Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Snam first half 2023 consolidated results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Miss Francesca Pezzoli, Head of IR. Please go ahead.
Good afternoon, ladies and gentlemen, and welcome to Snam H1 2023 consolidated results. Today presentation will be hosted by our CEO, Stefano Venier, and by our CFO, Luca Passa. In the presentation, Stefano will provide an overview of the H1 results, the key highlights of the period, and an update on the delivery of the strategic plan. Luca will talk you through the financial performance, then back to Stefano for closing remarks, and finally, the Q&A session. Now let me hand over to Stefano.
Good afternoon, also on my side. Let's start on page two. Gas demand declined by more than 16% on the first half. Gas prices were on average 55% below H1 2022, and experienced significant volatility, showing the fragility of the energy system. Domestic gas flows continued to be impacted by geopolitical situation. The decline in volumes from north was offset by a 20% increase of LNG import and lower demand by 16%. On the regulatory front, we had the approval of the by the regulator of the output-based incentives on fully amortized assets for the years 2023 and 2024. Those were in line with the expectation, as well as of transport and LNG tariffs.
The new Italian Integrated National Energy Plan, that is so-called PNIEC, aligned with the most recent EU directives approved, was filed to Europe. It first set ambitious decarbonization targets. Second, fully recognize the role of gas to grant security of supply and resilience. Third, support the role of Italy as energy hub. With reference to our activity, the key elements are the confirmation of the role of biomethane, whose contribution is maximized to about 6 bcm by 2030, representing approximately 10% of the gas demand mix. The relevance of hydrogen also via import and the recognition of the CCS, carbon capture and segregation, opportunity to reach the decarbonization target set. This is fully consistent with our strategy and business plan targets. The first half results were solid. EBITDA adjusted was up 5.7% or EUR 66 million year-on-year.
Net profit adjusted reached EUR 621 million, down 3.9% year-on-year, affected by the higher D&A and the cost of debt. Investment reached EUR 734 million, down 23% year-on-year, due to the acquisition of the first vessel. That happened in H1 2022. Technical investment, vice versa, are instead 33% year-on-year, supported by completion of the Piombino and the start of works in Ravenna. Net debt increased to EUR 14.6 billion as effect of the expected reversal of working capital. Looking at the portfolio of our associates, on April 4th, along with the other core shareholders, we successfully placed 5.7% De Nora shares via Accelerated Book Building to increase free float.
The deal generated cash in of approximately EUR 144 million, and a capital gain of about EUR 76 million. On the 7th of July, Nucera, the joint venture between thyssenkrupp and De Nora, was successfully listed, thus further crystallizing the De Nora value. The weighted average of cost of capital of gas transmission in Greece was lifted to 7.85% for the regulatory period between 2024 and 2027. This will support the profitability of our associate, DESFA, while increasing the visibility of the results. Moving to slide three. Beyond the financial performance, we have made significant achievements on security of supply. The Golar Tundra floating vessel started operations at the beginning of July in Piombino.
Tariffs for the period 2023, 2024 was set, and almost all the capacity sold for the seven year, the 20 years going forward. Storage level is about 87%, with a smooth infilling curve. A constructive dialogue with Italian and European institution is ongoing for a possible allocation of REPowerEU funds to some of these Snam's projects, starting with the first phase of the Adriatic pipeline construction. Moving to energy transition. The relevance of the SoutH2 Corridor was reiterated by Italian and German prime ministers during the bilateral meeting held in June. Germany, that is leading the way in terms of H2 market design and development, has started the outline and defined the core H2 network involving the gas PSOs, in order to have an infrastructure that connects key imports, production, and consumption area, maximizing the repurposing.
Moving to Snam, we further progress on the third-party appraisal of the H2 readiness for our network. Now with more than 1,500 km of pipes certified by RINA, and two times the full year 2022 levels. Our partners in the energy transition are obtaining relevant accomplishment as well. dCarbonX was awarded a gas storage license over the depleted Bains gas field in the East Irish Sea, with possible hydrogen upside in the future. While De Nora, De Nora Italy Hydrogen Technologies, Snam and De Nora joint venture, has signed a decree granting the public funding of EUR 32 million to finance the Gigafactory project. That is out of the EUR 63 allowed under the EU state aid co rule. I will now mention some relevant issues regarding our sustainability profile.
