Good afternoon, this is the Chorus Call Conference Operator. Welcome and thank you for joining the Snam FY 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 an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Francesca Pezzoli, Head of Investor Relations of Snam. Please go ahead, madam.
Good afternoon, ladies and gentlemen, and welcome to the presentation of Snam FY 2024 Consolidated Results, approved by the board today. The presentation will be hosted by Snam CEO, Stefano Venier, and by Snam CFO, Luca Passa. In the presentation, Stefano will provide an overview of the strong financial and industrial results delivered over the last two years, the most relevant achievements on our ambition to build a pan-European multi-molecules infrastructure player, and key market highlights of the period. Luca will provide the financial performance overview, which has been remarkable as well, the emission reduction progresses, and the 2025 guidance. Back to Stefano for closing remarks, and finally the Q&A session. I will now hand over to Stefano.
Thank you, Francesca, and good afternoon, ladies and gentlemen. Over the past years, we made significant progress in strengthening security of supply while reducing our carbon footprint, leading the way toward a decarbonized energy system, and establishing the foundations for long-term growth and decarb opportunities. During this period, we conducted M&A activities coherent with our asset footprint to bolster a systemic approach to the energy system. Concurrently, we worked with our associates to support their growth and maximize their value, and implemented asset rotation aligned with our strategic focus on key energy corridors in Europe and the Med Area. We achieved a double-digit growth in an environment marked by fluctuating gas demand and prices, changes in gas flows, and rising interest rates. The energy market and geopolitical situation continue to be unsettled, emphasizing the need for reliable, affordable, and prospectively decarbonized energy supply.
These accomplishments were achieved while providing attractive remuneration to shareholders and maintaining full financial flexibility. Since the beginning of the energy crisis, Snam has achieved significant milestones and delivered remarkable results. On the operational front, focusing on national infrastructure, first, we have continued to develop and renew our network with a future-proof approach. Second, on LNG, capacity has tripled from 6 BCM- 19 BCM. The Piombino terminal and the Ravenna terminal have been set up, and additionally, OLT capacity has increased to 5 BCM from the 3.7 BCM, and soon we will follow the Adriatic LNG. Third, on storage capacity, this has been increased organically to 17 BCM thanks to enhanced performance driven by the new investments. With the integration of Edison's recently closed, the total capacity will reach 18 BCM, corresponding to more than 17% of the European capacity, of course, of the European capacity.
The Snam Group will operate 12 storage sites in central and northern Italy near main consumption hubs. Financial metrics show strong double-digit growth, with 2024 EBITDA up 23% versus 2022, or plus EUR 516 million, and net profit rising 11% despite the higher interest rate cycle. Capital expenditure has increased by 50% compared to 2022, three times the pre-crisis average of EUR 1 billion per year, totaling EUR 8 billion over the period between 2022 and. Disposal of ADNOC Gas Pipelines brings the total asset rotation to almost EUR 2.5 billion between acquisitions and investors. Despite the challenging condition, including a reshuffle of gas flows, we have reduced our Scope 1 and 2 emissions by a remarkable 28% in 2024 versus 2022. Page four. We are progressing on our strategy to build a pan-European multi-molecule infrastructure operator. Starting from gas infrastructure, the first phase works of the Adriatic Line have fully started.
Works are on track. We have upgraded export to Austria from 6 to 9 BCM per year and contracted more than 200 connections of new biomethane plants to our network. On storage, we have offered reverse flow services during winter season, and storage level is currently at 45%. On LNG, the regasification vessel BW Singapore successfully completed its mooring about 8 kilometers offshore Ravenna, in line with the planned schedule. Operations are set to start at the end of April. In 2024, approximately 150 LNG cargoes arrived to Italy, covering 25% of gas demand and providing large diversification, as one-third of the volumes came from the United States, one-third from Qatar, one-fourth from Algeria, and the rest from the rest of the world.
Moving on the other side on energy transition, renovated backlog reached EUR 1.4 billion, up 17% year-on-year, as the company is repositioning its business toward long-term energy performance contracts with public authorities and large industrial clients. On biomethane, nine plants won the tariff auctions launched by the GSE, about 20 MW, 100% of the plants submitted, and 14 additional were submitted in January. Outage to corridor and CCS were confirmed, as you know, as a project of common interest, and the H2 backbone was awarded EUR 24 million of grants in the last CEF, Connecting Europe Facility round. CO2 injection has been performing in Ravenna, and we are planning some further months of operation thanks to the very good performance posted. The project is set to become one of the world's largest CO2 storage sites as it moves to industrial phase.
