Good morning, ladies and gentlemen, and welcome to Snam 2025-2029 Strategic Plan Presentation. We appreciate your presence here in Milan or remotely. Our speakers today are Stefano Venier, Snam CEO, and Luca Passa, Snam CFO. The agenda will be the following: Stefano will discuss updates on the energy landscape, Snam response, key achievements, and strategic priorities. Luca will address the strategic levers, capital expenditure plan, financial projection targets, and dividend policy. Stefano will conclude with our 10-year vision and the closing remarks. Following the presentation, there will be a Q&A session. Analysts and investors will have the possibility to post questions live from here via phone or written format via chat, and in the latter case, I will consolidate and address all the remaining questions at the end. At the end of the presentation, you will find a comprehensive annex section covering key financial governance and sustainability topics.
The image featured on the front page is The Future Symphonist the winner of the Art Illustrators contest we launched. For the artist, it serves as a visual metaphor that embodies Snam's mission to transform the energy transport into a sustainable symphony, harmonizing technology and nature for a better world. Following today's presentation, we will spend two weeks in Europe and the U.S. to meet investors. As a reminder, all of Snam events, including the roadshow, will be sustainable, with carbon footprints calculated and emissions offset. In 2025, we have calculated the emissions from the events and compensated through Arbolia with 335 carbon credits. I will now hand over to Stefano.
Thank you. Thank you, Francesca, for the introduction, and good morning also on my side to everyone, and welcome to this third strategic plan presentation of Snam. First, let me address the energy context evolution over the past 12 months, with several developments in line with the expectations we shared with you last year as part of the building blocks of our 2027 strategic plan. In the next few pages, allow me to devote some time to share with you some further considerations and implications of our strategic development and the European energy system in general. The energy system equilibrium is inherently dynamic. The energy market remains unsettled, and not only for geopolitical reasons. This is reflected in the high volatility of power and gas prices that often influence each other, and it's exacerbated by growing global energy demand and tight supply.
In response, there is a growing emphasis on building resilient energy systems capable of withstanding geopolitical shocks and uncertainties. In fact, energy transition requires substantial investment in new technologies, infrastructure, and setup of effective regulatory frameworks underpinning attractive risk-adjusted returns to navigate the multifaceted landscape of global energy transformation while maintaining European competitiveness. Achieving net zero requires utilizing all available levers and technologies. There is now a broad agreement that about 50% emission reduction will come from energy efficiency measures and decarbonized and green molecules. Specifically, green electrons and decarbonized molecules are both crucial, and the energy system must become increasingly interconnected and tailored to each country's feature, with growing interdependence among Europe and the neighboring countries. Let me share some thoughts about the recent developments. Renewables are intermittent and not predictable by nature, requiring more balancing and leading to price volatility.
Dunkelflaute is a recurring German term that's gained popularity in the energy industry all across Europe. Described weather conditions where reduced sunlight and wind, and in some cases hydro, mean little or no energy can be generated from renewable sources. A Dunkelflaute period in Germany last November and December led to extreme price hikes in short-term electricity trading and a peak of gas fired production, more than 50% week on week. Moving on gas prices, they remain significantly above pre-crisis levels and exhibit an upward trend due to several factors, including the Russian-Ukrainian transit stoppage, the geopolitical developments in producing countries, and the rapid gas withdrawal from storage due to cold winter, the lack of renewable electricity supply, as I mentioned, and of course, the competition with Asian LNG terminals.
The power sector is not transitioning linearly, and gas is playing a crucial backup role in a system increasingly exposed to variability of renewable production. Renewable energy represents already more than 40% of European generation mix. Long-term storage and backup solutions are essential for addressing unpredictable shortages. Gas remains the most suitable immediately available option for this purpose. As a result, gas demand in the power sector has become more volatile and less predictable. Previously, peak demand was mostly met by flexibility offered by pipelines, given the spare capacity on the supply side of major EU suppliers like Norway and Algeria. However, since the beginning of the war in Ukraine, this has changed radically. With Russia out of the equation and Algeria and Norway operating at almost full capacity, LNG now covers 30% of EU demand, and it takes days to respond.
As a consequence, underground gas storages have gained a more pronounced balancing role. Management of these assets into an integrated and sizable perspective plays a strategic role for the domestic and European energy system security. This situation is prevalent across Europe and even more in Italy, where gas molecules account for more than 40% of the energy mix and are the primary source of dispatchable energy. After a period of decline, gas demand in Europe turned positive year on year at the end of 2024, driven by colder weather and flexibility required by the power market. Russian imports gained share in 2024, reaching 58 BCM, while LNG share, excluding the Russian LNG, declined from 39% to 31%. EU gas storage is still relatively full, but 72% at the end of 2024 compared to the 86% of the previous year due to the increased winter demand.
Nowadays, it stands at 61%, with Italy at about 70%. In 2024, global gas demand increased by 2.8%, with a more than 2% increase expected also for 2025. Given the Russian gas stoppage, delayed liquefaction projects, and development of Asian competition, gas market balance is quite tight in the short term. Looking at 2030, with global demand that, according to Rystad, a 1.9-degree scenario could grow at 2% on average per year. Markets will be balanced if LNG liquefaction projects meet their deadlines and we do not run into more disruptions. Future demand beyond 2030 varies significantly in different reference scenarios, not only in connection to coal phase-out, renewable development, and macro development, but also from factors like increasing building cooling needs, data centers, clean tech deployment, and electric vehicle predictability in terms of impact on energy demand and its profile.
Therefore, infrastructure redundancy and diversification remain a must to guarantee security of supply at affordable cost, with appropriate balancing throughout the entire midstream value chain, ready to host the green and decarbonized molecules for getting to Net Zero. On page seven, green and decarbonized molecules are rising to meet EU policy ambitions. Biomethane is a mature and sustainable alternative to fossil gas. According to the European Biogas Association, biomethane contributed to a reduction of approximately 15 million tons of CO2 equivalent in the EU in 2023. As outlined in the REPower EU Plan, the production of biomethane needs to accelerate significantly to reach the target of 35 billion cubic meters by the year of 2030. Decarbonizing some industrial processes, specific forms of transport, and certain agricultural practices remain complex and expensive. In these cases, technologies that can remove, capture, store, and eventually reuse carbon emissions become crucial.
As part of the industrial carbon management strategy, Europe has announced a target to capture 280 million tons per annum of CO2 by 2040, highlighting the importance of carbon capture and storage technologies for, again, getting to net zero. On July 15, 2024, the EU published the Hydrogen and Decarbonization Gas Package. This package updates the regulatory framework for the natural gas market. It also introduces new rules specifically for hydrogen infrastructure, and EU member states have until mid-2026 to transpose these new regulations into the national law. The ENNOH, the European Network of Operators for Hydrogen, has been established to promote the cooperation at the European level, fulfilling the obligations set out in the new hydrogen regulation. I would say this is even more important because both the Letta and Draghi reports clearly emphasize the critical role of pan-European hydrogen backbones in developing a competitive market at scale.
Finally, the hydrogen derivative market is very ample. Electric natural gas, or e-NG, is an option that does not require any change in the infrastructure we are building for gas transportation and depends only on competitive production under development. Let's spend a few words on where Italy stands. Italy is in a strong position when it comes to green and decarbonized molecules. The National Climate and Energy Plan outlines an estimated gas demand of about 58 BCM by 2030 in comparison to the 62 we had in 2024, of which 5 BCM coming from biomethane. Hydrogen and carbon capture and storage are also set to play a crucial role in achieving decarbonization targets. Biomethane shows a great momentum thanks to the support from national policies, which facilitates the conversion of existing biogas plants into biomethane production and encourages new projects.
The number of operating biomethane plants is rapidly increasing, with approximately 130 plants in the first half of 2024. That is 40% up from the end of 2023. At Snam, we have seen a significant rise in new connection contracts, which were up tenfold in 2024 compared to last year's average, guaranteeing the first step to two BCM per year. CCS is also gaining traction. A study by the Ministry of Environment and Energy Security about CCS development is expected very soon. Meanwhile, the Ravenna CCS project stands out as one of the most promising and advanced due to the proximity to the concentrated industrial cluster and its large reservoir capable of permanently storing over 500 million tons of CO2. As you know, injection activities began in August and are showing an excellent performance by capturing over 90% of the CO2.
There is a strong interest from industrial clients with more than 60 non-binding expressions of interest submitted during the market test we ran last spring, mostly from sectors like building materials, steel, waste-to-energy, and power generation. Significant progress has also been made in the hydrogen sector. This SoutH2 Corridor is not only listed as part of a project of common interest, but is also included in the list of the EU flagship projects for 2025 under the Global Gateway Initiative, and that was reaffirmed in the meeting we had yesterday morning in Rome under the Pentalateral coordination. Lastly, the Italian government has published the Italian National Hydrogen Strategy, which does represent a roadmap for hydrogen adoption, emphasizing the key role of infrastructure for a very competitive supply.