CapEx aligned to taxonomy and SDG represent 37% and 56% of the total and sustainable finance, reached the 75% of funding. The efforts to reduce leakages are progressing, and methane emissions are down by a remarkable 30%-32% versus the first half 2022, which correspond to about 63% for full 2023 versus 2015, well ahead of the United Nations targets of 45% reduction by 2025. Snam has been included in the CDP Climate A list, which ranks companies for their commitment, transparency, and action on climate change. We recently published a paper to describe our climate advocacy position, reiterating our commitment to the Paris Agreement and the tax transparency framework.
From a recent employee survey carried out, emerged an engagement level well above the 70%-75% threshold set in our ESG Scorecard, combined with a high participation rate of 80%. We also got two new important certification on anti-corruption and gender equality. Page four. Let me provide an update to the successful delivery of our strategic plan. On transport, output-based incentives on fully depreciated assets were approved, effective January 1st. We received a green light from ARERA and the government for the development of the Adriatic Line. Strategic projects submitted to the Italian government for the allocation of the REPowerEU public funds, as I mentioned before. We progressed on our H2 readiness certification roadmap, and leak detection and repair program was completed in 85% of the network main plans.
The SoutH2 Corridor, as I mentioned, is making strong progress and was filed to the PCI. Let's now move to storage. We offer new flexibility services to the system. We have made progress on permitting on overpressure at some storage facilities in the Lombardy area, as well as on performance upgrade in the storage in nearby Bologna. On LNG, Piombino was commissioned and entered into operation on time. The capacity was nearly fully sold. We submitted a proposal to relocate the vessel after the third year in the Liguria region, and the new commissioner was appointed. We started preliminary works for Ravenna and for new connection of the FSRU, and the truck loading project in Panigaglia, we mentioned in our business plan, was recently approved.
As far as energy transition business, on biomethane, we have executed the remaining pipeline of plants acquisition, and we took part to the first auction for upgrading with three projects that were all successful. On decarbonization progress, projects, we have first Modena H2 Valley, the development of a green hydrogen production hub, jointly promoted by Snam and Hera, that was awarded with EUR 19.5 million in funding as part of the National Recovery and Resilience Plan. We were also awarded with EUR 15 million for the realization of eight H2 refueling stations. Second, we are on track in the development of the pilot project with Eni for carbon capture nearby Ravenna. Third, we are progressing to launch a market test for expression of interest for the transport of H2 and the CCS capture.
On energy efficiency, we delivered a strong project pipeline in deep renovation projects, while working on the repositioning of our portfolio toward public PA and industrial clients. On page five, we spot the gas demand and flows. With regard to the gas market context, Italian first half demand was down 16%, -1 4% on weather adjusted, or 6.4 bcm. That was due to, first, the thermal electric sector, that was down 19.2 year and year, or about 3 bcm, driven by the electricity demand decline, the increase in imports, and the raise on hydroelectric production. Civil sector contracted by 2.7 bcm, due to the milder temperature we had in the last part of the winter, demand containment actions by 1 bcm , and the increase in energy efficiency. The majority of the decline is therefore not structural.
Third, decline in industrial sector by less than 1 bcm is mainly attributable to economic slowdown, with an effect particularly on energy-intensive sectors, so-called hard to abate. Worth reminding that last year, gas demand proved to be quite resilient in the first half and started to decline severely in the second part, with an effect on the year-over-year comparison. Moving to gas flows, they were impacted by the geopolitical scenario, with a 50% reduction in volume from north, fully compensated by an increase in LNG volumes by 20%, and as a result, the lower demand. We exported 1.2 bcm to Austria in the first half of 2023. Let's talk about the gas storage situation on page 6.
The gas in storage is approximately 15 bcm, including the strategic reserves, corresponding to a filling level of approximately 87%, well above previous year and the last 5-year average. We face next winter with a stronger energy system as we have gas storage facilities full above historical levels and Piombino floating vessel in operation. However, the recent gas price volatility shows that the gas market balance remains fragile and the reserve margin tight. European gas market now structurally relies more on LNG, or about 40% of total in the first half of 2023. Therefore, any pickup in Chinese demand could have an impact on prices. In addition, last winter benefited from the mild weather and demand containment measures that are temporary. Measures aimed at maximizing coal, by the way, are being lifted.