On page five, let's now focus on two key strategic levers of our framework that are sustainability and innovation. When it comes to sustainability, we have a comprehensive approach fully integrated into our business operations. In 2024, we achieved several significant milestones. Let me mention some. We managed to greatly reduce our Scope 1 and 2 emissions and received the UNEP gold standard for the fourth consecutive year. Second, additionally, our capital expenditure was well aligned with EU taxonomy and sustainable development goals, accounting for 31% and 65% of the total, respectively, with the sustainable finance representing now 84% of the total. Third, we published our first transition plan, and we maintain our leadership in the ESG ratings.
We will propose to the next AGM the approval of an employee stock ownership plan for the period 2025-2027, enabling employees to invest in Snam and share long-term value generated by the company. Moving now to innovation, we have a dual-track approach focusing on proven and explorative innovation. In 2024, we have invested approximately EUR 100 million in proven innovation as the rollout of the asset control room continues and Snam Tec advanced analytics for predictive maintenance implemented. Our goal with this investment is to drive operational excellence and sustainability by increasing digitalization, the IoT deployment, and leveraging the use of AI. In May, we will present our first innovation plan aimed at addressing the strategic lever of transformative innovation, an ambitious moment of reflection on the future evolution of Snam's journey over the next decade. On page six, a quick summary.
In 2024, we have delivered an adjusted EBITDA in excess of EUR 2.075 billion, up 14% year-on-year. The adjusted net income at EUR 1.289 billion is well above the guidance of EUR 1.230 billion provided during the strategic plan presentation on January 22, mainly thanks to better-than-expected contribution of associates and lower financial charges. The investments at EUR 2.9 billion are up 31% versus 2023. This is a touch below the guidance of EUR 3 billion, as some investments in the Ravenna Breakwater slip to 2025. As a result, the tariff RAB reached EUR 23.7 billion. The net debt was EUR 16.2 billion, 2% ahead of the guidance, and financial ratios stand significantly below the rating agency's thresholds.
It will be proposed a final dividend distribution of EUR 0.1743 per share to the shareholders, meaning that combined with the interim dividend distributed in January 2025, brings the total dividend for 2024 to EUR 0.2905 per share. On the regulatory front, 2024 marked the first year of implementing the base ROSS, the regulation by expenditure and service targets for gas transport, resulting in a more positive cash conversion ratio. The WACC formula was updated, as you know, for the next three-year period, providing future visibility across all regulated businesses. Moving to output-based incentives, we have proposed three additional ones focused on service quality, asset resilience, and sustainability, and we will suggest the extension of the asset health methodology to storage.
On M&A, in December 2024, we successfully finalized the increase of our stake in Adriatic LNG to 30%, taking an industrial role in the asset and strengthening our position in the energy sector, specifically in the Italian territory. March 2025 saw the completion of two transactions. First, the acquisition of Edison Storage, further solidifying our footprint in the energy storage market, and second, the sale of ADNOC's stake to Lunate for EUR 234 million that will generate a 14.5% internal rate of return. This transaction underscores the strategic approach to our associate portfolio, focusing on key energy corridors, as I said, for Italy and Med. On finance, in 2024, we have issued our inaugural green bond, hybrid instrument, and SLB in Sterling. Global gas demand was up 3% in 2024, driven by Asia, while Italy demand was stable at 62 BCM.
Interestingly, European gas demand soared by 10% year-on-year in the period November-February, with low wind speed and low hydro availability as key driver, which led to a surge in gas-fired power generation. This confirms our view of the growing relevance of gas and storage in a less predictable power market. Let me now focus a bit more on gas supply and demand on page seven. With regard to gas supply and demand, Italian full year 2024 reached around 62 BCM, 0.5 more than 2023, broadly stable versus previous year. This was driven by civil sector up by around 3% due to slightly colder weather and to the end of demand containment measures in place at the beginning of 2023.
