Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Snam Nine-month 2024 Consolidated Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal the operator by pressing star and zero on the telephone. At this time, I would like to turn the conference over to Francesca Pezzoli, Head of Investor Relations, of Snam. Please go ahead.
Good morning, ladies and gentlemen, and welcome to Snam Nine-month 2024 Consolidated.
Snam. Please, go ahead.
Good morning, ladies and gentlemen, and welcome to Snam's Nine-Month 2024 Consolidated Results. Today's presentation will be hosted by our CEO, Stefano Venier, and by our CFO, Luca Passa. In the presentation, Stefano will provide an overview of the key financial and strategic highlights of the period and on the progress to deliver our ambition to become a multi-molecules infrastructure operator. Then, he will focus on the updated long-term scenarios, providing a summary of the key takeaways from our transition plan that was recently presented, a complementary integrated pillar of our strategy and action plan. I encourage you to take a look at the dedicated webinar on our website and the document which outlines Snam strategy, targets, actions, and resources to sustain the transition towards Net Zero and contribute to a lower carbon economy. Luca will then walk you through the financial performance, cash flow analysis, and financial structure.
Then, back to Stefano for closing remarks, and finally, the Q&A session. Let me remind you that the next appointment on the agenda is the Capital Market Day in the second half of January, with the updated strategic plan presentation covering the period 2025-2029. I will now hand over to Stefano.
Thank you, Francesca. Good morning also from me. Starting the presentation on page two, indeed in these nine months we delivered sound growth with adjusted EBITDA up more than 12% year on year at EUR 2,089 million, mainly thanks to the weighted average cost of capital uplift, the ROSS effect, and the RAB growth. Adjusted net income at EUR 996 million is up 6% year on year. Investments reached EUR 1.8 billion, up 46% with respect to the nine months 2023, and the net debt is at EUR 15.9 billion, with 2.5% average net cost of debt. We have approved the distribution of an interim dividend for 2024 set at EUR 0.1162 per share, reflecting a 3% increase compared to 2023. That is in line with our dividend policy.
The key updates of the period are, of course, the agreement with Edison for the acquisition of Edison Stoccaggio for an amount of approximately EUR 560 million, with closing expected by the first quarter of 2025. We have already obtained the Golden Power approval, and we will file to Antitrust shortly, I think already next week. The deal will further strengthen our industrial and strategic position while being an accretive net profit. With regard to Adriatic LNG, we have received on Tuesday the EU Commission DG Competition green light. It's a key milestone toward a successful closing of the transaction, which is expected by the beginning of December. We have successfully issued our EUR 1 billion inaugural hybrid instrument to finance the above-mentioned acquisition and relevant CapEx plan while keeping sound financial flexibility. We have presented our first transition plan, and I will provide more details in the following slides.
Now, looking at the gas market, global demand is up 3% driven by industrial recovery in Asia. In Italy, instead, it declined by 2.7% in the nine months due to the historically low thermoelectric production in H1 and the mild weather, while in Q3, it was 2% up thanks to thermoelectric and domestic demand. All in all, average gas prices were 20% below last year, but in Q3, they reached the highest level year to date, supported by tighter fundamentals and rising geopolitical tension. Now, moving to regulation, we have submitted our comments on the weighted average cost of capital and inflation consulting documents at the end of September. Before year-end, the regulator will define the parameters and publish the updated WACC for 2025, while the decision on RAB indexation will be taken by April 25.
We have published updated long-term scenarios on which I will touch base later, and the document prepared by the Ministry of Environment and Energy Security to guide the carbon capture regulation is expected to be published soon. While the Italian H2 strategy will be launched by the end of November, while the German Federal Network Agency approved the National Core Hydrogen Network proposed by the gas transmission system operators, entailing more than 9,000 kilometers of pipes due to go into operation step by step up to 2032 for a total investment of about EUR 20 billion. Now, moving to page three, we can say we are progressing on our strategy to become a pan-European multi-molecule infrastructure operator.
Starting from gas infrastructure, the first phase works of the Adriatic Corridor, the backbone to strengthen south to north capacity, have started in Sulmona for a compression station and in the segment of Sestino and Minerbio. All the contracts have been awarded, and the work on the other two pieces of this network is going on in parallel. On storage, the storage facilities are filled by 98.5%, with 14 BCM of working gas available, while the withdrawal season just started on the first of November. We are progressing with the Ravenna FSRU terminal works, which are completed at 80% on average. The asset is expected to be operational, and we can confirm that by the first quarter of 2025, with the floating unit expected to reach Italy by year-end.
