Good morning, ladies and gentlemen, and welcome to our 2019-2021 Strategic Plan Update. As you can see from the agenda on the screen, our CEO, José Bogas, and our CFO, Luca Passa, will begin by introducing Endesa's current outstanding position, after which they will provide an overview of the power sector landscape and current market trends in Spain. We will then share an updated view of our strategic plan with the main financial figures. After a brief conclusion of the presentation, we will close the event with a Q&A session. Let me remind you that the media will be able to listen to both the presentation and the Q&A session, open to those connected both on the call and on the web. Now, I'm turning it over to José Bogas.
Thank you, Mar, and good morning, ladies and gentlemen, and thank you for joining us today. I am in slide number four. In recent years, Endesa has consolidated its position as the Iberian market leading player. We've managed to not only increase our turnover and customer base, but we have also made a stride in our commitment towards a cleaner, more sustainable, and efficient business model. Just to point out some figures, Endesa is the first player in electricity sales with 103 terawatt-hours, and the second in gas sales with 95 terawatt-hours. Total customers, both in electricity and gas, amount to 12.4 million. We are the first player in distributed energy, reaching around 114 terawatt-hours, and we've nearly completed our smart meter deployment plan with nearly 12 million devices replaced. Our generation share is growing through new renewable capacity, being now approximately 50% CO2 emission-free production.
Endesa is an early mover in new products and services, with almost 2 million contracts in e-Home and around 2,000 electric vehicle charging stations. These figures are the result of a clear strategic vision and the delivery thereof, which will be ready for the challenges that the sector will face and also for new opportunities that may arise. Our integrated model is a clear advantage and allows us to look at the future with enthusiasm. Moving to our business plan pillars on slide number five, our strategy is and will remain strongly focused on the opportunities that the decarbonization will bring in the future, being our main priorities and aspirations. First, we aim at maximizing customer value and consolidating our leadership with Endesa X. Second, we aspire to further develop a smart and optimized network with continuous focus on efficiency.
And third, we target the decarbonization of our fleet while maintaining security of supply. We are set to pursue these pillars, maintaining a strong focus on efficiency through digitalization and, of course, maintaining attractive shareholder returns. Let me now comment on the achievement recorded so far on the main operating target of the past business plan. Endesa's strategy, oriented to customer value creation, has been quite successful. Estimated integrated margin for 2019 reaches EUR 23 per megawatt-hour, improving initial forecast. On gas, proactive initiative, coupled with a faster-than-expected market context normalization, have resulted in a gas margin of around EUR 2 per megawatt-hour, ahead of the trend we anticipated. Our recently launched Endesa X business line is also performing ahead of expectations. We now anticipate 1.8 million clients' contracts in the e-Home division by the end of the year.
When it comes to grid, let me remind you that we have fully completed our smart meter project implementation this year, while additionally we have grown inorganically with the acquisition of Empresa de Alumbrado Eléctrico de Ceuta. Our focus on renewables has resulted in a significant increase of the Enel Green Power Spain portfolio, which incorporates 879 MW obtained in the two auctions held in 2017, and the bolt-on acquisition of Gestinver, which together exceeded the initial target. Our investment in decarbonization and efficiency have resulted in a significant increase in the share of CO2 free emission generation. Finally, on digitalization, key enabler of our strategy across all mainstream businesses, we have successfully deployed more than 50% of the committed CapEx. In the following slide, number seven, I will give you a snapshot of our delivery towards financial targets since 2014.
We have performed extremely well over the last four years, accomplishing and sometimes exceeding the target that we had set in our business plans. In particular, CapEx had been steadily increasing from EUR 0.8 billion in 2014 to EUR 1.4 billion expected for the end of this year, which represents an annual increase of 13%. Moreover, exhaustive and successful cost-cutting effort has delivered a 4% cumulated annual reduction in our operating expenditure. Main profitability figure evolution during the period is a clear example of the results of a successful and well-planned strategy, with over 2% cumulated annual growth in terms of ordinary EBITDA and 12% at net ordinary income level. As a consequence, Endesa has delivered during these years one of the most attractive returns to shareholders in the sector, with almost 90% of total shareholder returns after our 2014 secondary share offering.