The thermoelectric sector down by 1.4% year-on-year, driven by rising hydroelectric production, plus 11.6 TWh, around 2.16 BCM equivalent, and increasing renewable generation, partly counterbalanced by increasing electricity demand and lower utilization of coal and other fossil fuels. The industrial sector substantially was in line. In 2024, around 25% of gas demand was met by LNG, despite reduced volumes due to the maintenance period on OLT and Panigaglia terminals. In early 2025, gas demand increased by 8.8%, driven mainly by a 20% rise in the thermoelectric sector due to the lower imports and decreased renewables, and a 4% rise in the civil sector due to slightly colder weather. Higher demand was met by pipeline and LNG growth, aided by the full operation of the OLT terminal, bringing to 30% of the import the LNG contribution in the first two months of 2025.
Now, I will hand over to Luca for an overview of the full year results.
Thanks, Stefano, and good afternoon, everybody. Let's now move to slide number eight for a brief overview of the key full year 2024 financial results. Adjusted EBITDA is up 13.9% compared to 2023, thanks to tariff RAB growth, the impact of WACC uplift, ROSS introduction on transport, and Piombino FSRU full year contribution. Adjusted net income stands at EUR 1, 289,000,000 , well above the guidance, mostly thanks to better-than-expected associates' contribution and slightly lower financial charges, despite slower decline of interest rates. Total investment is up by 31% compared to the previous year, a touch below our guidance due to a postponement of some investment related to Ravenna Breakwater.
Finally, net debt is EUR 16.2 billion, lower than our guidance of EUR 16.5 billion due to a slightly lower CapEx level already commented and the earlier-than-expected cash-in related to the Adriatic Line project REPowerEU grant. Moving to slide number nine, out of the total CapEx of EUR 2.9 billion for full year 2024, 31% is EU taxonomy aligned and includes, with regards to the gas infrastructure, H2 ready replacement, dual fuel compression station, biomethane plant connection, Ravenna breakwater, and the construction of our new headquarter. As for the energy transition businesses, 100% of H2 and CCS, a large part of biomethane depending on the plant setting out standards and energy efficiency, excluding generation. SDG alignment is instead 65%, of which the majority goes towards SDG 7, 9, and 13, respectively, affordable and clean energy, industry innovation, and infrastructure and climate action.
Specifically, investments related to the FSRU are aligned with SDG 7, as they promote affordable energy and enhance supply security in today's volatile scenario. Almost 50% of CapEx are development investments underpinning the industrial growth phase of the company. Let's now look in more detail at the RAB evolution on slide number 10. Our tariff RAB saw a significant increase in 2024, up 5.8% compared to 2023. This growth was mainly driven by CapEx and inflation impact. In particular, transport RAB benefited from investment related to the Ravenna-Chieti project, which involves Emilia-Romagna, Marche, and Abruzzo regions, as it aims to replace gas pipelines in areas affected by ground instability. In addition, investment related to the Piombino FSRU connection entered into the tariff RAB. Storage RAB increased thanks to the performance upgrading and maintenance investments, and LNG RAB grew as a result of the Piombino FSRU moving investments and RIDOC.
As for 2025, we confirm our tariff RAB guidance of EUR 25.8 billion, up 9% versus 2024, including around EUR 500 million related to the Edison Storage acquisition. Let's now move to full year 2024 EBITDA analysis on slide number 11. EBITDA for the period was EUR 2,753,000,00 , plus 13.9% compared to last year, or plus EUR 336 million. The growth is mainly attributable to regulatory items for a total of around EUR 244 million related to WACC increase for around EUR 177 million, and the ROSS effect, especially fast money, on transport for EUR 67 million. Regulated revenues increased for around EUR 162 million. Piombino FSRU that started operation from July 2023 and continued, deposited by EUR 51 million. In detail, the regulated revenues growth was driven by transport and storage revenue increased by around EUR 160 million, of which EUR 120 million on transport and EUR 40 million on storage.
The recovery of 2023 LNG extra revenues for EUR 29 million, another allowed OPEX mainly due to inflation. These effects were partially counterbalanced by output-based reduction of around EUR 41 million versus last year, mainly attributable to the storage service that in 2023 benefited from the 2022 short-term auctions and booked at the end of 2023, and by the expected phase-out of input-based incentives. The increase in gas infrastructure fixed cost, which is EUR 28 million, is mainly attributable to the labor cost in large part due to new hires and the labor inflation. Worth mentioning that considering the 2021-2024 period, our fixed costs have increased less than inflation on a like-for-like basis. The difference in other items includes provisions on gas infrastructure.