In the first nine months, approximately 120 LNG cargoes arrived in Italy, covering 25% of gas demand and providing large diversification, as one-third of those volumes came from the United States, one-third from Qatar, and one-fourth from Algeria, while the rest from the rest of the world. Now, moving to energy transition. In August, the CO2 injection activity started in the reservoir for phase one of the Ravenna CCS project, the project that we are bringing on jointly with Eni, that is designed to support industrial decarbonization and will be the largest project for the capture, transport, and permanent storage of CO2 in the Med Area. Performance is doing very well, and we are capturing more than 90% of the CO2 in the final emissions.
Sonatrach, Sonelgaz, VNG, Snam, Sea Corridor, and Verbund recently signed a memorandum of understanding to conduct jointly necessary studies throughout the hydrogen value chain to assess the viability and profitability of an integrated project for the production of green hydrogen in Algeria in order to supply the European market via the South H2 Corridor. At the same time, the Tunisian government announced a sixth memorandum of understanding for the production of green hydrogen in Tunisia, which referred to the South H2 Corridor as a platform to get access to the same market. So, things are moving on. Renovit backlog is stable at EUR 1.2 billion, and on biomethane, nine plants out of 30 won the tariff options that are equivalent to 20 MW and with a success rate that is 100%, of which two plants will enter into operation before year-end.
Requests for new connections to the grid continue to rise and are up 23% year on year, getting to 320 so far, with 50% already accepted by clients. We have submitted more than EUR 250 million of grant requests to Connecting Europe Facility for our PCI projects that are South H2 Corridor and Ravenna CCS project. We also are working to submit a request of project of mutual interest funds for the piece of the Sea Corridor covering Tunisia and connection between Tunisia and Sicily since they are outside Europe. Finally, moving to sustainability, we can say that CapEx is aligned to EU taxonomy and SDGs requests, respectively by 30% and 50% of the total CapEx in the first nine months of 2024, while we continue to reduce our Scope one and two emissions.
For the full year 2024, we foresee a reduction by 20% versus 2022 after having reduced them by 10% in 2023, so doubling the percentage. We are confident to obtain the Gold Standard for the United Nations for the fourth year in a row with respect to the methane leakages reduction. Sustainable finance, by the way, reached 84% of the total, and I will provide more details in the next slides. Just moving on, page four, on October the 1st, we published the updated long-term energy scenario developed in a joint effort with the Italian electricity transmission operator. They outlined the evolution of the national energy system and underpinned the 10-year development plans for both electricity and gas. These scenarios are based on the most recent national and European policy references scenario, aligned with the Paris Agreement objectives.
In detail, 2030 is based on the last national and climate plan, so-called PNIEC. 2040 is based on scenarios developed by the European Network of Transmission System Operators for gas and electricity, so-called ENTSO-E and ENTSO-G. Distributed energy is marked by a significant adoption of electricity across all sectors, while global ambition projects the development of green gas-powered technologies and the wider use of molecules in the final mix. On the same slide, you can see the projected evolution of gas demand segmented by natural gas with unabated or abated emissions through CCS, bio and synthetic methane, and low carbon hydrogen. Natural gas demand, including biomethane, will stay close to the current level, approximately 660 BCM per year throughout 2030.
Some decline is expected to 2040, but still, volumes will be in the range of 45-50 BCM per year, and flexibility will be required while green gases demand ramp up. For the first time, we have also presented a directional energy mix evolution toward 2050, aligned with the 2050 EU Net Zero target. It points to 15 BCM of maximum potential of biomethane production, a carbon capture capacity of 30-40 million tons of CO2 per year corresponding to 15-20 BCM of abated natural gas, and 45-60 BCM of potential hydrogen volumes. On the back of this scenario just described, we have developed an extensive analysis to assess the usage rate of transport asset over time that you can find on page five.