Moving to the energy transition context in Spain, on slide number nine, the energy system medium to long-term future is defined by the transition of the model within a decarbonized economy context. The three main challenges the energy sector and, in particular, the power sector face are: in power generation, the mix has to evolve to generate over 70% of total power from renewable sources. This requires increasing the renewable capacity by 55-60 GW, as well as maintaining the current competitive low-emission backup capacity to ensure all demand is met. Secondly, it is essential to encourage smart electrification on final energy demand to meet the environmental targets set for both the European Union and Spain. Final energy consumer sectors, mainly transport and heating, have to reduce their emissions, and the most efficient way to do this is through electrification of the demand.
The amount of electricity in the final energy mix has to increase from the current 24% to 33% by 2030. Finally, being able to manage a system with over 70% of renewable power generation and unexpected growth of the total demand requires modernizing and automating the power grid, both in transmission and distribution, which will entail around EUR 30 billion of investment by 2030. Now, on slide number 10, concerning the energy policy in Europe and how it affects Spain, the environmental target set by the European Union and its member countries recently revisited to be more ambitious, accelerating the path towards the energy model's future. Currently, the 2030 goal for the European Union requires reducing the overall emission by 40% with respect to 1990.
The equivalence of this target for Spain is still under discussion, but the likely proposal will be to set the target of cutting emissions by 20% with respect to 1990. This requires a reduction of around 100 million tons of CO2 from today's 341 million tons to around 240 million tons by 2030. As for the renewable final energy consumption target, the target will probably be to reach 35% by 2030 from the current 17%. This requires an additional 55 to 60 GW of installed capacity before 2030. Finally, as per the energy efficiency target, Spain will have to reduce its energy consumption by 35% with respect to the grid business-as-usual trend scenario. Moving to slide number 11, on how this energy policy will resolve as potential emission target, to meet these ambitious goals, all of the energy consumer sector will have to take action.
The main priority will be to increase the electrification of final energy demand, which achieves two goals. Firstly, it takes advantage of the energy efficiency gain derived from the use of electricity, and second, this electrification is the only means of having the renewable resources required to meet the environmental target. With this context, we believe the electrification of the final energy mix will increase to 33% from the current 24%, as you can see in the light blue box on the right. Moreover, meeting the targets requires reaching 70% of renewable power generation, as well as keeping the current nuclear generation capacity, which will enable over 85% of power generation to be emission-free.
The increasing electrification of final demand and renewable power generation would allow us to meet the CO2 reduction target, assuming a 35% reduction in emissions trading scheme sector and 66% reduction in non-emissions trading scheme sectors, both with respect to 2005 levels. We can see how this will affect other sectors on slide number 12. The environmental priorities lie within three relevant sectors. First, road transport is responsible for 25% of total CO2 emissions in Spain since 96% of its current energy consumption is fossil fuel-based. To meet the target, over 30% of total kilometers driven by light vehicles should be driven by battery electric vehicles or plug-in hybrid vehicles by 2030, thereby reducing the sector's energy consumption and emissions. Second, in the residential and services sector, the goal is to increase renewable final energy consumption and to encourage the use of heat pumps for heating.
Supporting retrofitting of buildings will be required in those buildings where this will be efficient. In both transport and residential heating sector, electricity is four to five times more efficient than fossil fuels. Therefore, electrifying the final energy demand enables meeting the three environmental targets, that is, CO2 reduction, renewable penetration, and energy efficiency. And third, finally, in the industrial industry sector, measures include introducing renewable energy where possible and electrifying processes in which this is technically viable. As far as the evolution of the generation mix is concerned, on slide number 13, electrification of energy consumer sectors will entail an increase in overall power demand in order to face these changes in the power sector efficiently. The key measures to consider are: first, the introduction of smart tariffs to foster an increase in overall power demand during off-peak hours to minimize the increase in peak demand.