With regard to the energy transition businesses, the end of the super bonus incentive on energy efficiency drove its contribution to EUR 12 million, along with the consolidation of 8 MW of biomethane plants, with just marginally positive contribution, combined with the carbonization projects, led to a significant slightly positive contribution of EUR 1 million in 2024. Moving to page 12, in 2024, our associates contributed to the group net income by EUR 326 million, up 3.5%, of which EUR 234 million related to international associates and EUR 92 million to the Italian associates. In details, TAP inflation-adjusted tariff led to a slightly higher contribution compared to the previous year. In 2024, TAP covered 17% of Italian demand, maintaining its position as the second-largest import route via pipeline. The ongoing 1.2 BCM expansion is expected to be operational by 2026. Teréga performance is in line with expectations.
The year-on-year growth is due to an updated WACC and higher RAB increase, partially offset by higher OPEX. Worth mentioning that the new corporate tax recently introduced in France does not impact Teréga. Sea Corridor performance is broadly in line with the previous year, despite lower import volumes from Algeria, thanks to a better product mix. With approximately 21 BCM transported towards Italy, it represents the main supply source in 2024. This follower contribution is due to lower auction premium on LNG imports and exports to Bulgaria, moving back towards the historical trends after an extraordinary 2023. Despite this, Greek demand rose by 1.4 BCM to 6 BCM in total in 2024, driven by the coal phase-out with an increased power generation from gas. Greece is advancing in the energy transition, with DESFA as part of the H2 and CCS projects that were included in the sixth PCI list.
ADNOC performance is in line with expectations, as already commented, consistently with the clusterization presented in our business plan, which has closed the disposal of our minority stakes in the company, crystallizing a very compelling internal rate of return. Interconnector contribution remains in line with the early regulatory cap. The capacity is almost 50% booked until 2026. EMG performance benefits mostly from positive non-recurring items related to the previous years. The asset is operating above expectation and close to maximum capacity. Moving to Austria, GCA's performance has been impacted by lower bookings and, above all, higher revenues recorded in 2023, boosted by the recovery of the previous year's energy cost. Opposite trends for TAG's contribution that increased due to higher volumes from Tarvisio, coupled with short-term more remunerative bookings, and secondly, lower DNA, include a recalculation of the impairment allocation in the fourth quarter of 2024.
The new reference price methodology in Austria embeds volume risk stabilization from 2025, providing visibility for the period 2025-2027. Let's now move to net income analysis on slide number 13. Adjusted net income for the period was EUR 1, 289,000,000 , plus 10.4% compared to 2023, due to higher DNA by EUR 79 million following rising investments and EUR 20 million write-down mainly on gas infrastructure. Net financial expenses higher by EUR 110 million, mainly as a result of higher net cost of debt, which moved from 2% in 2023 to approximately 2.5% in 2024, driven by the increase in interest rates, partially counterbalanced by positive income from active cash management and optimization of financial sources. This was mitigated by the increase in capitalized financial expenses and the proceeds resulting from the time value effect on super bonus credits.
A higher contribution from associates, as already commented, which was the result of higher international associates' contribution for EUR 5 million and higher Italian associates for EUR 6 million. Higher taxes due to the higher EBT and tax rate increase from 25% in 2023 to 25.5% in 2024, mainly as a result of the termination of the so-called ACE Italian fiscal benefit. Reported net income for the period was EUR 1, 259,000,000 . The delta vis-à-vis the adjusted is mainly attributable to biomethane business for EUR 50 million, mostly related to charges for a settlement agreement amending previous agreements.
Charges related to the Austrian associates for the reimbursement of the 2013-2024 premium to volume risk exposure, partially counterbalanced by the adjustment related to TAG for EUR 27 million, mainly attributable to 2023 lower depreciation, insurance reimbursement related to OLT maintenance for EUR 17 million, and ADNOC discount rate effect for EUR 8 million. Despite the sale of our minority stake in ADNOC, whose 2025 full year contribution was expected to be EUR 25 million, we confirm our 2025 net income guidance of around EUR 1, 350,000,000 . The consolidation effect will be offset by several items, such as consolidation of Edison Storage earlier than initially expected, slightly better default on output-based incentives, and lower than expected net financial expenses.