Turning now to the different scenarios we have adopted for preparing this business plan, let me refer to the, let's say, the long-term scenario that we published the 1st of October and that has been developed in a joint effort with the Italian electricity transmission operator, as shown on page nine. They outlined the evolution of the national energy system and underpinned the 10-year development plans for both electricity and gas. In detail, 2030 is based on the last national energy plan. 2040 is based on scenarios developed by the ENTSO-E and ENTSO-G, the European Network and Transmission System Operators. The first distributed energy is marked by a significant adoption of electricity all across sectors, while the global ambition projects the development of green gas power technologies and a wider use of molecules in the mix.
Italian natural gas demand, including biomethane, will stay close to current levels throughout 2030, and then some decline might happen by 2040, but still with volumes in a range of 45-50 BCM per year while green gases ramp up. We have also outlined a directional energy mix evolution toward 2050, aligned with the 2050 EU net zero target. It points to 15 BCM of biomethane production, a CCS 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 H2 volumes. You have all the numbers on the page. It's therefore clear how essential Snam infrastructure is to meet natural gas and decarbonized molecules' demand as it evolves over the next 25 years, with an intrinsic edge between different options to achieve carbon neutrality.
Consequently, on the back of the scenarios described, we have developed an extensive analysis to assess the usage rate of transport assets throughout 2040 and 2050, which we have introduced also in our transition plan. The analysis considers a 45 BCM demand in 2040 and 35 BCM demand in 2050 and simulates three distinct supply and hydraulic scenarios to assess the usage rate of these assets under peak consumption conditions as defined by European regulation on security of supply. On the back of our experience, as well as on other energy assets benchmarking, we consider 25% as a low utilization rate threshold for an infrastructure. The outcome of the analysis, as you can see on page 10, 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 regulated asset base we are managing.
The average utilization rate for the remaining 99% of RAB is 75% today, and it will be 55% in 2040. Looking at 2050 and assuming the repurposing of only 10% of the infrastructure to hydrogen, the average utilization rate declined to 50%. The RAB referring to 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, no repurposing of north-south backbone. So let me move to the second point in the agenda, and let me position for a while the Snam key feature and achievement over the past three years as a platform for the development of the projections of the next five years. First, I want to quickly remind you of our asset footprint on page 12. Snam is one of the largest critical midstream energy infrastructure players in Europe.
We manage the largest transportation, dispatching, storage, and regasification natural gas infrastructure and operate the most developed multi-molecule energy transition platform. Italy is unique in Europe, boasting 10 entry points evenly split between pipeline and LNG, five different gas sources via pipeline from northeast through Baumgarten, the southeast from Azerbaijan, the northwest through Switzerland and Germany, and the southwest through Libya and Algeria, plus five LNG terminals, with the newest one that is expected to be operational from April 2025, but what is key to highlight is that Snam's asset base extends beyond the major pipeline entry point due to our significant equity participation in TAP, in DESFA on the west-east-west route, TAG and GCA on north-south and vice versa route, and SeaCorridor on the south-north route.
With a vast network including 7,500 kilometers of backbone, we have a storage capacity of 17 BCM and regasification capacity that grew up to 19 BCM per year in Italy. These figures increase by up to 20% when you include the pro quota of our associates. The Italian tariff RAB for 2024 is set at EUR 23.8 billion, which rises to EUR 28 billion when including the associates' shares. Snam also boasts an energy transition platform focused on energy efficiency and biomethane with operations in Italy. Additionally, we are part of important European projects related to CCS and hydrogen development, which also involves some of our associates. We own a portfolio of associates through equity participation with a book value equal to approximately EUR 3 billion, with an intrinsic value that goes far beyond. On page 24, we try to summarize major achievements over the last three years.
As you remember, 2022 was marked by a turning point for the global energy system. The structural underinvestment in the sector, compounded with the aftermath of the war in Ukraine, has reshaped priorities, particularly in Europe, leading to an increased emphasis on security of supply. As Snam, we have evolved our strategy to adapt to this rapidly changing landscape and made consistent progress with short-term responses for gas security while laying the groundwork for a more resilient energy system. In 2023, we focused on reestablishing a balance among the three dimensions of the energy trilemma. We announced a EUR 10 billion five-year capital expenditure plan, a 23% increase compared to the previous plan, which included a wave of investment aimed at ensuring supply security. In July, we started the floating regasification unit in Piombino with a capacity of 5 BCM and a 20-year capacity fully booked.
The OLT LNG capacity has been increased by 30%. Simultaneously, we continued to develop our energy transition platform, building institutional support around the SoutH2 Corridor and completing the expansion and refocusing of our biomethane portfolio platform. In 2024, the five-year capital expenditure plan was upgraded to EUR 11.5 billion, primarily due to the Adriatic Line accelerated development, which commenced in May. The SoutH2 Corridor and Ravenna CCS project were confirmed as PCI, and on regulatory front, 2024 marked the first year of implementation Base ROSS for gas transport, resulting in a more positive cash conversion ratio. By the year end, the weighted average cost of capital formula was upgraded for the next three-year period, providing future visibility across all regulated businesses. Finally, significant progress was made on sustainability, highlighted by the presentation of our first transition plan. Since the beginning of the energy crisis, Snam has delivered remarkable results.
On the operational front, focusing on national infrastructure, we now have approximately 2,000 kilometers of our network certified as hydrogen-ready according to the ASME B31.12 methodology, and it represents 25% of the total backbone and provides a comprehensive overview of pipes' features in terms of age and operational conditions. LNG capacity, as I mentioned, has grown from 6 BCM to 19 BCM. Storage capacity has increased to 17.3 BCM, mainly due to the overpressure and enhanced performance driven by the new investments. With the integration of Edison Stoccaggio, whose acquisition is expected to close before April 25, we will add another 1.1 BCM of capacity in very strategic assets. Financial metrics show strong growth, with EBITDA up 23% and net profits rising 6% despite a significant increase in the cost of debt driven by the higher interest rate cycle.
Capital expenditure has increased by 56% compared to 2022 and is three times the pre-crisis average of 1 billion EUR per year. Despite the challenging condition, including a reshuffle of gas flows primarily from south, which are more energy intensive, we have reduced the Scope 1 and 2 emissions by a remarkable 25% in 2024 vis-à-vis 2022. We work with our associates to support their growth and maximize their value. Teréga, DESFA and TAG completed their regulatory reviews. As for Austrian associates, volume risk is removed from 2025 with significant contribution in terms of profitability, as we will see later. And we pursued an inorganic growth opportunity to strengthen our role as a critical infrastructure operator, increasing our stake in the Adriatic LNG to 30% and the acquisition of Edison Stoccaggio that I already mentioned. Thanks to the effective implementation of our strategy, we have strengthened our key distinctive factors.
First, a unique geographic position and asset base, which are a bridge between the Mediterranean and the EU, strategically located near the energy and natural resource-rich region of North Africa, and well connected to Central European demand for the energy security today and the transition of tomorrow. Second, our comprehensive presence across the entire midstream value chain that is a unique feature, featuring resilient, flexible, and cost-effective infrastructure. Asset Health Methodology prioritized investment on the gas network while our parallel and repurposable lines support multi-molecule transition, ensuring adaptability and efficiency. Third, over eight years of experience in building and maintaining critical infrastructure, consistently delivering large projects on time. Additionally, we hold an early mover status, a robust innovation program, and a strong energy transition platform focused on multi-molecule technologies. And now, let me enter in our strategy for the forthcoming years on page 18.
Last year, we unveiled our ambition, energy infrastructure for a sustainable future. Our ambition reflects our aspirations and where we envision Snam in the medium to long term. The effective implementation of our strategy aimed at building a pan-European multi-molecule infrastructure. The achievements reached the EU energy context evolution that I just rapidly commented led us to evolve our strategic frameworks to an even more integrated perspective. In the evolved framework, you see on, as I said, on page 18, gas infrastructure and energy transition are increasingly interconnected, leveraging on shared infrastructure as well as the pan-European perspective. The strategic levers of innovation sustainability remain unchanged and will be presented by Luca later on. How we deliver our ambition.
We plan to achieve our ambition by investing EUR 12.4 billion over the period 2025-2029, that are EUR 13.4 billion gross of grants, with EUR 10.9 billion allocated to gas infrastructure and EUR 1.5 billion to our energy transition businesses. A large portion of investments are directed toward gas infrastructure to complete the projects aimed at achieving a resilient, flexible, and sustainable energy system, albeit with a future-proof multi-molecule perspective. The increase in the energy transition CapEx reflects core projects such as SoutH2 Corridor and Ravenna CCS further progress. Of the total investment, 41% are aligned with Taxonomy and 58% with SDGs. This year, we decided to shift our strategic plan horizon one year ahead to accurately reflect our future five-year investment from 2025 to 2029. The growth rates we outline today will be based on the 2024 guidance.