The analysis considers a 45 BCM gas demand, including biomethane in 2040, and 35 BCM in 2050, according to the scenarios just commented, with a peak daily demand of 370 million cubic meters in 2040 and 275 million cubic meters in 2050. Three distinct supply and hydraulic scenarios have been simulated to assess the usage rate of these assets under peak consumption conditions for each scenario, as defined by European regulation on security of supply. On the back of our experience, as well as on other energy asset benchmarking, we consider 25% as a low utilization rate threshold for an infrastructure. Worth mentioning that the decarbonized electricity system is based on a relatively low utilization rate with intermittent renewables. The outcome of the analysis can be summarized as follows.
The sections of transport assets operating at low utilization rate represent today and in 2040 less than 1% of the Snam RAB. Average utilization rate for the remaining 99% of the RAB is 75% today and will be 55% in 2040. Looking more longer time at 2050 and assuming the repurposing of only 10% of the infrastructure to hydrogen to cover the core backbone, the average utilization rate will stay above 50%. The RAB referring to the low utilization rate will be limited to less than 10%, and it doesn't change even in a stress test sensitivity, which assumes no transit usage and no repurposing of the south-north-south backbone. Now, on page six, as mentioned two weeks ago, we presented our first transition plan, whose key highlights are the following.
With two businesses, gas infrastructure and energy transition, that are synergistic and progressively interconnected, our ambition is to become, as I said, a multi-molecule infrastructure operator. Our latest business plan envisages up to EUR 26 billion cumulative CapEx in the period of 2023 to 2032 to pursue our ambition. We will provide an update of our strategy and CapEx plan, as Francesca said, in the next January. Our assets, investments, and business model come out as resilient in the face of climate change. Physical risks are negligible thanks to the effective safeguards and asset structural characteristics, as 80% is underground. While transition risks are limited in the short to midterm to reputational risks, such as those related to the achievement of sustainability targets.
Over the long term, they intensify primarily due to gas volume decline, but at the same time, opportunities related to repurposing of infrastructure for CCS hydrogen, as well as the expansion of energy transition businesses, arise. In the document, you will find a detailed actionable roadmap on how we plan to reduce our carbon footprint across our operations and value chain in line with the Paris Agreement and to have a positive impact on nature. This is underpinned by a robust implementation strategy and a clear action plan based on existing technologies. Now, not only do we plan to reduce our footprint, but through our infrastructure and projects to enable the energy system decarbonization. We are involved in two large projects, as you know, on CCS and H2 transport that will materially contribute to decarbonization of our hard-to-abate and power generation sectors.
Now, let me hand over to Luca to dive into the financial results of the period. Please, Luca.
Thanks, Stefano, and good morning, everyone. We are now on slide number seven to comment on nine months 2024 EBITDA. EBITDA for the period was EUR 2 billion and 89 million, + 12% versus last year, or plus EUR 227 million. The growth is mainly attributable to regulatory items for a total amount of around EUR 182 million, related to WACC increase for around EUR 133 million, and to RAB effect on transport, the fast and slow money, for EUR 49 million. The regulated revenues increased for around EUR 125 million. Piombino FSRU that started operation from July 2023 and contributed positively by EUR 36 million to the nine months EBITDA results.
In particular, the regulated revenues growth was driven by transport and storage revenues increased by around 123 million EUR, of which 93 million EUR in transport and 13 million EUR in storage. The recovery of 2023 LNG extra revenues for 29 million EUR and higher allowed OpEx due to inflation. These effects were partially counterbalanced by output-based reduction of around 32 million EUR versus last year, mainly attributable to storage services that in nine months 2023 benefited from the recognition of the short-term options provided in 2022 and booked in the third quarter of 2023, and by the expected phase-out of input-based incentives. The increase in regulated fixed cost, 25 million EUR, is mainly attributable to labor costs in large part due to the labor inflation, the extension of the employees' health insurance, and new hires. The difference in the item idles is mainly related to the capital losses on gas infrastructure.
With regards to the energy transition businesses, the end of the Super Ecobonus incentive on energy efficiency, along with the consolidation of 8 MW of biomethane plants, drove to a slight negative contribution of EUR 6 million in nine months 2024. For the full year 2024, we reiterate our guidance of an EBITDA in excess of EUR 2 billion and 750 million. Moving to net income, I'm on slide number eight. Adjusted net income for the period was EUR 996 million, + 6% compared to nine months 2023, and due to higher EBITDA by EUR 58 million following rising investment and EUR 15.15 million write-down on gas infrastructure.