For those reasons, the reaction to this crisis need to be structural, and we are continuing to strengthen our infrastructure for that purpose. I will now hand over to Luca to comment the financial results.
Thanks, Stefano. Good afternoon, ladies and gentlemen. Let me now move to the first half of 2023 EBITDA analysis on slide number 7. EBITDA for the period was EUR 1,221 million, +5.7% versus last year, or EUR 66 million. The increase was mainly attributable to a EUR 71 million growth in the regulated revenues related to regulated revenues growth, 37 in transport, 9 in storage, and 20 in LNG. The incentives related to the fully depreciated assets are for around EUR 20 million. Higher contribution from flexibility services provided to the system for EUR 6 million, mainly related to the default service. These effects were partially counterbalanced by a negative volume effect due to the already commented decline in gas demand and the usual phase out of input-based incentives.
EUR 26 million increase in the energy transition business, mainly attributable to energy efficiency and in particular, public administration projects and deep renovation. The difference of the item, others, is mainly due to the one-off contribution in first half 2022, from the sale of gas excess inventory for EUR 33 million, and expiry at the end of 2022 of the fee related to a telco lease contract, only partially offset by some positive items in first half 2023. Moving on to slide eight, adjusted net income for the period was EUR 621 million, or -3.9% compared to first half 2022, due to higher D&A for EUR 28 million, following rising investments.
Net financial expenses higher by EUR 36 million, mainly as a result of higher gross cost of debt, which moved from 1% in first half 2022, to approximately 1.7% in first half 2023, due to the increase in interest rates. 2023 is a transition year, as the WACC was stable despite the rising interest rates environment. Our regulation provides a good cash flow hedging over time. The mark to market for 2024 WACC points to a potential upward revision.
A lower contribution from associates for EUR 17 million, which was the result of lower international associates contribution by EUR 20 million, driven by the decline of TAG, due to the expiry of most of the long-term contracts and lower volumes as outbreak of the Russo-Ukrainian War, partially offset by entering into the perimeter of SeaCorridor, which represents a key route to compensate lower flows from north and strong DESFA results. I will comment in detail in the following slide. A positive contribution of Italian associates by EUR 3 million, thanks to higher results from Italgas, OLT, and Adriatic LNG. Higher taxes and minorities. Tax rate was 24.5%, slightly higher than the first half of 2022. For the full year, we expect it to be at approximately 25%.
Moving to slide nine on associates, international associates, they positively contribute to the group net income by EUR 113 million, equal to 18% of the group adjusted net income. SeaCorridor entered into the perimeter in January 2023. DESFA confirmed the strong performance recorded in first quarter 2023, supported by the higher export at its interconnection points with Bulgaria, and by the related auction premium. Year-on-year comparisons also benefit by the pass-through mechanism for the energy cost introduced from July 2022, when prices sharply increased following the energy crisis. TAP continued to work at full capacity. The increase versus first half 2022 is largely due to the CPI linked tariff.
The second phase of the two-step market test launched in 2021, which trigger a minimum expansion of 1.2 bcm on IR, is now expected by year-end, with the results to be published at the beginning of 2024. Teréga results is up EUR 3 million year-on-year, thanks to higher bookings in imports from Spain, from more gas transported via Pyrenees Interconnection point with Spain, following a reversal weeks of strikes starting in March 2023, that slowed the arrival of LNG to France. ADNOC performance remains in line with last year. Looking at Interconnector, its contribution slightly declined year-on-year. Operating performance remains strong, but profit cap mechanism kicked in, while last year benefited from the recovery of past years underperformance. The assets enjoy a high medium long-term visibility, thanks to the bookings till 2027.
Cap reached until 2026, approximately 50% of 2027 capacity is booked. Moving to Austria, the negative contribution of TAG is due to the expire of the long-term contracts, only partially offset by higher reverse flow booking. Yearly auctions confirmed the relevant role of TAG for reverse flows, booked for approximately 90%-95% until 2025, and 50% for 2026, with high auction premium. GCA performance remains stable, also benefiting from long-term contracts until 2031. EMG performance, finally, is in line with the previous year. Turning now to cash flow on slide number 10. Cash flow from operations for the period amounted to minus EUR 719 million, driven by the expected working capital absorption for around EUR 1.7 billion.