Our investments are not only aimed at building a multi-molecule infrastructure for the country, but also at promoting this vision at European level throughout our associates and their investment projects that I will cover afterwards. On slide 20, an overview of our investments, 70% of which will be to create the infrastructure to deliver green and decarbonized gas molecules, 45% in H2-ready gas infrastructure, and 25% in emission reduction and green molecules. The remaining amount will go on LNG and supporting activities and ICT. We have included in the plan EUR 1 billion of grants in connection with the projects recognized by REPowerEU, PCI, PMI, and are eligible for grants. We already applied for CEF funds for both CCS and H2 projects.
This assumption has a very high level of visibility as EUR 0.5 billion, or 50% of the total, has already been assigned to Snam, of which EUR 0.2 billion cashed in at the end of 2024. Starting with the key projects related to gas infrastructure resilience and flexibility, we highlight several major initiatives. First, the Adriatic Line represents the largest gas transportation projects in the past decade, I think also across Europe, with additional 10 BCM per year along the south to north corridor to strengthen the flexibility of these flows. The project includes 400 km of pipelines and 33 megawatt compression stations in the center of Italy in a place called Sulmona, just to push the gas northwards. The project is divided in two phases.
You have phase one, is set for completion by 2026, compliant with the REPowerEU deadline, and phase two by the end of 2027, with total investment amounting to EUR 2 billion, net of EUR 375 million in REPowerEU funds already assigned. This expansion will also enable to increase the exports to Austria, reaching the 14 BCM by 2026. Significant investments are also planned for storage, particularly concerning the replacement of aging wells and workover interventions to enhance flexibility and performance in general. The BW Singapore regasification ship will start commissioning in the next months and, as I said, the operations by April, bringing Italian regasification capacity globally to 28 BCM and with respect to Snam, the 19 BCM that do represent 45% of the global consumption of the country in line with the European standards.
Regarding small-scale LNG, the construction of 50 K tons bio-LNG in Pignataro, near Naples, started and will be completed by year-end, and the 200 K tons of LNG truck loading facility in Panigaglia will start operations in the next months. Moving to emissions reduction and green molecules on page 22, key projects focus on installing electric compressors also to gain flexibility and responsiveness. The dual-fuel compression station initiative significantly contributes to our decarbonization goals, and we encompass six compression stations that will be commissioned during the planned horizon. Starting from June 2024, the authority has attributed us a central role in optimizing the execution of new connections, addressing the potential of the Italian biomethane and minimizing the system cost. Most of the new connections are in the regional transportation network.
Investing EUR 2.2 billion to replace approximately 850 km of pipelines, a bit lower than the previous plan. The asset health methodology helped us in optimizing the replacement, increasing our financial flexibility. Finally, our CapEx plan enjoys some flexibility as we can redirect up to EUR 0.5 billion of investments from gas to hydrogen infrastructure or CCS projects if returns are visible and allow this kind of decisions. Also, thanks to the investment made and planned, we are proposing a comprehensive new set new range of additional output-based incentives focused on service quality, asset resilience, sustainability, and furthermore, we will submit the request to extend the asset health methodology also to storage. To prepare for a multi-molecule midstream, it's essential to coordinate efforts for the integration of new technologies and development of technical standards.
Snam is actively participating in relevant working groups and collaborating closely with industrial experts, as shown on page 23. First, we are working on hydrogen readiness for infrastructure, including materials, components, and storage. Beside midstream, we are collaborating on projects for H2 production and usage like steel production with Tenaris, De Nora. We are building H2 Shift, a testing facility to demonstrate and validate hydrogen production technology from biogas and biomethane. And this is unique worldwide and will serve technology developers from all over the world to test their new technologies. As for CO2 infrastructure, we are contributing to shape European technical standards and putting our expertise available to the Italian public authority with national transportation rules expected in 2025. And jointly with Eni, we are learning from the real world of injecting into depleted gas fields.
Being on CCS, let me focus on page 24 on the developments we are projecting. CCS is rapidly progressing. Technical rules for transportation and storage of CO2, as I said, should be out soon, while the legislative regulatory framework will be established by 2025-2026. The CCS project in Ravenna aims to develop the largest offshore open access multimodal CO2 hub in the Med area with dedicated onshore transport infrastructure and liquid CO2 receiving unit. Transportation and injection activities are ongoing, as you know, up to approximately 25 K tons of CO2 from Eni natural gas treatment plant in Casal Borsetti and piped into the offshore platform and injected and stored in depleted gas fields.
Over the coming years, phase two will expand the project to industrial scale with the capacity to store up to 4 million tons of CO2 by year 28-32, in line with the Italian National Energy and Climate Plan. An estimated EUR 200 million of equity injection is envisaged for H2 for CO2 injection and storage on venture with Eni and approximately EUR 300 million of net investment in the domestic CO2 network, including the 15 kilometers of existing lines repurposed. The final investment decision will be made by the end of 2026, subject to the adequate return and consistent regulatory framework. The project is expected to start generating revenues toward the end of the plan.
Further potential developments are the establishment of a virtual corridor where CO2 could be shipped in liquefied form, expanding the client base not only to the south of Italy, but also neighboring countries, and firstly, France and Greece. Finally, with which we are, of course, some conversations ongoing. Finally, we are considering the participation in the Eni CCUS vehicle to gain exposure to a broader portfolio of projects complementary to Ravenna one to capitalize also our own experience. Snam is leading also the development of Europe's hydrogen infrastructure. We are focused on the Italian sections of the SoutH2 Corridor, a 3,300-kilometer hydrogen dedicated pipeline that will connect North Africa to Italy, Austria, and Germany, anticipated to be operational by the early 30s.
This project involves the collaboration of three other transmission system operators, TAG, GCA, in which we have a stake, and Bayernets on the north side, and the SoutH2 Corridor where we are in the North Africa interconnection. It has received an endorsement from the institution not only yesterday, as well as from companies across the entire value chain. It is one of the key hydrogen corridors to Germany, probably the front runner, which is the most advanced European country in terms of hydrogen development and is the most cost-efficient due to its extensive repurposing of existing backbones. Our plan includes EUR 400 million of gross investment related to the first phase of the backbone, for which the final investment decision is expected in 2027, subject to the adequate returns considerations and coherent regulatory framework. The investment return extends beyond the planned horizon.
In the biomethane, we are promoting and optimization of the integration of plants into the network, as I said on page 22, and establishing a robust production platform with approximately 40 megawatts of biomethane and biogas plant operational at the end of last year. Over the past three years, we have optimized our production portfolio by rationalizing waste assets and focusing on agriculture feedstock plants, reducing, at the same time, the operating costs. Regarding production, the Italian biomethane decree provides an attractive semi-regulated regime that relies on PNRR funds to cover part of the capital expenditure and offer a 15-year feed-in tariff that is adjusted for inflation. We successfully secured nine new projects in the auctions in 2024, and we have submitted additional 14 projects in the auction that happened mid-January.
Our platform holds a leading position with a concentrated presence in the northern part of Italy, and our plan includes EUR 350 million in gross investment to achieve approximately 78 megawatts by 2027, primarily through the upgrade of the biogas plants, in general 25 of them, with only two greenfield projects. We expect about EUR 70 million of EBITDA contribution at the regime by 2027, same year in where we assume the deconsolidation as mandated by the regulator due to unbundling rules. Energy transition. That is the last part of the energy platform. Over the past years, we have developed a significant presence in energy efficiency. Renovit, the name of the company, the B Corp company in which we hold a 60% stake, has emerged as one of the top five integrated players in the Italian market, and it retains a market share that is higher than 5%.
In the past three years, Renovit completed more than 1,000 renovation projects for a total value of EUR 2 billion, and it has and retains EUR 0.8 billion of Super Eco bonus credits, which it plans to use through Snam's fiscal capacity primarily in between 2025 and 2027 over the next three years. Looking ahead, the strategy involves shifting the business portfolio toward industrial clients and public administration, taking advantage of Snam's extensive national presence and solid balancing by focusing on energy performance contracts. The objective is to increase the overall backlog coupled with long-term duration, enhancing the total value from EUR 1.4 billion in 2024 to EUR 2.7 billion by 2029, with an average duration of 11 years. Let me finally come back to the pan-European perspective on page 28 to tell you more about what is going on the different associates.
Our associates benefit from solid and visible businesses along with the energy transition opportunities. They are instrumental to 85% of gas flows transiting to the domestic entry points and support a multi-molecule evolution along major EU corridors. TAP and DESFA supply gas from east to Italy and central eastern Europe, enhancing the energy security post-Russian import containment. SeaCorridor represents the first Italian import route, and through our infrastructure and the export capacity, it contributes to Europe's security of supply. It is also part of the SoutH2 Corridor, as I mentioned, and in September 2024, gained the support to Algeria to submit the PMI proposal. Our associate Teréga is part of the H2MED project, linking the Iberian Peninsula's hydrogen network to northwest Europe. We have a leadership in multi-molecule storage. Teréga and DESFA are working on CCS projects called by the names of Pycasso and Prinos, respectively.
dCarbonX is originating and building a portfolio of subsurface assets offshore Ireland and the U.K., with a focus on energy storage for natural gas and hydrogen, while Storegga focuses on CCS mainly in the U.K. or in Scotland, to be precise, and the U.S. Being involved in this project and corridors has a dual strategic meaning for us. On the one hand, we can leverage our technical, financial, and institutional expertise to support our subsidiaries in their development journey and to promote a multi-molecule strategy for and with them. On the other hand, it gives us a broader perspective on the increasingly interconnected energy market and its evolution all across Europe. Now, let me turn to Luca for the final part of this, let's say, strategic introduction and the financial projections. Thanks, Luca.