Net financial expenses higher by 75 million EUR, mainly as a result of higher net cost of debt, which moved from 1.9% in 2023 to approximately 2.5% in 2024, as an effect of the increase in interest rates, partially counterbalanced by the increase in capitalized interest and the increase in financial income related to the default service and related to the eco bonus. A lower contribution from associates, which was the result of lower international associates' contribution for minus 16 million EUR, and a substantially flat contribution of the Italian associates. Finally, higher tax rate due to the higher EBT and tax rate increase from 24.4% in 2023 to 26.1% in nine months 2024, mainly as a result of the termination from 2024 of the so-called ACE, Italian fiscal benefit, and the lower weight of associates' contribution on EBT.
For the full year 2024, we reiterate our guidance of a net income at approximately EUR 1,230,000,000 . Moving to our associates, and I'm now on line number nine. They positively contributed to the group net income by EUR 233 million versus EUR 248 million in the same period of last year, of which 69. Adjusted tariffs drove a significantly higher contribution compared to last year. In nine months 2024, TAP covered 17% of Italian imports in line with the same period of 2023. Works for the 1.2 BCM expansion are underway. Sea Corridor was broadly in line with the same period of last year despite lower import volumes from Algeria, thanks to a better product mix. With approximately 15 BCM transported towards Italy in nine months 2024, it still represents the main source of supply. Terega performance is in line with expectation.
The year-on-year decline is due to cost phasing expected to be reabsorbed by year-end. DESFA lower contribution is the result of the lower auction premium on LNG imports and export towards Bulgaria, now closer to historical trends. Moreover, DESFA recently signed a long-term EUR 810 million financing agreement, including RRF, the recovery and resilience facility in Greece, funding under the green and digital pillars to support the company investment plan aimed at the security of supply for Greece and the entire Southeast Europe region. On October the 1st, the Alexandroupolis FSRU of Gastrade, in which DESFA holds a 20% stake, announced the start of its operation. Gastrade will provide a new source of natural gas for Greece and Bulgaria and the Balkans. Regarding ADNOC, the performance was in line with expectation. Interconnector contribution remains in line with the yearly regulatory cap adjusted by inflation.
The capacity is almost 50% booked until 2026, thus providing medium-term visibility. EMG performance benefits mostly from the recording of positive non-recurring items related to the previous years. In terms of gas flows, EMG is operating above expectation. Moving to Austria, TAG year-on-year delta is due to the higher volumes from Treviso, from 2.5 in 2023 to 4.7 BCM in 2024, bringing with them higher short-term bookings that are more remunerative. GCA has been impacted by lower bookings and higher revenues recorded in 2023 to recover the previous year's energy costs. As already commented in the first half results, the new reference price methodology in Austria was approved and embeds volume risk sterilization starting from 2025, providing visibility for the period 2025-2027. For year-end, we expect a full year net income contribution from our associates in the region of just below EUR 300 million.
Turning now on cash flow on slide number 10, funds from operation for the period amounted to around EUR 1,668,000,000 and were only partially absorbed by the EUR 419 million of working capital. This was mainly driven by the regulatory working capital with around minus EUR 490 million absorption due to the balancing and settlement activity, of which 330 related to a reduction in balancing item payables, approximately EUR 250 million related to cash deposits decrease due to gas price reduction, around plus EUR 170 million related to the full service receivables decrease, and about EUR 80 million negative related to the settlement activity, all partially counterbalanced by about EUR 20 million on tariff-related items. Moreover, there were about EUR 190 million negative on energy efficiency working capital absorption driven by the trade payables decrease, counterbalanced by EUR 100 million positive of eco bonus fiscal credit decrease.
And finally, about EUR 140 million positive on net tax payables. Net investment for the period amounted to EUR 1,850,000,000 . Other outflows were related to the payment of dividends for EUR 938 million and the hybrid instruments cash in for EUR 989 million, resulting in a change in net debt of about EUR 664 million. Moving to slide 11, the change in net debt, as I said, amounted to 664, resulting in EUR 15,900,000,000 of net debt at the end of nine months 2024. The average net cost of debt moved to 2.5%, while the fixed floating ratio stands at approximately 70% - 30%. Sustainable finance and commitment financing reached approximately 84% thanks to the recent funding executed.