This was mainly driven by about EUR 1.5 billion absorption due to the balancing activity, of which about EUR 650 million related to balancing item receivables, about EUR 500 million related to cash deposits decreased due to the prices reduction, and about EUR 500 million related to the full service receivables increase, only partially counterbalanced by +EUR 150 million in positive settlement items. Finally, a negative of EUR 250 million of energy efficiency net working capital absorption, driven by the fiscal credits related to Ecobonus revenues. As for the full year, we expect working capital absorption of about EUR 2.2 billion, with high uncertainty over the evolution of the balancing activity.
Net investment for the period amounted to EUR 1,024 million, mainly related to net CapEx and CapEx payables for EUR 759 million, the cash out of the acquisition of SeaCorridor for EUR 409 million, partially offset by the cash in of EUR 144 million for the disposal of the stake in De Nora. Other outflows were related to the payment of the full year dividends for EUR 919 million, resulting in a change in net debt of about EUR 2.7 billion. Moving to slide 11. Due to the previous commented cash flow evolution, the change in the debt of EUR 2.7 million resulted in EUR 14.6 billion of net debt at the end of first half, 2023.
The average cost of debt moved to 1.7%, and the fixed-to-floating ratio stands at 75%. Sustainable finance on committed financing is up to 75%, thanks to this recent funding closed in April. In April, we secured more than EUR 2 billion of medium long-term ESG link financing, out of which EUR 1.8 billion RCF obtained from a pool of banks and guaranteed by SACE. In April, our recent EU Taxonomy Aligned Transition Bond has been awarded as Transition Bond of the Year by Environmental Finance, as evident of our continuous efforts in the sustainable finance. In June, S&P affirmed the rating BBB+ of Snam, and lowered the threshold for the A- standalone credit profile from 12% to 11%, following the revision of the country risk assessments of Italy.
Given the previously commented working capital evolution and the funding already executed, financing needs for 2023 are almost covered. We confirm a net debt in range of EUR 15-EUR 15.5 at the end of 2023, most likely in the upper part of the range, depending on working capital volatility, and in particular, the withdrawal evolution of cash deposits. In terms of financing costs, based on the current forward curve, we expect the average gross cost of debt to increase to just below 2% at the end of the year. Now, let me hand over to Stefano for the closing remarks.
Thank you. Thank you, Luca. Just very, very short closing remarks. I do believe we delivered a solid H1 result in a very volatile environment. We are very well on track to achieve the 2023 targets that we confirm. In detail, EUR 2.1 billion of total investments, that are up 10% year-on-year, driven by the CapEx in our gas infrastructure and the acquisition of the second floating vessel. EUR 22.4 billion tariff RAB, that is up 5% year-on-year. Net income of around EUR 1.1 billion, and a DPS up by 2.5% versus 2022, that is in line with our dividend policy.
Net debt to fall close to EUR 15.5 billion, including the reversal of the regulatory working capital and the high uncertainty on balancing activity, as Luca described so far. We face 2023 winter in a stronger position. The situation remain volatile. We need to keep the focus on strengthening the energy system for the long term. EU and Italian policies continue to support our strategy. The REPowerEU funds could back further key security of supply projects while improving affordability. The PNIEC fully recognize the role of gas and green gases, as well as carbon capture to reach the decarbonization targets. We have made sound progress over the past months to deliver the strategic plan targets. We are now available to answer your question. Thank you so much.
Excuse me, this is the conference call operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from José Ruiz with Barclays. Please go ahead.
Yeah, good afternoon, and thanks for taking my questions. I just have two. The first one is, if you could give us a little bit of the timing of the approval. You said you filed the PCI for SoutH2 Corridor, if you can give us the timing of approval. Secondly, if you can split the allowed WACC in DESFA in Greece, between cost of equity and cost of debt, recognized. Thank you very much.
Okay. About the first question, the timing for the PCI, I mean, the procedure is expected to end to the conclusion by year-end. Of course, the conclusion of the PCI process will make the projects, let's say, available for specific funding. That is, means that, that is the first part of the progress for getting, let's say, additional financial support for the deployment of this project. For the second, I turn to Luca.
Yes. On, on the second one, regarding the 70.85% new allowed return from 2024 to 2027, the gear ratio is 45%, the debt assumption is 4.8%. When it comes to, basically the risk-free rate is 2.36%, country 1.3%, and a market risk premium of 5.5%.