Thank you, Stefano. You can now take a breath.
Just to set the expectation, my part is less than half of Stefano's, so it will be shorter. Good morning to everyone. Let's now focus on the two key strategic levers of our framework, innovation and sustainability, as shown on page 29. When it comes to innovation, we are taking a dual-track approach, focusing on proven and explorative innovation. Over the planned horizon, we will invest EUR 338 million in proven innovation. Our goal with this investment is to drive operational excellence and sustainability by increasing digitalization, IoT, and leveraging the use of AI. We also want to implement AI-enriched digital twin to redesign industrial processes throughout AI and further develop AI applications to optimize network operations and reduce emissions.
62 million of CAPEX will go to explorative innovation, where we plan to apply AI also to promote the multi-molecule setups, to integrate new clean tech technologies along the value chain, and to incubate and accelerate selected solutions. As for sustainability, we are adopting a comprehensive approach reflected in the transition plan we last published in October. When we believe that innovation is a key strategic driver and transformative force for us, and I'm now slide 30. Firstly, since 2018, we are applying new technologies and tools to our core business to enhance asset performance and resilience, which boosts their efficiency and improves operation safety, which remains our top priority. Furthermore, we deploy both existing and emerging technologies to integrate different types of molecules into our infrastructure and in the energy system, thereby enabling our vision.
As mentioned, we actively support system decarbonization by implementing and testing zero or low-carbon technologies that are functional across industrial, energy, and transport sectors. Our goal is to create value and explore new opportunities for Snam and its ecosystem. We do this also by promoting new ventures and fostering collaboration with suppliers and the entire value chain. I'm pleased to announce that in the first half of this year, we plan to unveil our first innovation plan. Just like the transition, the evolution between technologies and digitalization means that we need a concrete long-term vision that aligns with our strategy and includes a 10-year technology roadmap. Let me explain more in detail the dual-track approach on slide 31. Proven innovation, which involves scalable and reliable solutions with established partners to improve our performance.
The cornerstone is our asset control room, which serves as the central hub for operating activities, digitalization, providing a comprehensive view of processes across all systems. Some flagship initiatives include optimizing compressor stations through AI, installing over 10,000 new field sensors to collect data for PIMS, which is our leak detection system, and satellite monitoring. These efforts have increased the leak detection accuracy by 20 times and led to a 15% reduction in fuel gas usage per unit of transported gas, thereby contributing to the reduction of CO2 emissions. Managing data through AI has improved the accuracy of gas forecasts, enabling us to deliver 25% more accuracy on demand forecast services, thus gaining more output-based incentives. Explorative innovation refers to the pursuit of new ideas and clean tech technologies.
We rely on our internal decarbonization technology solution unit and leverage a global network of universities and research centers to exploit cutting-edge research and development in hydrogen, carbon capture, utilization and storage, and long-duration energy storage. We have two significant programs, Snam Innova and HyAccelerator, through which we have engaged with a large number of startups. A few successful examples, we have developed a pilot plant that uses membranes to test blending separation of hydrogen, which has received grants from the regulator ARERA. Additionally, we are supporting the development of CO2 Vault, which aims to remove CO2 by capturing and permanently storing CO2 generated by biomethane plants, thereby generating compensation certificates. On Slide 32, at the forefront and beyond sustainability, we can rely on a strong track record in reducing our methane emissions, down 62% versus 2015, ahead of the target set by UNEP protocol.
As a result, we have been awarded the gold standard by the Oil and Gas Methane Partnership for the fourth consecutive year. We saw a strong acceleration in the reduction of Scope 1 and 2 emissions, and the 2024 full year is foreseen down about 25% versus 2022, therefore reaching the 2027 target three years in advance. Such a strong reduction is also due to contingent market conditions, i.e., higher imports from northern Russia, low exports, and peculiar optimization of the network. Our emission roadmap was deemed credible by a third party as we've been first corporate globally to undergo the Net Zero Assessment by Moody's last February. Priorities for the next years are, first of all, related to our emission reduction and sustainability scorecard ambition targets, execution, and delivery.
We also aim to keep a leading position across key ESG rating and to pursue SBTi and SBTN certification once it will be possible to do so. We will leverage on CSRD to further strengthen our disclosure and reporting. Biodiversity will be integrated into the climate change risk assessment. On the back of our achievements and targets, we have submitted to the authority, our regulator, a proposal for new output-based incentives based on ESG KPIs. As mentioned, on October 16, we presented our first transition plan, and I'm now on slide number 33. A few key messages since we spent a couple of hours presenting it. Our assets, investment, and business model are resilient in the face of climate change. Physical risks are negligible thanks to the effective safeguards and the structural characteristics of our assets, with more than 80% being underground.
Transition risks are limited in the short to medium term and related to reputational risk, such as those related to achieving sustainability targets. Over the long term, these risks intensify primarily due to the declining gas volumes, but at the same time, opportunities arise related to the repurposing of our infrastructure for CCS and hydrogen, as well as expanding our energy transition businesses. We set a detailed and actionable roadmap outlining 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. Not only will we plan to reduce our footprint, but through our infrastructure and projects, we aim to enable the decarbonization of the energy system through the H2 backbone and the CCS project described before.
Moving to the business plan projection, finally, on slide 35, we can see a sound and improved growth. Our CapEx for the period 2025-2029 will increase by around 8% versus the previous business plan to EUR 12.4 billion net of grants, which amount to approximately EUR 1 billion, mainly driven by the direct decline and acceleration of the energy transition projects. This will translate into around 6.4% RAB CAGR 2024-2029, increasing versus last year's plan thanks to the higher investments. EBITDA CAGR of around 5% is driven by the RAB growth, the additional storage contribution, the Ravenna FSRU entering into operation, and the energy transition EBITDA contribution, partially counterbalanced by the WACC downward revision. Net profit CAGR in the planned horizon is a remarkable 4.5%, increasing versus last year's plan, reflecting a sound EBITDA growth and an improved contribution from our associates' portfolio.
We will be able to deliver a solid growth while keeping the financial strength and flexibility. Net debt will increase to around EUR 21.2 billion in 2029, with credit rating metrics to remain with ample flexibility within the thresholds of our credit rating positioning. In the annex, you will find the underlying macro scenario assumption that underpins those projections. For the sake of clarity, there is no material new M&A included in the plan. Let's now look in more detail at the CapEx plan by business, and I'm on slide number 36. Our total 2025-2029 CapEx plan amounts, as I said before, to EUR 12.4 billion net of grants, which are EUR 1 billion. This plan enjoys a high level of visibility as around 70%, seven zero, of the gas infrastructure CapEx are already authorized.
Total investment in our multi-molecule infrastructure amounts to EUR 10.9 billion, of which EUR 8 billion on transport, increasing by around 8% compared to the previous plan, mainly related to the replacement dual-fuel compressor station deployment and the Adriatic Line. EUR 2 billion on storage, increasing by more than 40% compared to the previous plan, mainly attributable to the performance upgrading of existing fields, installation of dual-fuel compressor stations, and investment on additional storage fields, and EUR 0.9 billion on LNG related to the Ravenna breakwater, the potential Italy's LNG facility relocation, and small-scale LNG infrastructure and mobility investments. The total LNG investments decrease versus last year's plan due to the inclusion in the previous plan for the Ravenna FSRU acquisition.
Investment in the energy transition businesses accounts for EUR 1.5 billion, plus 25% versus the previous plan, and are related to the acceleration of our CCS project and H2 backbone, the development of our biomethane platform, and the refocus of our energy-efficient business on long-term contracts with public administration. More than 40% of our CapEx plan is taxonomy aligned and almost 60% SDG aligned. Let's now look more in detail at the RAB evolution on slide 37. Our RAB, regulated asset base significantly increased in the last years, with an approximately 5.5% annual growth from 2022 to 2024 guidance. Over the planned horizon, we project a 6.4% CAGR. This growth will be mainly driven by CapEx increase, the inflation impact, the inclusion in our perimeter of the Ravenna FSRU and additional storage fields.
In addition, considering that the Italian Ministry of Energy and Environment formally stated that the CCS transport and storage will be regulated, we started to include towards the end of the plan the CO2 network startup, which accounts for EUR 500 million in the bridge. Moving to the EBITDA evolution analysis on slide 38, EBITDA annual growth will be around 5% in the planned horizon. The increase will be mainly driven by the contribution of gas infrastructure, which will benefit from organic growth driven by the investments and the deflator impact. Over the planned horizon, we assume on average EUR 100 million of output-based incentives per year. Change of perimeter related to the Ravenna FSRU and additional storage fields counterbalanced by regulatory items that are mainly related to the WACC decline following the update of the new regulatory period, which is down vis-à-vis the past.