Second, in order to ensure that power demand is met, it is essential to keep the current thermal installed capacity after 2020. Coal plants and CCGT will gradually reduce their production, and in 2030, their growth factor will be below 1,000 hours, so their emissions will be reduced. However, they will still provide reliable backup capacity at a competitive cost as opposed to potential newly built thermal plants. It is important to mention the role of nuclear generation, which is emission-free and also provides base load capacity, reducing the wholesale market price and stabilizing the system. Third, and finally, capacity market mechanisms supplementary to the current wholesale market have to be introduced so that backup technologies can competitively remain in the system.
Regarding the power transmission and distribution grid, on slide number 14, operators are expected to invest between EUR 29 billion-EUR 34 billion in grid infrastructure until 2030 in order to support the transition of the energy model. The main levers that will drive investments will be the modernization and digitalization of grid assets, the electrification of energy consumption, and the connection of emission-free generation. This total investment up to 2030 represents around EUR 2 billion-EUR 2.4 billion annually, which is in line with historical investment and below the current regulatory limits. Moreover, this annual amount will be lower in the first period, 2017 to 2019, and gradually increase between 2026 to 2030 due to an increase in the needs for renewable assets, penetration of new technologies, and demand. Modernizing, updating, and digitalizing the power grid are the main investments to be supported.
Regarding digitalization, 70% of this investment comes from automation of substation and transformation centers, systems, and communication, and preventive, predictive, and corrective maintenance of the grid to support new renewable energy. In order to foster these necessary investments in the grid and assure the transition of the energy model, regulation will have to be attractive for grid operators. Now, I will hand over to Luca for the strategic plan update.
Thank you, José, and good morning to everyone. I'd like to share the key pillars of our 2019-2021 strategic plan. So let me walk you through the next pages. Moving to slide 16, in order to continue consolidating our leading position in Iberia and to capture growth opportunities of the energy transition, just explained by our CEO, we have updated our strategic plan to reflect our main priorities and aspirations. First, we set to further decarbonize our fleet while maintaining our security of supply. Second, we will continue developing smart and optimized networks. And third, we aim at maximizing customer value and consolidating our leadership with Endesa X. Enabling these strategic elements will require a strong commitment to digitalization and innovation, a continuous discipline efficiency plan, and sustainability-oriented organization. Integrating these pillars enables us to present a business plan clearly based towards maximizing growth over the long term.
Moving to the first pillar on slide 17, the first pillar centers on our commitment to decarbonize our mix while ensuring security of supply, entailing the following strategic guidelines: significant growth in renewables with attractive returns, keeping emission-free generation fleet while ensuring security of supply, and carrying out investment in thermal fleet according to European regulation to ensure efficient and sustainable operations, increasing emission-free generation. As far as renewables on slide 18, during the timeframe of the plan, we are committing a total cumulative CapEx of around EUR 2 billion in renewables, which doubles the amount of investments of the previous plan.
Starting from the 6.5 GW of total renewable capacity as of today, which includes 4.8 GW of hydro and 1.8 GW of wind and solar consolidated through Enel Green Power Spain, we aim to develop the 879 MW awarded in two auctions held last year, which are expected to come online before 2019 year-end. We are also set to build additional capacity of 1 GW, mostly in wind and solar by 2021. All these new projects are expected to bring returns over 9% on average. In this renewable capacity in 2021, we reached 8.4 GW with an estimated annual output of nearly 16 terawatt-hours, thus increasing our company's renewable energy generation by 30% altogether.
As we did with the recent Gestinver acquisition, we will continue monitoring bolt-on acquisition as long as it might be value-accretive. It is worth noting hydro technology's important contribution to decarbonization, providing emission-free production and high flexibility.
Decreasing production over the plan is driven by an exceptional 2018, which will lead to over eight terawatt-hour expected output. With this commitment to renewable energies, we will offset the drop in conventional thermal power generation and take another step forward towards decarbonization of its generation mix within the framework to the medium and long-term energy transition process. Moving now on our thermal power generation fleet on slide 19, in the Iberian Peninsula, our plan envisages the following. Regarding national coal, BREF investments have been finally ruled out for the Compostilla and Teruel plants. This is in line with the present and expected future market environments, which will not let this technology achieve the minimum profitability criteria. The plan includes activities for an organized decommissioning in June 2020, as indicated by the European emission legislation, which will be supported by a site requalification plan and reallocation of employees.