Thank you.
The next question is from Javier Suárez with Mediobanca. Please go ahead.
Hi, all. Thank you for the presentation. Two or three questions, on my side as well. The first one is on the strategy for the company to provide security to European, I guess, gas and hydrogen supply. There has been a document published by the European Hydrogen Backbone that is extending visibility to 2030, then 2040. They are mentioning a new interconnection with Italy to be built by 2040.
The question for you is which is the possible upside for Snam from the development of southern European hydrogen hub by 2030 and then 2040, and which would be in your view, the contribution to ensure better diversification of energy supply for Europe? Second question is on the upside from the recovery REPowerEU funds. When do you expect to have visibility on collection and also details on the project? That would be helpful. The third question is latest thought on the profitability and possible upside from your energy efficiency activity. Many thanks.
Okay. With respect to the strategic perspective, as we said, the SoutH2 Corridor and is one of the five corridors that has been identified by the European Commission, is progressing through the PCI. I think the most valuable part for this project is the fact that according to the estimates and the assessment we have done so far, the largest part of the transportation pipe will be repurposed from existing pipes. We estimate the current estimates assess that 70% will be, let's say, repurposed, and that makes the competitiveness of this corridor in terms of cost of transportation, very high with respect to, let's say, alternative corridors, of course, with respect to the distance.
The second part is what role can be played? Of course, the role is with respect to the gas, it's much easier. I mean, as Luca said, in the last auctions for the reverse flow toward Austria, 100% of the capacity has been sold for the next 2 years, 50% for the third year. Means that there is appetite for, let's say, volumes.
Of course, the total capacity that was put on auction was up to 6.5 bcm per year. Among the projects we are developing that will be submitted for REPowerEU funds, there is also a debottlenecking or strengthening of this export capacity up to 9 bcm, 10 bcm per year, because we think that this could be in the interest of the surrounding countries. That will work exactly with the same perspective also for hydrogen. When do we expect the deadline for REPowerEU? I mean, according to the most recent information we have, there is a deadline set by the end of August that might be potentially managed within the following 45 days-60 days.
To be conservative, I might say that by the end of September, end of October, we should have a return on the total amount of funds that will be devoted for the three projects we have submitted according to the request that came from the government. For the third one, I turn to Luca.
Hi, Javier. Regarding your contribution of energy efficiency for the full year, the overall energy transition business should contribute around EUR 80 million of EBITDA for the full year. You know that we're starting from a good, you know, first half. The majority of the contribution now of this increase toward second year is actually coming from energy efficiency, which is providing the majority of the growth between now and year end.
The next question is from Meike Becker with HSBC. Please go ahead.
Thank you so much I have three . The first question is on your long-term expectations for gas demand, let's say for 2030 and beyond, considering the continued depressed levels that we are seeing. The second question is on the hydrogen supply options into the future, and I guess there are two parts to it. The first one is, under what circumstances would you consider not forward with investment into the South Corridor? The second part is, how do you see the supply options between shipping hydrogen into Europe and the pipeline option that the transmission system operators have proposed? Thank you.
In terms of projections on gas demand, let me rely first on the national update on the energy plan that was sent to Europe a few days ago. If we take the two scenarios that has been considered, the first one projects for 2030 gas consumption that is up to 67 bcm, that is with the current policies. Whilst the consumption expected for 2030, that is compliant with the CO2 reduction of 45%-47%, projects 59 bcm of gas. There is 1 thing we should consider in valuing these numbers, is the fact that the underlying economic growth that has been assumed for these scenarios, according to the guidelines from EU, is about 0.3% on average per year for the country.
That might be a bit conservative to a certain extent. That would be reflected on the, let's say, projections of consumption. To say, in general, the PNIEC is projecting something in the region of 60 bcm or with a more, let's say, dynamic economy, we might have slightly more than 60 bcm of gas. Going forward toward 2040, that projections reduces the total gas demand in between 50-55 bcm. That is according to the government scenarios. I don't know if I got exactly your question on H2. What I'd like to say that is the fact that, of course, these projections and the development of the hydrogen corridors still need to have.