The capitalization rates for the fastest loan money are equal to 86.14% in 2024-2025, 88.12% in 2026-2027, and finally 84.16% in 2028-2029. In terms of energy transition businesses, the contribution will increase to around EUR 80 million by 2029. The increase will come from the energy efficiency businesses' contribution and the decarbonization projects that will start contributing from 2029. While biomethane will reach a peak in 2027 with no contribution from 2028 onwards due to the deconsolidation of the business in line with accounting rules. Let's now look in more detail at the net income evolution on slide 39. We project a remarkable 4.5% CAGR over the planned horizon, starting from our 2024 guidance of around EUR 1.23 billion.
This will be mainly the result of a sound EBITDA performance, as previously explained, partially counterbalanced by D&A increase due to the new asset entering into operation, the interest expense rise with the net cost of debt increasing to 3% at the end of the plan from 2.5% today. In terms of contribution from our associates, we project an increase over the planned horizon that will be mainly driven by TAP, the Italian associates' performance, and the TAG recovery in Austria. The net income 4.5% CAGR will drive a solid EPS growth to 4.6%, which can be seen as sector-leading for regulated peers. Let's now move to our portfolio of associates on slide 40, where our main goal is maximizing the value creation and their contribution.
The overall associates' contribution will increase by 40% in the planned horizon to around EUR 420 million by 2029, mainly driven by TAG recovery following the volume risk removal in 2025, the TAP contribution increase driven by the limited expansion in 2026, and the Italian associate contribution growth. In 2025, we forecast already over EUR 370 million contribution, thus securing the contribution growth to 2029. We confirm the clusters already presented where we indicated as value enhancer, industrial assets with direct or virtual connection to the Italian infrastructure, or with an involvement in the strategic European corridors, enablers of business optionalities associates with no connection to our assets providing reinforcing market intelligence and business development potential, and in the last cluster, companies with a more opportunistic angle. We have moved Teréga from enablers to value enhancers, considering its involvement in the H2MED project.
On the financial structure side, slide 41, we remain committed to keeping our balance sheet financially solid. Over the planned period, we will generate approximately EUR 13.6 billion of cumulative cash flow with a very sound EBITDA cash conversion over 80% on average. This will cover 12.9 net billion of investments, including CAPEX, the additional storage acquisition, the cashing from the biomethane disposal, which is forecasted at book value, leaving EUR 0.7 billion of cash flow available to partially cover dividend distribution. This excess cash flow is roughly two times the amount of last year's plan. Credit rating metrics are expected to remain with a sound flexibility within the thresholds of our current ratings by Moody's, Standard & Poor's, and Fitch over the planned 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 11.7% over the planned horizon, well above the 9-10% threshold corresponding to our existing credit rating. For illustrative purposes, we have also indicated the evolution in the planned horizon of the net debt less book value of associates over EBITDA that will be on average 5.3 times, which is consistent with the financial profile of a fully regulated player. Average net cost of debt is approximately 2.8% over the plan, 20 basis points higher compared to the previous plan. We will continue to focus on sustainable finance with a commitment to rely on 90% of sustainable finance by 2029, which is currently 85% of total funding by 2027, one of the highest in the sector.
Moving to dividends, which I guess is of interest to you, slide 42, as already announced, 2024 DPS will increase by 3% to EUR 0.2905 from the 2.5% the year before. We have just paid the interim dividend of EUR 0.1162 per share. The solidity of this business plan and the higher EPS growth profile allow us to improve our dividend policy going forward. We commit to a 4% annual DPS growth from 2024 to 2029 from the previous minimum 3%. We introduce a cap of maximum 80% payout calculated as dividend paid over adjusted net income in order to maintain a solid financial structure. According to our calculation, with a 4% annual growth in DPS over the planned horizon, the average payout will be in the region of 76%, so we have significant headroom to the cap.
This dividend policy, sustainability supported by the regulated nature of our core business, the higher level of visibility over the plan, very sound cash generation, and accelerated DPS growth. Such policy reflects our commitment to the coupling on the remuneration while keeping financial solidity and flexibility with a disciplined approach. And now, moving to our financial targets on slide 43, our full-year guidance for 2024 is confirmed. And when it comes to 2025 outlook, CapEx will stay at around 2.9 billion EUR, mainly driven by gas infrastructure investment, which includes, among others, the Adriatic Line, the Ravenna breakwater, and biomethane connections. Tariff RAB expected to increase around 8% year on year to 25.8 billion EUR.
We expect EBITDA of around EUR 2.85 billion, mainly driven by the RAB growth, the Ravenna FSRU, and the additional storage sites entering into the perimeter, partially counterbalanced by the WACC decline, as mentioned before. In terms of net income, we expect around EUR 1.35 billion, driven by the EBITDA positive performance and the higher contribution from associates, which exceeds already EUR 370 million in 2025, partially counterbalanced by higher D&A. The net income growth will drive EPS to EUR 0.40. DPS will increase to around EUR 0.30, in line with our improved dividend policy. Net debt is expected at EUR 18.6 billion, with an average net cost stable at 2.5%.
Finally, over the planned horizons in 2029, as commented before, we see a RAB growth of around 6.4%, EBITDA adjusted growth of around 5%, net income adjusted CAGR of 4.5%, and a solid EPS CAGR of 4.6%, with a net debt exit at EUR 21.2 billion, underpinning the financial strengths of this business plan update. Now, let me hand over to Stefano for the vision to 2034 and beyond and the closing remarks.
Thank you. Thank you, Luca. Luca, very effective. I mean, three more slides, not more. On page 45, let me now discuss our forward-looking investment plan designed to achieve our ambitious goal. We have a total of EUR 27 billion here marked for the period 25 to 34, along with an additional EUR 5 billion in investments from our foreign associates over the same timeframe.
In the first phase of our investment plan, 2025-2029, as just described, aims to uphold the reliability and resilience of our assets while also keeping to reduce their carbon footprint. Over the same period, the international associate plans to invest about EUR 3 billion. Moving to the second phase, covering 2030-2034, we foresee considerable investment opportunities amounting to EUR 14.7 billion net of grants. The scale and timing of this investment, particularly in the hydrogen backbone CCS scale-up, will be evaluated based on the future regulatory framework, market dynamics, and the availability of grants and financial support for those kinds of investments. And our H2 backbone and CCS expansion, coupled with the dual fuel compression station acceleration, will boost the taxonomy-aligned CAPEX from the 41% we have in the first period of the plan to the 48%.
We now share the view that has some thoughts behind, and to show that vision and investment are intrinsically linked in the evolution of the mix of gas molecules that will need to be transported over time if we look throughout 2050. The gradual transition from natural gas to alternative molecules such as hydrogen and CO2 will amplify the overall volumes that must be transported through the network due to the energy content that hydrogen has in itself. We foresee a future in which different molecules will coexist within our global infrastructure in dedicated assets, some green and some decarbonized, in their end use. We are prepared to accommodate and support this evolution in a cost-effective manner. The rising volumes of different gases will underpin our long-term investment opportunities and drive the strategic decisions we make today. Importantly, the multi-molecule perspective provides an intrinsic edge.
In the event of a slower-than-expected ramp-up of green molecules, gas volumes will remain higher. Conversely, should the transition to decarbonized molecules accelerate, we are able to adapt accordingly. Final slides. In conclusion, 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 future energy system. We have very clear strategic priorities to build a pan-European multi-molecule infrastructure. Our strategic framework has evolved over time, with the two business levers, gas infrastructure and energy transition, becoming increasingly interconnected. Furthermore, we are promoting a pan-European vision across our portfolio of associates. With this plan, we have further increased investment, accelerated EPS growth, with high visibility as regulations are set and policies evolve in line with our expectations and strategy.
This enables us to upgrade shareholder return, as Luca said, and we commit to a 4% DPS annual growth from 2025 to 2029, with the maximum payout of 80% that was mentioned, maintaining a solid balance sheet and financial flexibility that is extremely important in this evolving scenario across Europe. So then, thank you very much for your attention, and now it's time for your questions. Thank you.
So, thank you. We will start by taking the questions here in the room. I kindly ask you to raise your hand and say your name and company name before asking the question. Thank you.
Thank you for the presentation, Javier Suárez, Mediobanca. Three questions. The first one is on the big picture. We have seen Europe taking maybe more focus on competitiveness.
It has been a very important paper by the largest political party in Europe that is asking for more focus on the competitiveness of Europe versus other green targets, maybe. Which are the implications for a company like Snam? I'm saying this because during the presentation, I got the impression that you are saying that all the theme of hydrogen expansion is getting an acceleration. It couldn't be the opposite, that we are accommodating hydrogen expansion to a period on which maybe traditional molecules are going to be more important, and maybe ambitions to decarbonize our infrastructure are going to be pushed down the road, and if that is the case, which are the implications for a company like Snam? I think that the management team has made the point that they have CapEx flexibility to accommodate what happens.