Moreover, we expect to complete the process of adapting imported coal power plants to comply with the strictest BREF standards on polluting emissions. In particular, investing in the As Pontes power plant in the same way as we concluded back in 2017 as the Litoral power plant in Almería will enable us to guarantee greater sustainability and diversification of the generation mix. Regarding the operation of our nuclear power plants, we will continue to promote the long-term secure and profitable operation while keeping plants to the highest security standards in accordance with local and international regulations. Finally, the investment in the mainland will focus on two areas: the investment in adapting generation plants to the IED BREF legislation to comply with the most stringent emission limit coming into force in 2020, mainly in Balearic and Canary Islands, and investment in battery development to optimize the generation fleet.
Lower capacity in the mainland during the plan will be compensated by investment in new capacity that will be generating 2021 and onwards. Moving to slide 20, we expect to have a lower production from conventional thermal sources, which will be virtually offset on the horizon of this plan by the increased production from renewable energy sources and improved availability of our nuclear fleet. The change of the generation mix over the planned horizon will enable our emission-free generation to reach approximately 56% by 2021, comparing very favorably with the intermediate 2020 target we have set for emission reduction. In 2030, if the percentage of electricity coming from renewable sources will reach 70%, our CO2 emissions will be around 50 million tons, below the 20 million shown on the chart, a level aligned with the most ambitious objective of the Energy Transition Ministry.
In this regard, we are well on track to achieve a fully decarbonized mix before COP21 deadline of 2050. Moving to smart grids on slide 21, distribution remains being a fundamental pillar of our strategy. We are clearly committed to become a digital network operator with a view to increasing asset value to smart grid investments and best-in-class operations. As you can see on slide 22, we are planning to invest EUR 1.9 billion till 2021, 53% of which will be allocated to grid digitalization with network automation and modernization as key drivers for future grid efficiency. Let me remind you that our smart meter implementation plan was already fully rolled out this year, and only marginal CapEx amounts are included going forward.
Therefore, in comparable terms, we can point out that the current plan represents an increase of EUR 100 million versus the old plan, ensuring rough stability over the planned horizon. These investments in grid modernization and automation will position us to capture future opportunities arising from the energy transition, as illustrated by our CEO. Moving on margin evolution of our distribution business on slide 23, regulated investments coupled with higher incentives and improvement in non-regulated revenues will enable us to partially offset the reduction in the lower returns expected for the second regulatory period affecting 2020 and 2021. This impact, reflected in our assumption, is aligned to the latest CNMC proposal of 5.6% financial remuneration in 2021. Moving to the efficiencies driven by the realization for distribution on slide 24, these efficiencies obviously are aimed at improving asset resilience and will contribute to better grid reliability and quality of service.
In particular, we will be able to reduce interruption by 26% and grid losses by 0.4 percentage points, while further reducing the OpEx for customers by 9% in three years. And now moving to the customers, the other pillar of our strategy, we have a customer-centric vision that will lead us to maximizing value through distinctive power and gas commercial strategies and leading energy solution business. This will entail consolidating our power and gas businesses with a customer-centric focus, improving our margin through customer value-based engagements, growing based on innovation, differentiating business models, and development of digital platforms, full digitalization of the customer-related process. And now on chart 26, we are fully committed to a superior customer experience, a plan of excellence in customer retention and efficiency in operation. This strategy for power and gas will rely on three main pillars: customer value, customer-based efficiency, and operative excellence.
A greater understanding of our customer through advanced tools such as advanced analytics will allow us to increase marginality, which will also drive the continuous switching of customers from the regulated market to the liberalized market. The implementation of the new commercial strategy in B2C, with a sales mix optimized to the new market condition, will enable us a reduction of churn rates in both electricity and gas, thus reinforcing our customer-based loyalty. In B2B, we are evolving our strategy to a more tailored solution approach for our most sophisticated clients. Efficiency and operational excellence will be reinforced by designing the customer relationship and operational models with a relevant drive towards digitalization and process automation.