Not only the financial support, but also the final approval of the market design that is part of the gas package that is under discussion at the European level. What we do expect by year-end is the final approval of the gas, the green gas package, that will design to a certain extent the market, and then, of course, will come the mechanism to, let's say, recognize the return on the investment of the hydrogen infrastructure. That is, of course, a key point for the investment decisions going forward. There might be also, in this scenario, the opportunity of receiving, let's say, hydrogen through shipping, possibly through, let's say, through the cracking of the green ammonia, is part of the scenarios we are studying.
As you know, Italy has several industrial ports along the coast that might receive, this kind of shipments. Of course, going forward, what we might have is a mix of the two solutions.
Thank you.
The next question from Marcin Wojtal with Bank of America . Please go ahead.
Yes. Good afternoon. Thank you so much. A couple of questions. Firstly, if I can ask you about your Austrian associates, how much visibility do you have on these assets achieving a turnaround? What is actually required to see earnings rebounding? Do you have visibility on auctions, or perhaps can you enter into some longer term contracts? When would you expect earnings to improve in that part? Secondly, can I ask you about your potential targets for M&A? I'm talking more about small and medium-sized M&A. Previously, you said that you wouldn't rule out, perhaps some transactions in Italy.
It was reported in the press that you were looking at assets of Edison, I believe, in Italy. Is there any update on your M&A ambitions? Thank you.
Thanks, Martin. This is Luca. I'm answering the first one, and then I'll leave Stefano to comment on the second one. Basically regarding TAG, clearly, you know, we have some visibility on, you know, booking up until, you know, 2027. The assets as a regulation, which currently is not supporting the reversal of flow that we've seen in 2022, then we are expecting, you know, to be there going forward, given, you know, the geopolitical situation. We are, you know, conducting basically discussion with the regulator in order to change the way in which this asset is remunerated. The discussion has started.
We expect to have, you know, further visibility, I would say, and, you know, final decision by 2024 or the end of 2024, and to have, basically a new type of regulation, kicking in, in 2025, for TAG. That's, you know, what we're working on. Clearly, you know, the asset has to change, the way it's remunerated, given the radical change in flows, that we've seen, and we are expected to be there, for the foreseeable future.
On the second one?
Yeah. With respect to the Edison's to catch them in the storage activity of Edison, we already expressed during the business plan presentation and several times afterwards about the fact that we are interested in looking at that asset. I have to be frank, honestly, the process has not started yet. We do expect it's gonna start very soon, but not yet, as a matter of fact. We will follow that process, and we will see how it will develop.
Okay. Thank you.
The next question is from Stefano Gamberini with Equita. Please go ahead.
Good afternoon, everybody, and thanks for taking my question. Just a few of them. First of all, regarding the picture of Italy in the future. According to Minister Pichetto, he plans to present a new energy decree in September on energy situation. He underlined in some interview that according to him, the LNG import of gas should be around 35 bcm, 40 bcm in order to be completely independent in the future from situation like the Russian one. He also referred to Algeria, which is now the main supplier of Italy. What do you do...
Could you comment about the statement 35 bcm, 40 bcm means, I don't know how many new LNG, are you also ready to invest in this asset or not? The second, regarding the update of the WACC on 2024, do you expect around 80 basis points of increase in returns? What is the scenario that you expect from 25 basis points onwards, considering the current situation? The third, according to your statement, you are interested also in some M&As activities, on the other day, short-term interest rate scenario worsened a little bit compared to the presentation of your business plan. Could we expect also some asset rotation in the forthcoming months or year, or you're still?
Fine with the current situation of no disposal of associates? Thanks.
Let me say first about the projections of LNG. I think with the completion of and the full operation of Ravenna, Italy will have a total energy capacity in between 28 bcm-29 bcm, okay. With respect to the projections that the Minister of Energy mentioned of 35 bcm-40 bcm, I not have clear at what year he was referring to, okay. I think that means there could be space for further LNG capacity. For the time being, we don't have projects for expanding that capacity, but doesn't mean that other entrepreneurs might intend to develop these kind of assets.
I have also to say that, as was mentioned during our presentation, I think we have also to see how the market sounding that will happen year-end will go with respect to the possible bottlenecking of the capacity of the TAP. As we know, presently, that asset is importing roughly 9 bcm of gas, there has been, let's say, first approval for a minimal expansion of 1.5, 1.3, we have this sound of the market by the last quarter of the year to see if there is gas available for further imports and appetite from the market. Theoretically, this increase might top up to, let's say, 7 bcm, 10 bcm, we will see what the market will turn.