In terms of financing, during the third quarter, we secured EUR 1 billion hybrid instruments in September, reaching the lowest coupon on a crossover rated instruments in over two years, and EUR 300 million of banking facilities, including EUR 200 million of extensions. Thanks to the recent funding executed, financing needs for 2024 are now covered, leaving the remaining part of the year for potential opportunistic refunding activities. Moreover, we swapped to fix approximately EUR 750 million of floating loans, thus leveraging on recent reduction in interest rates and reducing financial charges volatility for 2025. We expect net debt evolution in the area of EUR 16.5 billion at the end of 2024 versus the previous guidance EUR 17.5 billion due to the effect of the hybrid instrument cash in that I mentioned before.
Based on the current forward curve, we expect the average cost of net debt for the full year to remain stable at 2.5%, which is better than what we budgeted at the beginning of the year, which was 2.6%. And now, let me hand over to Stefano for the closing remarks.
Thank you, Luca. There is not much I can add. Let me just try to summarize three, four things that came up from this first part of the conference. I would say that in the first nine months, we have delivered a solid growth, or I will also say even a bit ahead of our expectation, and we are well on track to deliver the full year guidance that was upgraded mid-year.
The CapEx plan will reach EUR 3 billion, driven by gas infrastructure investments, which include, among others, the start of the Adriatic Line and the mooring and connection investments for the second floating vessel in Ravenna, as I mentioned. Tariff RAB is up around 6% year-on-year, and we expect to reach EUR 23.8 billion. With respect to the financial performance, as Luca reminded, we reconfirm our guidance on EBITDA in excess of EUR 2 billion and EUR 750 million, driven by the reasons we mentioned, like the WACC uplift and the deflator impact, as well as the ROSS effect on transport and RAB growth. Adjusted net income guidance remains approximately EUR 1.23 billion . That is up more than 5% year-on-year. Again, as mentioned by Luca, we are updating our net debt guidance from EUR 17.5 billion to EUR 16.5 billion as a result of the hybrid issuance for EUR 1 billion.
It includes the cash out for the increase of the stake in the Adriatic LNG that, as I said, is expected next December, so all in all, we progress in delivering the implementation of our ambition. With our first transition plan, we have outlined updated scenarios, data, and analysis showing that our assets, investments, and business model are not only resilient in the face of climate change, but also key in transitioning to net zero with firm and achievable targets and actionable roadmap. We continue to look for value creation opportunities through M&A, like the Edison Stoccaggio and the Adriatic LNG facility. We aim at keeping a solid balance sheet and retain financial flexibility even after the recently announced acquisition to chase possible future other options, so then, thank you very much for your attention, and I leave the floor for questions.
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We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Javier Suárez from Mediobanca. Please go ahead.
Hi, good morning, all. Thank you for the presentation. Three questions that have to do with the strategy of the company. The first one is on the carbon capture and storage strategy. In this slide number two, you are mentioning that the preparatory studies should be published soon to regulate and support this national strategy.
So which are your expectations and where are the discussions on the creation of a regulatory framework for carbon capture and storage that could put Snam in a comfortable position? That would be the first question. The second question is related to hydrogen. The government has stated that it is working on the definition of a national hydrogen strategy. Can you help us to understand what are your expectations from that government national hydrogen strategy? And that certainly you are going to be involved. Which are your expectations on the timing and also on the visibility that we may have on the CapEx related to create these hydrogen value chains? And the third question is related to your scenario, energy scenario for 2040 and 2050.
If you are considering also or taking into consideration the possible development of a small nuclear reactor, I think that there have been several recent statements by the Minister for Energy saying or arguing that the contribution for a small nuclear reactor could be sizable by 2015 to the national energy mix, how that development of new small nuclear reactor may impact your scenario, the scenario to 2050 that you are showing in slide number four. Thank you.
Okay, let me start. Thank you, Javier. Let me start with the CCS.
As we said during commenting the H1 results, there were some working groups led by the Ministry of Environment and Energy Security to tackle with different issues, technical issues on how to regulate from the technical side the, let's say, transportation and segregation of the CO2. That is something that needs to be covered. And on the other side, on how to organize and create the, let's say, legal framework for operating this type of activity. The outcome of these working groups that involved several stakeholders, including us, will be published for a consultation, I think, by the end of this year.