Endesa X will complement our approach to clients aiming at different needs, relying on three pillars of action: maximizing consolidated businesses and services to the residential sectors and services provided to industrial customers based on the energy savings and efficiency, promoting the key businesses for decarbonization, distributed generation, smart lighting, and electric mobility, and developing new global initiatives leveraging on Enel X global scale and knowledge of products and markets. Moving now to our power and supply business on slide 27. The first step will be to consolidate our leadership position in the Spanish power business, maintaining our current market share in a competitive environment through a strategy aimed at capturing customers switching from the regulated to liberalized market, managing customer lifetime from customer acquisition to retention, focusing on more valuable segments, and developing more sophisticated and flexible products.
Our customer base will remain stable at approximately 11 million, but with an increase of almost one million in free customers. Sales will improve by 3% to 106 terawatt-hour, driven by higher volume in B2B and B2C. The effect of the strategy in supply, alongside with the generation initially described before, will crystallize integrated margin as we manage our generation and supply margins together. For 2018, we expect to achieve an integrated margin of around EUR 23 megawatt-hour that will increase up to EUR 27 megawatt-hour by 2021, supported by higher renewables in our generation mix and improved market conditions. Gross supply margins are expected to remain stable at levels around EUR 8 megawatt-hour in 2018 and above EUR 8 megawatt-hour, supported by the value management of our customer base and improvement in the mix.
Moving to gas on slide 28, we aim to consolidate our position as the second operator in Spain with a 60% market share. During the period of this business plan, we expect the number of gas customers to increase significantly at a much higher rate than the figures forecasted in the old plan, reaching a total of approximately 1.9 million customers in 2021. Gas sales are expected to decrease to a cumulative figure of 5 terawatt-hours by 2021 as a consequence of no wholesale sales considering the plan from 2020 onwards. On the contrary, retail sales and CCGTs consumption are expected to increase substantially. We will seek to extract the maximum value from the flexibility and competitiveness of our gas contracts thanks to the improved market fundamentals.
This will allow us to substantially improve the retail unitary margin from around EUR 2 megawatt-hour in 2018 to around EUR 3 megawatt-hour by 2021, which are substantially higher margin levels than the previous plan. Now moving to efficiency on digitalization KPI on slide 29, the strategy following retail will have positive effects in the churn rate and cost to serve, which will drop by 15% in unitary terms as a result of redesign of our internal processes and customer interface, which will be fully digitalized on a new platform. The digitalization effort in the retail area, which includes over 50 projects, has led to a very relevant increase in the main digitalization KPIs, which will also reflect the change in pull versus push channels. The number of contracts with e-billing will increase by 39% during the period of the plan, up to nearly 4 million contracts.
The number of digital contracts will expand by 19% and will stand at 4.4 million at the end of the plan. The proportion of digital interaction will climb from 72% to 78%. Now moving to Endesa X on slide 30. Endesa X will focus its activity on four main areas based on customer typologies that include a specific line of products focused on e-Mobility. e-Home includes B2C customer-related activity. In addition to the purpose of maximizing the current maintenance and repair client and home appliance business, new initiatives such as distributed generation or smart home hub will be rolled out. The operational target for 2021 is 2.5 million of total maintenance and repair clients. e-Industries focus on maximizing the potential of current products. It will evolve its portfolio towards platform-based flexibility service, distributed generation, and gasification of heavy transport.
e-City was created to grow in public smart lighting and develop flexibility services such as energy management for public administration. e-Mobility will promote electric mobility, as we will detail on the next slide. And I'm now on slide 31. Endesa X presented last Friday its strategy related to electric mobility, which will entail a nationwide deployment of recharging points. We will plan to install both public and private up to 41,000 recharging points by 2021. All the infrastructure deployed in the mobility plan will be connected to a digital platform that will allow users to have all the activity and recharge information on the same app. Now moving to the efficiency through digitalization on slide 32. The business plan we are presenting today represents another step towards the deployment of the initiative we are already carrying out to prepare our company for upcoming challenges.