My question is, what do you think is more likely to happen? Do you see a scenario in which hydrogen ambitions are not going to be fulfilled or completed until a period that goes significantly beyond 2030? That's it, the big picture question. On the company details and the business plan, there are two things that I think have caught people's attention. One is the assumption on the deflator. The deflator, I think, has an average of 1.8%. The question for you is that, are you embedded into that assumption? Is the assumption that the regulator is going to change the reference basket for the calculation of the deflator? On the WACC and management, that probably you are trying to accommodate the cost of financing assumption with your assumption on the allowed return on WACC.
So if you can explain the logic that has been utilized to accommodate maybe your assumption to what do you see on the forward curve? Because forward curve moves a lot, and therefore, if you design a plan to 2029, maybe to rely on that forward curve is a little bit aggressive. And then the final question is on the affiliates. So I think that the big surprise has been the increase in contribution from affiliates. I think it could be as high as EUR 100 million, a number like that. So you can elaborate on why in the new business plan you have identified such a big number of higher contribution from the same existing affiliate. Thank you.
Thank you. I take the first, then you take the second, and the third, probably we share both.
I think the big picture, I mean, if you look at the deployment of the CapEx we are projecting, it's almost EUR 11 billion goes on gas infrastructure. The way we are deploying those investments is in a flexible way. So those are hydrogen-ready. So when I say we want to be ready for the developments, and the further investments on those kinds of, let's say, transition in the sense of hydrogen will be related to the regulatory framework and the development of this project, of course, means that we are focused on security of supply, but we are preparing for it. Okay? So if it comes later on, there is a pushback from, let's say, the European Commission or, let's say, the political decisions, of course, means that we have this intrinsic hedging. So it means we are going to use more gas. Okay?
That is, and we have the infrastructure that are ready for that. So I think what is important to prepare for is that if those kinds of solutions of the decarbonization will come in five years' time, eight years' time, nine years' time, we need to start now to prepare. Okay? Get ready. And then if demand and production meet each other, we are, I mean, the enabler for it. Okay? So I think if you ask me what are the implications, I don't see much implications in the sense that we have this plan that is driven by the investments we are doing. Those investments will be dual usable. And in case there is this option, we can get this option. At the same time, if we want to achieve the investments on decarbonization, if we don't use the green molecules, we need to decarbonize the molecules.
And then CCS gains more and more momentum. Okay? Finally, if we don't want both, in the sense that we postpone both, we use the gas. And the infrastructure, the investments like the Adriatic Line, are aimed at creating the flexibility that will allow us to accommodate both options. And I think it's in line with the recommendation that came up from the Draghi Report, for instance, what he said. We need to have a more competitive energy cost. To have more competitive energy cost, you need to work on the sources and on the liquidity of the market. To work on the liquidity of the market, you need to have ample infrastructure to accommodate different options of sourcing. To that extent, strengthening the corridors from south to north, we are doing that, opening the MED area.
and the five LNG infrastructure with a total capacity of 29 BCM goes exactly in that direction. So more liquidity, more competitiveness, that contributes to reduce the cost. On the other side, the emphasis we want to put on the role of the associates and the interconnection between the countries exactly goes in the same direction of the recommendation of the Draghi report. It said we need to have a more unified market in the energy, more interconnection between the countries, more flows in one or the other direction. So repowering the capacity to export up to 14 BCM to Austria. Think about that the total consumption of Austria is 67 BCM. Okay? If you put together Austria, Slovakia, and the third is Hungary, okay, you get to a total of 15, 16 BCM. Bavaria has more than 20 BCM. Okay?
I think strengthening the southern part and the export and the approach east to west from LNG goes exactly in the direction of creating more interconnection and therefore more liquid market and more competitive price. I think that is part of the contribution I see. The flexibility in the CapEx plan goes exactly in that direction. I mean, we can revert or reconfirm some of the options we have. Regarding question number two on the assumption for both deflator as well as interest rates, to answer your question, yes, we are using an assumption where the reference rate for inflation will change according to the current proposal. The assumption will be, let me say, formally released when the regulator will come out, but there is an assumption in the plan, and that's why we have an average of inflation of 1.8% over the plan.
Second, when it comes to the curves that we use, these are the four curves in terms of underlying, which are for the first two years, Bloomberg Forwards, and for the remaining year since we are going out, an average between Bloomberg and Oxford, which is the other, let me say, large provider for long-term interest rates. We do not expect clearly for the first three years the trigger to basically be activated. That's the first. The second is that from 2028, we are considering the new cost of debt formula accounting for 100% of the cost of debt from the previous 66%, because that's part of the current regulation with the change in 2028, and in line with the fourth core, we are projecting 20 basis points higher WACC. Now, the majority of the increase is driven by the country's premium.
The assumptions are on slide 54 of the presentation that you have, where we project the three variables into the formula on our assumption, and clearly the country's premium moved from 2027 at 1.2 to 1.4, and that's the majority of the variables. Now, if you don't believe that this will happen, let me say that if you have lower rates, we will have also lower cost of financing. Therefore, our marginality in terms of net income is ensured. When it comes to the associates, yes, there is a big jump in the plan, but the jump is already happening this year. The majority of the jump is driven by the Austrian new regulation. So to give you two numbers, TAG was negatively impacting in 2024, will be negatively impacting in 2024, more than EUR 30 billion negative, and it will be more than or around EUR 50 billion positive in 2025.
From there, which is EUR 370 million contribution in 2025, clearly the growth of EUR 50 million over four years is very easy between efficiency and the changing regulation in the other geographies.
If I can add one comment, because you said what made us more, let's say, confident with respect to a year ago. When we had the presentation of the business plan in January last year, we just had the release of the new regulatory framework in Greece. We were still studying the operating cost, the mechanism, and what was around. And I have to say that the outcome was a bit better than we expected or we understood from the first reading, and that was supported also by the approval of the new 10-year development plan that upgraded further the contribution.
I like to remind that we had also the startup of the Alexandroupolis terminal in where DESFA has a 20% stake. Okay? That is for DESFA. France, we were just in the middle of the negotiation with the regulator in January last year, and the outcome, I have to say, was a bit better than we were expecting in terms of an allowed return on the infrastructure and the mechanism to remunerate the existing assets with respect to the new assets. Okay? And that was the second pillar. The third is the one that Luca mentioned. I mean, the negotiation with the Austrian regulator that has been very tough for months and months in 2024, and the outcome at the end of the day was again a bit better than expected.
Of course, you might say that last year we were too much conservative, but as you know, you know us for a long time, we are pragmatic, fact-based, and then now we can offer you a better return than we were projecting last year.
Thank you and good morning, Bartłomiej Kubicki, Bernstein. I would also stick to three questions. One big picture, if we think about the gas flows in the next years, under two scenarios, much more LNG potentially coming to Europe because there's more LNG being produced around the world. And second of all, let's assume some kind of a peace agreement in the east and potentially gas flows in the east.
I just wonder what is your view on those scenarios and how it could impact the operation of your assets, not the financing because financials, because I guess it will have no impact, but on the operations of your assets. Second of all, if we look at your transport CapEx estimates, last time you were talking about EUR 1.1 billion in 2027. Now you are talking about EUR 1.3 billion in 2029, so post the peak investments. In the past, it was well below a billion. So I wonder what is really the sort of underlyings to increase the long-term CapEx or let's say the mid-term CapEx in gas transport and what actually should we assume beyond 2029 in terms of gas transport per se. And the last point will be on your non-regulated activities and more specifically on biomethane. You mentioned the disposal assumed at book value.
Just, if you can give us some indications what the book value is. And second of all, I think you said EUR 70 million on an EBITDA from biomethane, EUR 80 million increase in an EBITDA, which gives us around EUR 150 million. Let's say if you didn't sell biomethane assets in 2029, and previously I think you were guiding EUR 140 million, and every year basically you are kind of decreasing the guidance on the non-regulated assets. So I wonder, I mean, what's the point to sticking to them? They seem to be somehow disappointing every year. Thank you very much.
In terms of, let's say, gas flows, yes, scenario with more LNG can be reasonable. I think as far as our assets are concerned, the assumption is to have almost fulfilled the capacity we have. So hovering in between 30%-40% of the global demand coming from LNG.
I'm saying that simply because, I mean, if you take Italy's LNG, it has 20 years booked capacity, so the flows will come there. If you look at the Livorno floating vessel, we have a five years forward looking. If you look at the Adriatic LNG, we have up to 2034 almost full capacity booked. So therefore, I would say the strategic position of these assets in the MED area, of course, offers a very attractive opportunity for the potential developments in the Middle East. Okay? That if peace will stay there, there will be a development, Aphrodite, and all other large gas fields will be developed. The nearest entry point, if they decide to develop part of that capacity through LNG, will be Italy. Okay? Thanks also to the export capacity we are improving.