What we do expect there, we expect the, let's say, setup of this new market consistently with the first, let's say, declaration that has been done with the separation between the activities of capture from transportation and sequestration, having this transportation and sequestration being in a sort of regulated way. That will leave ground for us to have a direct role on the transportation and in the fold, the project of creating a regional network from Pianura Padana. And on the other side, also be involved in the sequestration of the CO2 on the offshore depleted gas fields. Then, of course, it's early to say what sort of support or return will have those activities. This will be necessarily an issue that will be addressed also by the, I think, the national regulator that has to be entitled to address this type of topic.
With respect to the hydrogen strategy that has been announced by the minister to be released by the end of November, I think this will be primarily focused on defining the demand and developing demand and the possible supplies for this demand and the infrastructure that could best fit this type of development expected up to 2050. In terms of support, I think support already came from the government with the supporting letter for the submission of the request for the first funding that we did on CEF just a few weeks ago, and with the support we got from the government, the letter of support from the government for the application of the PCI that happened last year.
I think within this framework, what we do expect is this type of support will be reconfirmed in the perspective not only of the domestic perspective, but also on the, let's say, European perspective, because it's clear that the Adriatic Corridor is going to be an infrastructure created to serve the Italian market, but the German and Austrian market as well, primarily. Therefore, I think what we might find and we will find in this strategy is, let's say, a consistent framework within our project, the Adriatic Corridor will fit in. With respect to the SMRs and development, we have to say that this was part of the notes that were attached to the PNIEC plan. And what we might expect is that this type of production will cover around 10% of the Italian demand.
This is going to be, let's say, part of the mix of the renewable electricity sources that will not impact materially the scenario we have developed. That was part of our stress test we did, but doesn't change much the projections we have prepared, especially with respect to 2030 and 2040. If I may, just adding on the second one, in terms of our visibility on timing of CapEx deployment for H2, we will address this in the January CMD update, but also in the current plan, we were envisioned to start deploying some investment in 2028.
Thank you.
The next question is from Marcin Wojtal from Bank of America. Please go ahead.
Oh, yes. Good morning.
I wanted to ask you, what level of WACC do you anticipate for 2025 based on the mark-to-market exercise that can be done for the year ending September 30th and excluding any potential changes to the tax rate and to asset beta? Would you be able to share this number with us, please?
Hi, Marcin. Yes, no problem. I mean, the mark-to-market, you know that the observation period has ended at the end of September, is 5.5% for our regulation on transport, which clearly is the most relevant one. This assumes no change in the beta or no change in the tax rate. As you know, there are consultations there. And clearly, we have put forward our stance where beta for the gas sectors should not only decrease, but potentially increase in the tax rate as well.
Rather than decreasing, it could actually increase, but we will see what the regulator will decide before year-end. Let me just give you also some sensitivity. Even if the low part of the range on the beta and on the tax rate were used by the regulator, the impact will be 20 basis points only on the WACC, which the majority comes from the tax rate.
Okay, well, thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is from Bartek Kubicki from Bernstein. Please go ahead.
Hello, good morning. This is actually Bartek Kubicki.
Just a question on your guidance or the lack of increasing the net income guidance, because basically what you are saying today is that your associates will hit almost EUR 300 million in FY24, while previously you were guiding EUR 270 million. You are saying the net cost of debt is going to be around 2.5, whereas in your budget you had 2.6, but you are still not increasing your net income guidance. So what are we missing here? Thank you.
Hi, Bartek. You're not missing anything. I mean, we have a slight increase in financial expenses not related to debt. Before we were guiding for EUR 300 million, it's going to be about EUR 330 million. And the difference there derives basically from some capitalization as well as some accounting on the default interest rates that we are receiving. So that's really the difference.
Thank you.
So on the very, very last point, it means that you are not accounting anymore for the interest income coming from whatever receivables you have been booking, correct? This is what you mean?
No, no, no, no, no. Bartek, what I'm saying is that when it comes to default services, we have some deferrals outstanding. The assumption on interest receivables for the deferrals has decreased vis-à-vis the expectation. And that's why basically the impact is higher on the financial expected charges. But what I'm saying is these items are basically outside of our financial charges on net debt. So there are, let me say, items which potentially we might recover in the coming years.
Very interesting. Super. Thank you very much.
The next question is from Davide Candela from Intesa Sanpaolo. Please go ahead.