We strongly believe that digitalization will be the cornerstones of our future business value creation. This is why we are allocating EUR 1.3 billion up until 2021, expected to achieve savings of approximately EUR 260 million. We will continue consolidating our solid track record of outstanding cost reduction achieved in recent years and maintain this level of excellence in the future. Now on to slide 33. As commented, we will invest EUR 1.3 billion in digitalization for about 80% allocated to distribution projects. Our digital plan will result in top-line benefits, but also important cost savings reaching EUR 260 million by 2021. Smart grids will enable clients' active participation in the energy market. Automation of construction processes, such as in renewables, reduces significantly overall costs, almost neutralizes risk of overrun, and results in better value creation and shorter time of deployment. Digitalization applies also to our thermal capacity.
Our aim is to evolve towards the power plant of the future with substantial improvement in flexibility and asset reliability. Moving to slide 34, we can see that our efficiency program affects all of our business lines, reflecting a sound evolution since 2015. When it comes to generation, the continuous operational improvement in all the technology using the most advanced optimization tools and leveraging on digitalization will allow us to further reduce our generation unitary cost by 10%. Likewise, regarding renewables, we are committed to achieving several cost synergies, mainly coming from O&M unification in hydro and wind and power. All in all, we expect fixed cost per megawatt to decline by 21% when compared to 2018, as we manage to contain costs despite higher capacity.
In distribution, digitalization activities, the increase in the resilience of the assets, and the improvement of the quality of service will allow us to improve the main operational efficiency indicators throughout the plan. As a result, we aim to further reduce our unitary cost per client by 22% in 2021. Lastly, in supply, we will reduce the cost to serve by 22% based on the digitalization initiative mentioned previously, while stabilization in the cost to acquire will stem from a new strategy to reduce the churn rate of our customer portfolio. All this efficiency initiative will allow us to keep our OpEx steady in nominal terms and offset the increase resulting from inflation and activity and growth. Moving to the sustainability of our strategy on chart 35, our new business plan deepens the commitment of our sustainable business model to the Sustainable Development Goals set by the United Nations.
First, in relation to SDG 13, we will keep our commitment to achieve 100% decarbonization in 2050. Second, we confirm our investment on digitalization of our assets and customers and on launching new energy solutions, as we believe this will enable us to lead the energy future. Finally, we keep on committed to work with public authorities to guarantee electricity supply to all vulnerable customers. We will deploy the new Social Bonus, and we will adjust the agreement signed with local public authorities to guarantee electricity supply to low-income customers. Our strategy is also based on a sound commitment to the local communities. Therefore, we are implementing a Creating Shared Value methodology in our power plants that will ensure returns for our stakeholders while it generates a positive impact on the local communities where we have our facilities.
We are also deploying the Sustainable Construction Site and Sustainable Plant model concepts. We are also based on our strategy and our commitment to our employees. I would like to highlight here four targets that were set for 2021: 40% women in new hires as diversity is a key element for us. 100% participation of employees on the new methodology that enables an open feedback exchange to boost our people professional deployment. 10% of our employees owning an electric vehicle at 2021, as we believe they are the best ambassadors on the e-Mobility. 0.98 combined rate of accident frequency, confirming the levels of excellence on such relevant questions such as health and safety. Finally, I'd like to underline the relevant role of our supply chain.
And in this sense, we are incorporating the analysis of sustainability indicators together with economic and technical aspects so that providers with better sustainability performance are rewarded with better evaluations. Moving now to the financial indicators of the plan, and I'm now on chart 37. We are going to deploy EUR 6.4 billion of CapEx in the plan, which is 1.4 more than when compared to the previous plan. The investments in renewables energies for EUR 2 billion almost doubles the last plan investments. In distribution, we will deploy over the plan EUR 1.9 billion. Distribution and renewables accounts for 61% of our all investments, while all regulated investment for 39%. EBITDA shows a 14% increase over the plan horizon, reaching a level of EUR 4 billion by 2021, mostly driven by better liberalized margin in electricity and gas and the contribution by Endesa X.