If peace comes from Ukraine, I think it is a point, is a scenario. I would say not automatically that will imply that large volume will start flowing. I think there will be a point with respect to the condition of this peace, the leadership in Russia, and how, let's say, the Western countries will decide to balance the, let's say, agreements with Russia. So some flows could be restored, but I don't expect significant ones. Okay? What does it mean for us in terms of operations? It means that we can balance a bit better the flows from south and north. Okay? Now we have a predominant flow from south to north. It has a cost to ship the molecules for more than 2,000 kilometers.
If we have more gas on the north coming from north, in some way, we can have a system that is much more balanced and more optimized in terms of flows. The second for you, I think.
When it comes to transport CapEx, you're right. By 2029, it's EUR 1.3 billion for transport. It grows beyond 2029. The reason being clearly besides the H2 backbone, which is part of, let me say, transport, substitution will continue. We have 1,700 kilometers of substitution beyond 2029 to be done. And the installation of the dual-fuel compressor station is very relevant for transport, but also for storage. We have six dual-fuel compressor stations within the plan, three in transport and three in storage up until 2029. There are missing basically other 12 to 13 up until 2024. So those are where the increase is. Then to the third question.
Let me add a comment, sorry, Luca, because the other part of the question was what we might expect beyond 2030. Okay? I think we have done a very detailed work in preparing the projection to 2034 and beyond, okay, in terms of transportation and how to optimize the mechanism of asset health for the substitution, and we have reshaped the curve. We already reduced by 50 km in the first period of time, but we expect more in the second period of time. That means in between 2030 and 2040. Sorry. Sure. Then for the unregulated activities, yes, the target is lower, but we are consolidating EUR 70 million of EBITDA in 2027, which we are obliged to. Therefore, it will be higher if these assets were still consolidated.
And now let me also add on that in those numbers, so the EUR 80 million contribution from our energy transition businesses, we have roughly EUR 50 million contribution from our energy efficiency businesses and less than EUR 20 million from the first contribution of the CCS, which is the first year, 2029, which we'll start contributing. The assumption there is that both transport as well as storage will have a remuneration based on a WACC formula, which is more or less in our assumption higher 100 basis points vis-à-vis gas. So that's a very marginal increase. And let me say that we use that assumption given the discussion we are having with both the regulator as well as the energy ministry. I think because you said you had much more, let's say, bullish projections in the past vis-à-vis the outcome now.
We have to be frank and transparent in saying that biomethane turned to be less, let's say, profitable than we expected four or five years ago. That was driven by two factors. The first one relates to the production of biomethane from organic waste. Okay? The situation in Italy turned to be less profitable because of the tariff for disposing organic waste. That was due to some oversupply we had in the market. Okay? We have in the market. That is the reason why, as I pointed out, we went through a sort of, let me say, small restructuring on the portfolio of assets. We have closed, shut down one asset, and we have rescheduled or, let's say, dropped a couple of projects we had in the portfolio originally. Okay?
For the agriculture production, of course, the strong attention we have in the market and the inflation that we had in the last two, three years has caused an increase in the cost, specifically in the sourcing of the agricultural residuals. That has eroded part of the profitability. Of course, it's still attractive in terms of returns, but not as good as probably we expected four or five years ago. Full transparency. Finally, you asked also the book value. At September 30, it was just north of EUR 500 million. Clearly, we are closing 2024 numbers. It will be very similar. We made an assumption of what will be the book value given the investment that we are doing in 2027 when we will de-consolidate. But it's not going to be a major shift vis-à-vis the numbers that we actually closed. The micro. Okay.
Emanuele Oggioni at Kepler Cheuvreux. Thank you for taking my question. The first is on a clarification on, you said before, the CCS could be regulated, could be raised in the future. But now the CFO mentioned that in 2029, the first-ever contribution is included, if I understood well, is included in the non-regulated EBITDA. Okay. So a clarification and when it could change if it will become a RAB-based. Okay. Then overall, you mentioned to plan EUR 400 million on capex on innovation, investment for innovation. My question is to what extent this would benefit the cost base. And to what extent the benefit on the cost base is included in the business plan in your target. And finally, the third question is on TAP. TAP in the business plan is included only the minimum expansion, not the doubling of the capacity.
So in this case, what is the visibility on the update on doubling the capacity on TAP? Thank you.
Okay. I'll start with the TAP. Again, let's take the same kind of approach we used last year for the associates. TAP, what is secure is the initial expansion for 1.2 billion. For further expansion, we have different scenarios. The open season will happen, if I do recall correctly, from October, right? This year for the next months. And therefore, we will see probably in the next business plan if something concrete with clear commitment will come up, we will embed it. For the time being, the sole thing we have secure is the one that we have accounted. So it's an upside, but as soon as we have clear commitments from production and clients. The second is the return on CapEx. Yeah, you can see on different ways.
I mean, of course, I'll make you an example. The asset control room allows us to have a much more effective order dispatching control of the assets. So it's a micro-optimization we do every day in the turbine and the compression stations, in the decision and scheduling of the workloads. That allows us to optimize the number of employees we have per kilometer of network, taking into account that at the same time, we are increasing the length of network because simply with the new Adriatic Line, we will have 400 kilometers more plus one more compression station. So that allows us to optimize the workforce and to optimize the operating costs. And as you know, with respect to the operating costs that are recognized by the authority, if we beat that number, we can retain that saving. And that is included in.
Then you have the second of the three dimensions that is security. So more reliability, okay, more business continuity, more flexibility in the system. The third, of course, relates to the carbon footprint and the total emissions. I mean, the 25% reduction in the CO2 emissions we achieved in 2024 with respect to 2022 was driven mainly by two, let me say, two drivers. The first one was the balancing in the flows, okay, and the use of the storages that was much lower than in the past. But the second, we have developed an, let's say, an artificial intelligence model to, let's say, forecast the demand and the shaping of the profile of the demand to optimize the choice in the type of stations we will activate for compressing the gas.
That has provided the majority of the reduction of the CO2 that also has as a consequence, or I mean, we reduce the fuel used for compressing the gas that allows us to reduce the cost and the CO2 emissions. These are the types. It's very fragmented because this type of innovation is very spread in the operating sites.
Just complementing in terms of fixed cost in the plan, like-for-like fixed cost increased by 1.8%, which is exactly in line with inflation. Clearly, this excludes the changing perimeter, the additional storage acquisition as well as the FSRU, and includes all the LDAR expansion, so the leak and repair that we need to do according to the new Euro regulation, which has an increase in terms of cost. It also includes an increase in labor cost by 4.1%, which is driven by applying basically a national contract.
Therefore, we can maintain cost basically flat or in line with inflation thanks to this innovation that we're putting into the system and keeping clearly staff and operation cost at the minimum, which are basically flat on the nominal terms of the plan. When it comes to the first question, CCS contribution, yes, at the moment, first of all, the CapEx deployment on CCS will be done. Clearly, earmarked in the plan will be done only when we have a clear regulated framework with the assumption in terms of remuneration that I mentioned in our assumption. Second, 2029 is the first year because we actually start spending in 2028 and currently are in the energy transition business because clearly those are in order to carbonize the mix. Then when we're going to get there, we might change the reporting since it's going to be a regulated business.
But 2029 is far away.
Thank you so much. It's Marcin Wojtal from Bank of America. Perhaps some questions on capital allocation. Firstly, could you say how much headroom do you believe you have on your balance sheet for any further potential opportunities? I think previously you were mentioning around EUR 2 billion. So could you maybe update us on that number? Then do you actually see any opportunities for maybe further bolt-on acquisitions in Italy or outside of Italy? Then maybe on Italgas, could you also reconfirm that you are not planning to participate in the potential capital increase, if that's okay? And maybe if I can squeeze in last one question. I believe in your CapEx guidance, you're suggesting that you are going to utilize EUR 1 billion of grants, yeah? This gross versus net CapEx.
So could you just explain what is the rationale for using grants and what is the remuneration? Thank you.
Okay. For headroom, we are running a headroom towards a 70% threshold where the threshold is actually 75% for our rating of EUR 1.7 billion on average in the plan. Therefore, we have clearly headroom. And the reason of financing the additional storage acquisition through hybrids was to maintain this headroom, as we explained at the time. Now, do we see opportunities? Clearly, we are the largest infrastructure operators that is actually, let me say, geographically placed into the three main corridors, as Stefano mentioned at the beginning of the presentation. We need to monitor what the situation and how it will develop. Today, we don't see, let me say, imminent opportunities, but this might come, and we need to be vigilant being the largest player.
Therefore, there's nothing, as I said, into the business plan in terms of M&A, but things might change as additional storage basically was part of our acquisition plan last year without being in the plan. We have hired a new head of M&A department, so we need to make her to work, right? When it comes to the second question, Italgas, what we can reconfirm, which is not what you said, is that we will partially participate into the capital increase. I.e., we want to maintain the same financial exposure being for us an opportunistic asset, meaning that if they will finance their acquisition through a capital increase, we partially subscribe the rights, and to do so, we will sell a portion of the rights in order to finance this subscription in order to be cash neutral.