Turning now to the cash flow on slide number 14, funds from operation for the period amounted to EUR 2,239,000,000 and were only partially absorbed by EUR 425 million of working capital. This was mainly driven by regulatory working capital with around EUR 400 million absorption due to the balancing and settlement activity, of which about EUR 230 million related to an increase in balancing item receivables, approximately EUR 230 million related to the cash deposits decrease due to gas price reduction versus 2023, around positive EUR 120 million related to the full service receivable decrease, and about EUR 60 million negative related to the settlement activity, and finally about EUR 45 million negative on tariff-related items. Net investment for the period amounted to EUR 2,681,000,000 , including around EUR 160 million of Adriatic LNG cash-out and around EUR 126 million of Adriatic Line grants prepayment.
Other outflows were related to the prepayments of dividends for EUR 946 million and the hybrid instrument cash-in for EUR 976 million, resulting in a change in net debt of about EUR 968 million. On slide 15, due to the earlier discussed cash flow changes, net debt increased to EUR 16.2 billion at the end of December 2024. The net cost of debt moved to 2.5%, while the fixed to floating mix stands at 81.19%. Sustainable finance reached 84% of committed financing, nearing the 85% target set for 2027. The goal for 2029 is now 90%. Snam has been honored with the prestigious Sustainable Issuer of the Year award by IFR, a leading global publication in capital markets, a recognition of the company's unwavering dedication to the energy transition and its adoption of innovative sustainable financial instruments.
Funding for the year was completed in September, with the issuance of EUR 1 billion of hybrid bonds, following EUR 2.3 billion of senior bonds successfully executed earlier in the year, including EUR 500 million of inaugural green bonds, EUR 1 billion of sustainability linked, and about EUR 750 million of floating rate notes. The last month of the year, we have been dedicated to pre-funding activities for 2025, with approximately EUR 1.5 billion issued in November in a dual tranche SLB format, being EUR 750 million at seven years and EUR 600 million at 12 years, further enhancing diversification of sources, while being the first Italian large corporate issuing on MOT, which is the Italian exchange for fixed income instruments. Finally, in December, EUR 4 billion of sustainability linked revolving credit facility has been signed, replacing existing pool facility of EUR 3.2 billion and EUR 700 million of bilateral RCF lines.
Significant steps forward were made in terms of sustainability disclosure. I'm now on slide 16. In October 2024, we presented our first transition plan, which outlines in a comprehensive and systematic way the company's objectives, actions, and resources aimed at driving the company's efforts towards a low-carbon economy system. As part of our climate strategy, we are strongly committed to reducing Scope 1 and 2 emissions, with a target to reduce them by 40% in 2030, 50% in 2032, and achieve carbon neutrality by 2040. Moreover, we are committed to reach net zero across all Scope by 2050. The risk assessment carried out based on long-term energy scenarios, providing the most recent outlook on the Italian energy demand, corroborates the resilience of Snam assets and multi-molecule business model.
We also sized the opportunity of the CSRD not as a compliance exercise, but as a chance to further improve our disclosure, internal processes, and organization. The consolidated sustainability reporting for the financial year 2024 represents a specific section of the management report and has been prepared in accordance with the legislative decree number 125 of September 2024 and the European Sustainability Reporting Standards. The document links relevant sustainability topics emerging from the double materiality analysis to relevant impacts, risks, opportunities, including policies, objectives, and actions. It comprises information related to the TCFD recommendation and the SASB and the oil and gas midstream sector indicators. Let's now examine the CO2 emission performance within our regulated target perimeter on slide number 17. Scope 1 and 2 emissions, which includes gas combustion, compressor station, and methane leakage, decreased by 16% compared to 2023 and over 28% from the 2022 baseline.
These achievements exceeded our expectations, and we have already surpassed the 2025 target. This was mainly driven by the methane emission reduction, down 16% from last year and 62% from the 2015 UNEP commitments and dispatching optimization. Additional unpredictable and not fully repeatable factors, like reduced use of the energy-intensive North African backbone, also contributed. Scope 3 emissions fell by 10% compared to 2023 and 15% from the 2022 baseline due to lower emission intensity in the supply chain and reduced emissions from subsidiaries. We will continue our efforts to reduce emissions, as outlined in our transition plan. I am now moving to slide number 18 on 2025 guidance. Based on a solid set of 2024 results, we confirm the guidance provided in the strategic plan presentation on the 22nd of January.