Good morning, gentlemen, and thank you for taking my question for the presentation.
I just have one with regards to the gas market. I was wondering if you can share your view about the supply-demand balance in Europe in the short term in view of the potential non-agreement between Russia and Ukraine. So how Europe could replace eventually those gas volumes and which could be the impact also on the LNG side. And on top of that, which could be the price pressure we may see or not in the first months of next year. Of course, it is the weather dynamics could impact, but just wondering what is your view and what are your expectations in these different scenarios. Thank you.
I think the first comment needs to be done with respect to the level of storage, the fulfillment of the storages. On average in Europe, this is around 95%.
In Italy, as I said, it's 98.5%, and that represents a very good, let's say, reservoir for in case of possible shortfall in the different sources of supply. That is the first point that secures part of the winter consumptions for Europe. Then we have to, let's say, really frame what volumes we are talking about, because with respect to the transit through Ukraine, the total volumes on yearly basis is around 15 billion cubic meters. And with respect to total consumption in Europe, that is by far higher than 300 billion cubic meters. So it's a part that can be covered, leveraging upon the LNG facilities that have been in place, that has been put in place in the last 12-18 months.
Let me recall the Alexandroupolis new floating vessel that started operations October the 1st that is dedicated to supply the Balkan area up to, let's say, Hungary. And the new floating vessel in Ravenna that can be a means to supply from south. And the capacity on LNG that is available on the western coast of north part of Europe. Those have appropriate flexibility to, let's say, offset this possible 15 BCM shortfall. Frankly speaking, I've heard that there are some intensive conversations between Ukraine, Bulgaria, sorry, Azerbaijan to see how to manage a possible postponement of this deadline. In any case, if those conversations will not end up in a positive conclusion that will extend this deadline, I think Europe has plenty of facilities right now to offset this 15 BCM of gas still flowing throughout Ukraine.
Very helpful. Thanks.
The next question is from Jose Ruiz from Barclays.
Please go ahead.
Yeah, good morning. And thanks for taking my questions. A couple of them. First one, if you can give us a kind of an estimate of output-based incentives for 2024, and what are your expectations for 2025 if they remain flat or there is something new here? Secondly, if you can give us, at this point of time, an initial forecast of gas demand growth for Italy 2025. And finally, on the energy transition business, I mean, you lost EUR 6 million at the EBITDA level. Can you give us a little bit of visibility what to expect in the near future, 2025? How long does it take the biogas projects to mature? If you can give us, are we going to continue seeing losses in 2025? Thank you very much.
Okay. Hi, José. This is Luca.
On the first one, when it comes to output-based for 2024, we are in a region for the full year of EUR 100 million, more or less. Bear in mind that we are already in nine months, close to EUR 80 million in terms of output-based. While for 2025, you should expect some kind of growth, but to be honest, we'll address this when we present the plan in January.
In terms of demand projections for gas consumption in Italy, I have to say there are, let's say, for 2024, there are some signals of recovery. As I mentioned in my part of presentation, we had a 2% increase in Q3, and also October did pretty well to that extent. We do expect the year-end to end in between 62 and 63 BCM, and for the next year, something in the same region.
Of course, mainly will depend on, as you know, climate conditions during winter and possible bounce back on thermoelectric production, given the fact that Italy has taken the commitment to get rid of coal production next year, so that should in some way increase the thermoelectric production to offset the current coal production. With respect to the transition business, yes, this year was a year suffering from the shortfall and the conclusion of the Super Ecobonus, and the biomethane business went through some, let's say, transition phase from the bioelectricity toward the biomethane. As I said, the first two, we have already nine plants approved for the repowering to biomethane. Two will be on stream by the end of the year.
The rest will be on stream next year, so giving a sizable contribution on the business, and we expect to fairly increase the performance next year and even more in 2026 when the large majority of those repowered plants will be on stream. With respect to energy efficiency, of course, this year was again a transition period for the business to, let's say, end up all the works that were related to this Super Ecobonus and relaunching some of the activities on the industrial, especially on the industrial and public administration activities. So next year, we expect, let's say, a sizable recovery in the performance with respect to the outcome of this year that again will be on the pathway of progressive growth we expect up to 2019.
As Luca said, we will be more precise in January when we will introduce the updated business plan up to 2029.
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