And when it comes to the last question, which is EUR 1 billion of grants, what is the rationale? The rationale is pretty simple. I mean, every, let me say, new technologies, and this in particular when it comes to hydrogen and CCS, needs public funding support. And it's not just for us, it's for the whole system. And that's why Europe has done the REPowerEU plan first and other plans. Now, the visibility that we have with this EUR 1 billion assumption is pretty high because, as Stefano pointed out, EUR 500 million has already been assigned to us. EUR 200 million has already been cashed in at the end of last year.
We are assuming that our application to the Connecting Europe Facility, which we did last October, will have a certain rate of success, which will support both the CCS as well as the hydrogen backbone as the main grants. We have smaller grants for the biomethane, which is part of the regulation, around EUR 80 million in total. For certain projects, even other smaller grants. To be honest, the large portion are the CCS and then the hydrogen.
I will say, what's the meaning of using the grants for gas infrastructure? That was part of your question, the EUR 400 million that we have been granted from the REPowerEU plan. I think it's an amount, EUR 400 million out of EUR 2.5 billion. There, of course, it's negligible with respect to the total amount.
It's 15%, but it leaves us some flexibility on the balance sheet given the fact that we have ample of investment in the CapEx plan that supports a growth on the RAB by 6.4%.
Hi, good morning. Alexandra Arsova from Equita. Three questions on my end. The first one is on hydrogen.
It's a perfect number. Everyone has three questions.
So the first one is on hydrogen. You now include EUR 400 million broadly in investments, and you mentioned a final investment decision by 2027. So let's say that we are in 2027. What would you consider, let's say, a fair or attractive regulatory framework and returns for such investments? The second one is maybe on the full ROSS, which will be applied from 2026 onwards, but now 2025 is the year on which we should expect some, let's say, outcomes by the regulator.
Maybe if you can elaborate on this, what you expect, what we should expect from the full ROSS. And maybe a final one, maybe just some details on what you have included in your plan on output-based incentives. Thank you.
What is attractive? I think what we all expect is a markup on the allowed return for gas infrastructure. Of course, what could be an expectation on the basis points, 150 basis points, that is a reasonable number we might expect for this kind of assets, of course, considering the fact that part of these investments need to be funded with grants or other sources of funding. About the full ROSS, I think I don't have, let's say, a precise idea on what and when this full ROSS will be implemented. We know the guidelines.
We also have as a plan to provide the authority the outcome of the first year of application, but what I push you to look at the full ROSS is with the perspective of the fundamental of the ROSS, that is to incentivize, let's say, the output performance, okay. The idea or what pushed us to propose the authority new output-based is exactly in that direction, so use the approach the authority has introduced with the ROSS to extend, okay, the span of activities that are driven by extra return through the output basis, and that's, I think, the driver we need to look at. It's not simply a matter of fast money, slow money, cash conversion. It's also, I mean, behind this approach, there is this kind of evolution that the TSOs and DSOs have to take into, and we decided to move ahead, okay, to that extent.
About what we do expect from output-based, as Luca said, the average is EUR 100 million per year. Of course, we had the peak in 2022 and partly in 2023. We then smoothed back to more reasonable levels, but EUR 100 million is the average. Of course, we have made the assumption that some of the proposals we have done in the last months will be accepted. Therefore, we expect a trend.
Good morning. Thank you for the presentation for taking my question, Davide Candela from Intesa Sanpaolo. I just have two.
You have three questions.
No, just two.
Just two. Okay.
I may add one maybe. The first one is on the hybrids. You went out with an issue back in September.
I was wondering if there would be an opportunity like we see in recent times in terms of a spread, you're going to tap into the market again and if you can provide, which is maybe your headroom on your balance sheet for additional hybrids. The second one is a clarification on the 2025 guidance, specifically on CapEx. I was wondering if in the regulated CapEx, it is included the M&A from Edison, so the cash out from that, or is above that, the number? And basically, that's it. Just sorry.
Okay. When it comes to hybrids, let me say additional room is north of EUR 2 billion for us. That doesn't mean we're going to utilize it because, as I said before, our financial flexibility is on average EUR 1.7 billion already. So we don't need, to be honest, to issue more hybrids.
And therefore, the hybrids will only be, let me say, utilized or resourced if there are inorganic opportunities like it was Edison Stoccaggio back in the past. When it comes to 2025 guidance, the CapEx included and the RAB includes clearly the acquisition of Edison Stoccaggio, which we plan to be basically finalized, I would say, in the month of March. Okay?
Just to clarify, the CapEx are CapEx investments, and then on top, there is the cash out. So the cash out is not into the CapEx.
Francesca, shall we leave some space to the people with questions?
Yes, we have some questions coming on the chat. A couple of questions from James Brand from Deutsche Bank. One is another question or a repetition about the walk-up lift of 20 basis points if we can explain the drivers.
The second question is more on capital allocation, and the question is, you have substantial investment opportunity, also quite strong balance sheet. Could you consider share buybacks in the future?
Okay. So for the first one, I think we answered already, but just to be clear with everyone, basically, we are assuming from 2028 a 20 basis points uplift, which is driven by the new cost of debt in the formula accounting for 100% vis-à-vis 66%, which is today. And the majority in terms of curves that impact the formula is the country risk premium that grows from 1.2 to 1.4 in 2028. For the second question, i.e., if we are considering share buyback in the future as an attractive investment opportunity, to be honest, we have ample of organic investment to be deployed.
We currently have a share buyback authorization from the board, which we renew every year, but is probably the last in terms of priorities for coverage allocation.
To be frank, we have made the exercise to value whether to increase the dividend per year, I mean, from 3% to 4%, or go for a different option like share buyback. The board decided to go for the dividend increase.
We have another couple of questions from Alberto de Antonio from Exane. The first one is, could you quantify how much of the CapEx plan is approved? Is there any risk of permitting or in the supply chain? And the second question is a question regarding the replacement of pipeline. If investments in H2 are postponed, is there a risk that also investments in replacements are postponed as well?
I think 70% is the number, right?
Yes.
Those are environmental authorizations already obtained. Therefore, we don't see any risk in terms of authorization. When it comes to supply chain, I think the big jump was done in the last two years. Now the supply chain is, let me say, used at a Snam that basically deploys EUR 3 billion CapEx per year. Therefore, we did a lot of work in the last two years in having a supply chain that can accommodate our budget in terms of amounts of spending as well as timing because timing is the other key component. On the second question regarding the kilometer pipes or substitution around the potential postponement of hydrogen, so substitution for us needs to be read together with the Asset Health Methodology, which is the methodology that gives us the possibility not to substitute if we can still utilize the pipes where we get termination.
Therefore, we will plan substitution according to the aging or the potential usage of our pipes. I don't think that a potential postponement of H2 might have a huge effect in that respect.
Oh, I don't think so. I mean, in the sense that if repurposing is postponed, you have more replacement because you're using the assets for more gas transportation. So it goes exactly in the opposite direction. But I have to say that also the simulation we showed you with respect to the different scenarios shows that, I mean, the usage of the pipes is with a rate that is higher than 50% beyond 2040. And that means that the substitution plan is driven mainly by the Asset Health Methodology that optimizes not only the CapEx, but also the output-based incentives that come.
Because if we optimize the substitution and we extend the life of a certain part of the CapEx, we get a return through the output-based.
Yeah, there are a couple of points that we have somewhat already addressed, but maybe they need clarification from Mafalda Pombeiro from Goldman. What drives the strong performance evolution in the associates in 2025 and the level of visibility we have on the net profit guidance? And on 2029, an EBITDA target, EUR 3.51 billion. How many output-based incentives do we have in the target and the contribution of CO2 network?
Thank you, Francesca. For the first one, I think I already responded, but basically, in the associate line, the big differential in 2025 will be the positive contribution of TAG in Austria, which was or will be negative in the closing of 2024 and will be positive for around EUR 50 million in 2025.
Therefore, our visibility on our net income guidance for this 2025 is pretty high as of today. When it comes to 2029 EBITDA, the contribution of the CO2 network we are assuming is less than EUR 20 million, so very marginal. In terms of output-based still for 2029, we should be reaching, let me say, our growth target by including the three services that Stefano mentioned before we are discussing with the regulator, bringing us to EUR 130 million, EUR 130 million contribution by 2039. On average, in the plan, it is about EUR 100 million. Very clear. We have one question from Thomas Treter. It is, please, can you expand on any potential opportunities with Eni on CCUS over and above Ravenna projects? As Stefano mentioned in the presentation, Eni is consolidating a vehicle with all their CCS projects, which includes 50% of our JV in the Ravenna project.
So we are considering contributing our 50% and getting resource projects to a wider portfolio. That clearly will depend on Eni's decision to go ahead with this project, which they are evaluating, and we will see in the next probably couple of months.
Okay. If there are no questions from phone, I think there are no questions. We have finished the chat questions, so I think we are done. Thank you very much for your attention. The Investor Relations Department remains available for any follow-up questions you might have.
Thank you.
Thank you.