FFO increased by 40% in the plan period as a result of EBITDA growth, the corresponding cash component of it, and improved working capital. I'll now comment on the CapEx by year in slide 38. The slides have the details of the CapEx plan divided by business line and nature. As you already anticipated, it foresees a significant increase in investments with a nominal run rate of more than EUR 1.6 billion, which is 30% higher versus the previous plan. The new plan is characterized by the strong organic growth in renewables, which will help to accelerate our decarbonization process, increased investments related to digitalization, automation, and modernization of the networks, new asset development investments in Endesa X, both in e-Mobility and e-City. To be more reflective of the nature of our current and future business and in line with Enel segmentation, we have changed our CapEx categories.
Customers, which includes the cost to acquire new customers both for supply and Endesa X and connections. Asset management, which includes maintenance CapEx for all businesses. Asset development, which includes growth investment for renewables and distribution and CapEx for the e-Mobility and e-City business for Endesa X. The CapEx plan is 52% devoted to asset development, 37% to asset management, and the remaining 11% to customers. Finally, I would like to stress that the total investment in digitalization stands at EUR 1.3 billion, approximately 80% in distribution, as highlighted before. Let's now have a look at EBITDA figures on slide 39. The EBITDA during the period will have a positive performance, moving from EUR 3.5 billion in 2018 to EUR 4 billion by 2021, growing by 14%.
Generation and supply will drive this EBITDA increase, mainly thanks to higher integrated margin, thanks to the higher prices, the contribution of new renewable capacity, and higher supply margin, partially offset by lower thermal spreads and volumes. Better gas margins supported by the better market context and Endesa X margin increase as a consequence of the higher impulse of the existing business and the development of the new products and services. Nominal EBITDA is marginally reduced in random numbers due to a slight lower RAB. Distribution EBITDA remains almost stable over the period. The positive contribution of incentives, new investments, and other revenues, and lower fixed costs partially offsetting the regulatory revision in 2020. All in all, EBITDA is expected to grow at a 5% compound rate over the three-year period. Now we are moving to the comparison with the previous plans on chart 40.
Comparing EBITDA figures with the performance in the previous plan year by year, new EBITDA projections are higher than the previous plan, mainly thanks to the higher electricity and gas margin explained by the better market context in these two businesses and higher growth that the plan includes, mainly renewables, which contributes very positively to the improvement in the integrated margin in a context of higher expected prices. In particular, in 2019, EBITDA will be better than the previous plan due to the higher integrated margin thanks to higher prices, the higher growth in renewables, and higher supply margin, partially offset by lower thermal spreads and volumes. In addition, there is a positive effect from the gas margin. In 2020, the situation is very similar.
EBITDA will improve thanks to a higher integrated margin supported by higher prices, higher growth in renewables, and higher supply margin, partially offset by lower thermal spreads and volumes, and higher gas margins. On top of this, non-mainland EBITDA is affected by the delayed investments and partially offset by the previous positive effect. All in all, the current plan forecasts a path of sustainable EBITDA growth thanks to the higher margin in the businesses supported by the contribution of new renewables and thanks to a great focus on containing our fixed cost base, practically stable, despite the higher growth and the perimeter from renewables and Endesa X organic expansion. And now moving on the bottom line of slide 41, we are forecasting a 24% increase in ordinary net income, mainly supported by the aforementioned EBITDA increase.
Tax rate is marginally improving during the business plan period and will partially offset higher D&A, mainly due to higher investment in energy and power and slightly higher financial expenditure as a result of higher gross debt and higher cost of debt. Now moving to cash flows on chart 42. Concerning cash flows, the generation on the plan entails funds from operations to reach 8.4 billion cumulative during the 2019-2021 period. Deducting the CapEx related to the same three-year period for 5 billion, the free cash flow generation will amount to 3.4 billion. Expected cumulative dividends paid in the period will total EUR 4.6 billion , finally triggering a EUR 1.2 billion increase in net debt.
Comparing the plan to the 2018-2020 plan on the right-hand side of this chart, the increase of EUR 1.2 billion in net debt favorably compares to the EUR 1.5 billion in the old plan, thanks to the higher FFO for EUR 1.7 billion, which offset higher CapEx of EUR 1 billion and higher dividends for EUR 400 million for the same period. Now, moving on to debt on slide 43. Net debt is expected to increase from EUR 5.9 billion in 2018 to EUR 7.1 billion at the end of 2021 as a result of the change in net debt of EUR 1.2 billion just mentioned. The cost of debt is expected to slightly increase by 0.2% to 2.1% at the end of the plan, mainly driven by our interest rate assumptions.