In 2025, CapEx will reach EUR 2.9 billion, mainly driven by gas infrastructure investments, which include, among others, the Adriatic Line, the Ravenna Breakwater, and biomethane connections. We expect EBITDA of around EUR 2 billion 850 million, mainly driven by RAB growth and the Ravenna FSRU and Edison Storage sites entering into the perimeter, partially counterbalanced by the WACC decline. In terms of net income, we expect around EUR 1,350,000,000 , despite the sale of our stake in ADNOC, driven by EBITDA performance, higher contribution from associates, partially counterbalanced by higher D&A. While on net debt, we have updated our guidance to EUR 18.4 billion, down from EUR 18.6 billion, including also Edison Storage cash-out and the ADNOC cash-in, with a stable net cost of debt of 2.5%. The dividend policy envisions 4% dividend annual growth, with a maximum 80% payout.
Now, let me hand over to Stefano for the closing remarks.
Thank you. Thank you, Luca. My closing remarks will be very short. I think in conclusion, this 2024 has been another year of growth and overperformance versus the guidance we released. Since the onset of the energy crisis in 2022, we have successfully managed the emergency by leveraging our assets and capabilities while paving the way for a more resilient energy system. At the same time, we have achieved significant progress on the delivery of our strategy to build a multi-molecule infrastructure and define very clear future strategic priorities to pursue. Our strategic framework has evolved over time, with the two business levers, gas infrastructure and energy transition, becoming increasingly interconnected and meshed.
Furthermore, we are promoting a pan-European multi-molecule vision across our portfolio of associates that makes Snam as the most important and the leader in Europe, not only because of the Italian assets, but also for the European presence we have. We enjoin strong visibility over future growth, and we can leverage on sound financial flexibility. This enables us to offer growing and sustainable shareholder return. Thank you very much for your attention. As a reminder, we will present the first quarter 2025 results very soon on the 8th of May. Now we are available to take your questions. Thank you very much.
Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one under touchdown 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 Sarah Lester Morgan Stanley. Please go ahead.
Thank you very much. I just have one question, please, and it's a high-level strategic question. As you talked a bit about in the presentation, we're seeing climate policy uncertainty and potential watering down of climate commitments around the world, and this has escalated since your January update. I am interested whether you see this as presenting upside risk for gas networks and potential upside risk to the longer-term gas network CapEx program for Snam. Thank you.
Hi. Hi, Sarah.
I mean, regarding the evolution around climate commitments, I mean, clearly we cannot comment on others in terms of actions, as well as what is the stance of regulators, both, I would say, this side of the pond and, I would say, the other side of the Atlantic. What I can comment to this clearly that, as you saw also in this presentation, our commitment is there longstanding and also, I would say, explain up until 2050. Therefore, for us, it is a commitment in reducing emission across all scope up until reaching basically net zero by 2050. Now, in terms of potential increase of investments, given a different approach from either countries or regulators, clearly we will assess what is the stance.
We do not expect in the area where we operate, which is Europe, being a pan-European operators, to have, I may say, radical changes vis-à-vis the trajectory which the European Commission and European Union has taken in the past. Therefore, for us, it is an opportunity clearly to continue investing in infrastructure which will transport more and more, I would say, green molecules in the next, I would say, few decades.
The next question is from Alberto De Antonio, BNP Paribas Exane. Please go ahead.
Hi, good afternoon, and thank you so much for taking my questions. I have two questions. The first one is on regulation. Maybe if you can update, how do you see the situation regarding the cross-integral regulation that, I guess, at a consultation paper should be published anytime soon?
What do you expect if you have a timeline and what are the conversations with the regulator? Also, if you have any further visibility regarding a potential change in the deflator. Thank you so much.
I don't know if I have much information to provide you with respect to these two points. Let me start from the deflator. As you know, the process has ended. Now the authority has to take its own final decision. We are all waiting to see what will be the final decision. As I said, I can reconfirm that the expectation is toward a shift from deflator to the European Inflation Index, and that's what we might expect. Just because there are strong fundamentals that support this type of swing. We don't have right now any further indication about the time when the authority will release this decision.