Third, we have also to consider how the production of gas will evolve in Libya, according to the significant investments that Eni has planned to do on the offshore part of that country. I think there are different pieces in the puzzle that will evolve in the next 2 years-3 years, and will let us to understand what is gonna be the balancing between, let's say, the sourcing through pipes and the sourcing through LNG. About the third, we'll leave Luca for the second. About the third, I mean, we are sticking with the position we expressed during the Capital Markets Day. We said that we will consider asset rotation in case of, let's say, M&A activity.
The M&A activity for the time being is still on standby, as I said, because the process has not started yet. Therefore, we are sticking with that, the same position we had a few months ago. Luca?
On the second one, the expectation, according to how the variables has moved in terms of, you know, WACC, basically reset for 2024, is in the region of between 80 and 90 basis points upwards, which is about 20 basis points higher than what we actually assume in our business plan. Going forward, for the following years, clearly a lot will depend on how the formula will be, you know, triggered down. In the business plan, we had, you know, a reduction from the six, from the 2024 increase by about 40 basis points. That's the assumption for now. Clearly, when we have more visibility towards the end on the reset this year, there might be, you know, some visibility also for the following down in 2025.
Thank you. Just a quick follow-up. The 40 basis points reduction is from your previous expectations. This means around 60 basis points reduction compared this increase of 80 basis points in 2024. Am I wrong?
The reduction in the business plan from the reset in 2024 was 40 basis points. According to the market-to-market of the formula, as of today, the reduction could be even smaller, in and around 30 basis points.
Thank you.
The next question is from Emanuele Oggioni with Kepler . Please go ahead.
Good afternoon, thank you for the presentation. My first question is on output-based incentives . You collected EUR 25 million in each one, if I'm not wrong. My question is, what could be the full year contribution, so roughly 50, twice this amount, in collected in each one? This is the first question. The second is on LNG vessel, called Tundra. I wonder, what is the booked capacity for the coming years? If you could provide us color, more color details on that. Also as regards to the capacity booked for OLT plant.
Finally, as regards the gas storage, you mentioned 87% of the capacity. I suppose that basically, this means that all the next winter's demand is already fully sold for gas, Snam gas storage. Thank you.
Let me start from the last. I mean, we are standing at 87% fulfillment. We count to reach the 95%, that was the same level we reached last year. The fact, that means we're gonna have roughly 12 bcm of cash, of working capital, plus the strategic reserve of 4.5. That is basically the level we had last year. It's not enough to say, frankly speaking, that any problem for next year will be then solved, because mainly will depend on how the winter is gonna be. Of course, if the winter will be as mild as last year, I mean, we will not run significant risks. If it's gonna be more colder, of course, depends on how much colder. That is 1 point.
Second, when we consider the possible risk profile for next year, we have to consider that you have two dimension to deal with. The first dimension is the total consumption over the winter. The second is the peak in demand in specific days when it's extreme, the climate might be extremely cold. That is, of course, the more complicated part, especially if these cold days comes in February and March, when the storages are half empty, and the pressure you have in the storage is much lower than at the beginning of the winter.
The way you can, let's say, reduce down to zero this kind of risk, is to have even more flexibility on, let's say, the delivery points for receiving the gas, and in to that extent, the second floating vessel will play a significant role on the next scenario to secure the situation in the different winters. In terms of outbase, what we do expect is almost EUR 100 million for the year. With respect to the EUR 50 million, EUR 45 million we had last year, consider that the major change in this performance will be, will come from the fully amortized assets, the so-called Asset Health contribution that will hover in between EUR 40 million-EUR 45 million.
With respect to the Golar Tundra, that was your second question, I can tell you, I mean, we have sold the capacity with the auctions from October, the first, that is the beginning of the terminal year. For the first year, we have sold 100% of the capacity. For the second and the third year, we have sold 95% of the capacity, so means that we have only two slots still available. Whilst from the fourth year to the 20th year, means in the following 17 years, we have already sold 87% of the capacity. In other words, almost full of the capacity of that asset has been sold for the next 20 years.
Just complementing on OLT, 100% to 2027 is fully sold, and 20% to 2029.
Thank you.
Gentlemen, there are no more questions registered at this time.
Thank you all, and I wish you good vacation for those who have still to do them, like we. Bye.