you know, will be, we need to reduce the stake in those assets down to the minority or even to zero, by 2027. Of course, it's something that we have considered in, also in the development of the new CapEx plan to get there with the best and most fitting asset base to see, let's say, the opportunities to get the best ownership on those assets. And of course, it's a point we have in mind clear. Of course, in the meantime, we have the option to use that biomethane for self-consumption, giving a clear contribution to emissions reduction.
Thank you very much, sir. Ladies and gentlemen, once again, if you have any questions or follow-up questions, please press star one. We'll now move to James Brand of Deutsche Bank. Please go ahead. Your line is open, sir.
Good morning. Thank you for the presentation. Or good afternoon, I guess, where you are. Just, but good morning to you in the U.K. Thank you for the plan. I had just a question on or a few questions on TOTEX. So firstly, I was interested in, kind of, what you're assuming for TOTEX incentives, whether there's anything in your plan that's incorporated into your profit guidance for that? And then secondly, maybe you could just update us kind of what the timeline is for the kind of different stages of the TOTEX regime to be or the ROSS regime to be introduced. And thirdly, if you're not incorporating anything into your plan, you know, how optimistic are you that that could be a significant driver of outperformance for you?
Thank you very much.
Okay, thanks. In terms of, you know, TOTEX, which is called ROSS, according to our regulator here in Italy, you can see on slide, you know, 24, already the ROSS base starts in 2024 for us, so this year. Clearly, those, you know, assumptions are included for this business plan and for the net income projection. As, when I comment EBITDA, I said that overall, the effect is neutral from 2023 to 2027. Because while you have a positive effect from the fast and slow money in the first years, where we assume 15%-25% for 2024 and 2025, and 13%-27% in 2026, 2027.
Clearly there is a reversal in 2027, given the amount of investment, as commented before, are going down in the last year. And the D&A, shorter time lag, of year one, is basically accreting more cash, but is not, you know, contributing, in terms of, EBITDA. So overall, the growth is coming from both, the new investment, for EUR 590 million, and, the impact of the deflator, which impacts, for almost half of this growth. And that's on, ROS. So that's the introductory phase in the first two years, and then, starting from 2026 and onwards, there should be the final ROS implementation, according to what our regulator said. I think your last question was about Alfonsine field. Is that correct?
Can we open James's line for a second?
Well, no, my last question was really, you know, you might, you might not be including anything in your EBITDA for, for ROSS. Obviously, we haven't got the parameters outlined yet, but, are you optimistic that it could be, I guess, from 2026 onwards, when the full regime is introduced, that it could be a significant driver of outperformance for you?
Yes.
Again, I get the answer is yes, but is there any? Is it just too early to kind of flesh this out at all? Or is there anything that you can tell us at this stage that would help us get more of a feel for what it could mean?
James, as I commented already, we are taking into accounting basically, ROS or TOTEX regulation for the plan starting in 2024. And while there is a positive impact in the first year, according to the fast and slow money percentage that I gave, this impact is neutralized given that the amount of investment earlier in the plan is going down to EUR 1.7 in the last year. Clearly, we have a benefit from higher cash conversion from the shorter time lag of recognized D&A, which goes down from T -2 to T -1 . And I can give you another element in terms of conversion. EBITDA conversion basically adds up 10 percentage points from around 75% in 2024, to more than 85% in 2027.
We are already seeing some positive benefit, but overall, it's a neutral contribution to our targets.
Next question, please.
Ladies and gentlemen, we have no further audio questions at this time. Thank you.
Okay, so I have received some quick questions from home in the chat or via email. So Jose Ruiz from Barclays is asking: What are our assumptions in terms of WACC in 2025 if we have a drop expected? Which is the associates where we'd expect higher growth over the plan horizon? And how much EBITDA do we expect beyond 2027 that will come from the investments already executed by 2027?
Okay, in terms of, you know, WACC assumption, you have, in the next Slide 44, 44, where you actually have a drop of around 30 basis points, for storage and LNG, expected, clearly, and, about 20 basis points for transport. So those are the assumptions, basically that underlie, you know, the plan. In terms of, contribution from, from associates, as I said, we have, basically, 2024, where, you know, overall contribution will go down. But, you know, we're targeting, EUR 320 million of contribution by 2027.
Here, the increases are clearly driven by a stabilization of, you know, DESFA and Teréga, according to the new regulation, a higher contribution of, you know, TAP, and a higher contribution from all the Italian associates, for, you know, 2027. The last one, sorry, Francesca?
The last one is the contribution of EBITDA coming from the investments done before 2027, that is going to be beyond 2027, if we have some investments that are not bearing EBITDA within the plan?
Basically, I mean, of the EUR 1.2 billion of investment that we are actually devoting to the energy transition, around EUR 350 million are not contributing into basically EBITDA and net income, you know, towards the plan, given that there is no regulation for some of these investment, and the majority is clearly driven by the CCS, you know, project. So you will have still a share of, you know, potential contribution beyond 2027 for some of this investment. But in the plan, this EUR 350 million do not bring basically contribution.
Okay, so we have a couple of questions coming from Emanuele Oggioni. The first one is on Edison gas storage deals. According to the Italian press, the valuation could be at premium to RAB. Can you comment? And the second question is: do we expect any antitrust issue on this potential deal? The second question is on TAG and GCA. Are the, What are our expectation in terms of regulatory review for those assets?
In terms of Edison's Edison storage, of course, I will not comment on the speculations that were on news. With respect to the antitrust, of course, we started this process, having done some pre-analysis made by our lawyers and getting from them a clearing. Of course, those are, let's say, preliminary evaluations that eventually will be subject to the process and therefore... That. But is, I think, one of the point we have to consider. Snam is managing according to the regulation and under the and the definition of the tariffs by the regulator, 93% of the existing capacity. Edison storage covers 6% of the existing capacity. So to us, this is a point that counts.
Okay. A final question comes from Alessandro Chiodini, is on potential hybrid bonds. We ruled out last year any interest in this instrument, and he's asking if we are of the same approach.
I mean, as I commented before, given the financial flexibility that we have, currently, we don't see the benefit of using such instrument also in this, I would say, high interest rate scenario. So with our projection, currently, we do not see the need of using that type of instruments.
I think, I think we missed one of the questions of, from Oggioni. That was on TAG and GCA, what we expect. I mean, discussions that are ongoing with the regulator, called E-Control, are on neutralizing the volume risk since 2025. So redesigning the tariff system, so to sterilize the volume risk and going toward a system that is more in line with the Italian regulatory system. That is, let's say, the method of discussion with the regulator, and I have to say that, the regulator shared the need for having this transition toward a more, let's say, stable, system. So the question now is how to design the tariff to that purpose.
Okay, we have no further questions.
Okay, then. Thank you very much to all of you that follow this presentation. We hope to have, let's say, used your time effectively. Thank you so much.