We hope it's going to be soon.
With respect to ROSS Integrale, again, we are expecting this first consulting document coming out in the next weeks or eventually months, a couple of months. It will be a more comprehensive document. We are waiting to see on how to, let's say, some of the issues will be addressed within this new document, this new version that takes also, let's say, the conclusion of the first year of application of the partial ROSS.
Thank you so much.
The next question is from Bartlomiej Kubicki with Bernstein. Please go ahead.
Hello. Good afternoon. Thank you for the presentation. Three maybe issues I would like to discuss and ask. First, you mentioned about the storage incentive asset health-related, sorry, asset health-related incentives on the storage assets. I just wonder if this is something new and it's already in your business plan.
How should we think about this in terms of size? Shall we look at this in the same way as we look at the incentives on your transport asset? Consequently, would it also lead to lower CapEx in the future because you will try to optimize the way how you are running the assets right now? Secondly, on the ADNOC transaction, if we look at the sort of implied PE multiple on this, it is below 10 times. I just wonder how would you defend this multiple and how shall we put this 10 times PE in the context of your associates' portfolio? Maybe the last one, if we look at this 10-year development plan, Terna published last week, they are talking about 40 GW of data center connection requests in Italy.
Just thinking, if there's indeed more data centers coming, if there's some kind of electricity consumption increase which will require more power production, especially from reliable sources, how do you think the gas assets in Italy will perform? I'm talking about, A, of course, gas-fired power generation assets and, B, consequently, what will be the impact on your gas network assets as well? Thank you very much.
I'll take the first and the third, and then I leave the second to Luca. The first one is on storage and the asset health. We haven't included the, let's say, the effects of the possible introduction of the asset health methodology to the storage simply because, as you know, there is a consulting document out from the authority, and we will put this proposal in this consulting document. The process just started.
I think it's important because what we deem is the fact that this methodology works very well for the transportation and for some of the investments we need to do on the storage, it can work very well as well in terms also in terms of return. Of course, this will be proportional to the asset base and the RAB related to the storage and the amount of CapEx we have for the substitution of some parts of those storage facilities. The discussion has already to start. It's just a proposal we're going to make. Therefore, given the uncertainty about the timing and the scope, we haven't included it in the business plan we just presented to the market at the end of January.
With respect to the Terna plan and the estimates about the demand of reliable energy due to the data centers, I think we only have two reliable sources. One is gas and the other one is nuclear. Whilst nuclear is in the planning of the energy policy of the country, I think in the meantime, the sole reliable is gas, combined cycle gas to banks. What is the implication on the transportation? I think we'll make the assets more needed for the transportation. I would say also more needed the storage capacity because as we have seen with rising demand and the higher penetration of renewables, the instability of the energy system becomes much, much more important. The sole solution we have for offsetting this volatility and maintaining the electricity system stable is to use the thermal generation via gas. This is something that you cannot schedule.
You need from one day to the other. If you can't rely on a very, let's say, sizable storage system, you can't have that gas available for the combined cycle gas turbine. That is the story we have seen in Germany. Partly we have seen it in Italy in February when the use of storage has increased by 22% year on year because of the larger use of thermal generation. I think the flexibility that gas pipelines and storage facility provides, combined with the thermal gas turbines, will make a difference to fulfill this additional demand. I don't know, frankly, what is the source of the estimates of Terna, but if the number is correct, I think it could be only a benefit for us.
Bartek, as for the ADNOC disposal, sorry, for the ADNOC disposal, basically, we, let me say, reason more in terms of what is the return for the investment. As you know, we entered this investment in 2021. We managed to basically recover most of our amount basically through dividends in terms of the investment. The option for us was either remaining invested with an internal rate of return of around 12.5% or selling to an external shareholder, although he is a local player, is the fund Lunate, basically making 200 basis points of increased IRR. Clearly, given that it is not a strategic portion for us, that is basically the decision that we made. Let me also add that clearly the cash flows of ADNOC are guaranteed for 20 years from 2021. Hence, we will be approaching, let me say, the end of the maturity in the coming years.
Therefore, we extracted most of the value. Let me also add that we made a capital gain that was in excess of EUR 120 million. Therefore, I think for us was the right basically option to choose.
Thank you very much.
The next question is from Marcin Wojtal, Bank of America. Please go ahead.
Thank you so much for taking my questions. I've got two. Firstly, given the recent increase in interest rates, could you perhaps indicate where do you see your WACC for 2026 based on a mark-to-market, if you could perhaps provide some indication? My second question relates to slide number 13. It is mentioned that there were some write-downs on gas infrastructure. Could you just confirm to what extent that was material and what is the reason for these write-downs? Thank you.
Okay.
For the mark-to-market that we run on a weekly basis, as you can imagine, with the interest rate volatility is basically now approaching 10 basis points lower than the current basically WACC. Therefore, very far from the trigger. Clearly, we are monitoring these variables throughout the year, but we do not expect clearly there to be trigger because we're going in the opposite direction, actually closing the gap to the current 5.5 on transport in terms of WACC because interest rates have moved, but also the country's premium has slightly moved. Therefore, in the right direction in the sense of confirming the existing WACC. When it comes to slide 13, the write-down that I mentioned was for EUR 20 million. Those are related to projects which started that from an ECB perspective were not deemed to be finalized.
Therefore, we decided to basically end this project, taking basically the heat this year. In terms of evolution of write-down, we do not expect to have further write-down in the coming years.
Thank you very much.
The next question is from Javier Suárez, Mediobanca. Please go ahead.
Hi everyone. Thank you for the presentations. Two questions remaining. The first one is high profile is on your latest view on gas demand evolution in 2025 and also your view on the current level of gas storage at 46% as we speak and how that compares with the historical average. This high profile indication on demand and level of storage could be appreciated. After the disposal of ADNOC, the company has maintained EPS guidance. If you can elaborate more on the offsetting factors that you are considering.
I'm particularly interested in your expectations for output-based incentives in 2020 and 2025 and if there is also consideration of lower financial expenses apart from obviously the cash in from the disposal. Thank you.
With respect to the projections of gas demand for 2025, of course, as you have seen in our chart, in the first two months, we have this 8% increase. I think we're going to see, let's say, a growth also in March. Probably with respect to the 62 billion cubic meters we had that we posted in 2024, we will end up a couple of BCM more than last year, two, three. With respect, and if we consider the storage situation, of course, there is a withdrawal, additional withdrawal on the storage reservoir during the winter because of colder winter, but specifically from more demand for thermal generation.
As far as Italy, as you know, we are 10% more than the rest of Europe. We are hovering around 45% as of today. What we do expect is to have at the end of the month when the winter season ends, a total amount of gas in the storage is around 3 BCM on top of the 4.6 bc that is the strategic storage capacity. Globally, 7.6 BCM -7.7 bcm. That means that with respect to last year, for instance, we will have to, let's say, fulfill the storages by a bit less than 3 BCM more than last year, globally around 10 BCM during the summer. This is the target to fulfill also the 90% fulfillment that is recommended by the EU. These are basically the numbers we have to deal with in the next summer.
Of course, for that, let's say, additional volumes, we can count on, let's say, the full operation of the OLT, as we said, because this facility is back on stream. This startup with some contribution from Ravenna and also, let's say, the right balancing in the different flows from pipelines.
As for the measures in order to offset the loss of income around ADNOC, first, we have a quarter still of ADNOC basically in 2025, which is in the range between EUR 5 million and EUR 7 million. Therefore, the three levers that I mentioned to recover the rest are clearly the consolidation of the storage. One month earlier than expected, we closed the transaction the 3rd of March for, therefore, higher consolidation for EUR 5 million. We expect better default output-based. In the guidance, we have EUR 85 million of output-based for 2025, of which the default part is only EUR 7 million.
Here, as you might recall, in 2024, we've done almost 20. Therefore, we think we can have a better performance on the full output-based. Then when it comes to lower than expected net financial expenses, besides the cash in, therefore, lower debt around the period, clearly we are working in order to basically reduce our net average cost of debt for the full year, which is expected to be 2.5%. Given the amount and the volume of debt we are expecting for this year, a marginal improvement recovers basically the rest.
Javier, I have also one information you asked me to answer that what was the average storage fulfillment in the last five years in Europe, it hovered in between 40%-60%.
Interesting. Many thanks.
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