Leverage will move from 1.7 times in 2018 to 1.8 times in 2021 as a consequence of the higher CapEx and dividends paid, but is expected to remain below the 2 times level, and this balance sheet remains one of the healthiest in the sector thanks to sound cash flow generation supporting future growth while maintaining an attractive dividend policy, and now we'll hand over to Pepe Bogas, our CEO, for the final conclusion of this presentation.
Thank you, Luca. In relation to our dividend policy on slide 45, I would like to stress that we will maintain 100% payout on ordinary net income until 2020, as committed to last year.
In 2021, the new dividend policy will reduce the payout ratio to 80% on ordinary net income to reflect the increase in bottom line results while keeping flexibility to be able to cope with challenges and growth opportunities that will arise in the energy transition in Spain, where Endesa is expected to be a relevant player. As we announced last year, the 2018 floor of EUR 1.33 per share will be the last one due to the growth established in the strategic plan, our track record of achieving or beating our guidance, and the attractiveness of our overall dividend policy. In particular, we feel assured about the target set for 2019 due to the better market context that has allowed us to hedge most of our expected sales and at an attractive selling price.
I must emphasize that Endesa's dividend policy continues to be one of the most attractive in the sector, and now moving to our financial target on chart 46, we summarize our main financial metric guidance over the business plan period. As we said before, EBITDA is expected to increase at a compound annual rate of 5% from 2018 to 2021. Net ordinary income is expected to reach EUR 1.4 billion in 2018 and rise to EUR 1.8 billion in 2021, which implies an annual compound rate of around 7% higher than the previous business plan. Despite the significant CapEx increase included in this business plan compared to the last one, we still foresee a sound EUR 3.4 billion free cash flow generation during the period from 2019 to 2021, or EUR 0.6 billion higher than the equivalent period of the last business plan.
We believe that the figures presented today represent an important milestone in Endesa's equity story, in which we are laying the foundations to address future growth opportunities and deliver sustainable shareholder returns. Moving to slide number 47, I would like to conclude by commenting on the main highlights we have been discussing today. Endesa's leadership in Iberia is driven by its first-in-class asset portfolio managed through a very successful integrated strategy. We have demonstrated in recent years our ability to deliver on our commitments, leveraging such leadership. The energy policies will drive further decarbonization and electrification of the economy, which will offer multiple opportunities over the next 10 years. Our strategic vision supports our leadership in this evolving energy transition, and this plan reinforces our commitments to grow further while preserving sustainable value creation for all our shareholders over the long term.
Ladies and gentlemen, that concludes our strategic update presentation. Thank you very much for your attention, and we are ready to take some questions.
Thank you, Pepe. Now we will start with the Q&A session.
Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. And when preparing to ask your question, please ensure your phone is unmuted locally.
The first question comes from Harry Wyburd. Good morning, Harry. Please go ahead.
Hi. Good morning, everybody. Three questions from me, please. The first one's on the guidance. Your EBITDA targets in 2019 and 2020 were up by about EUR 100 million-EUR 200 million , but the net income targets are unchanged.
Could you let us know what's happening below the line to eliminate that guidance upgrade by the time we get to net income? Second question's on gas. On slide 28, you showed that you're expecting other gas volumes and non-retail to fall from 24 terawatt-hours this year to 17 in 2021. Now, I'd assume, generally speaking, that those volumes would be up given what's going on in the global LNG market. So it seems like there's perhaps a one-off impact in there or something. So could you let us know why you've got that decline in your guidance? And then the final one's on the balance sheet. You're targeting still what looks like quite a low level of net debt to EBITDA. Your peers in Spain are nearly double what you're guiding to in terms of net debt to EBITDA.
What is the end game for the balance sheet? It seems like you're preserving balance sheet capacity for something, whether that's a big transaction perhaps that you expect to come over the next few years or something else. So can you just remind us of what the long-term balance sheet strategy is? Should we expect that Endesa will continue perhaps for a very long period of time with a net debt to EBITDA multiple below 2, or is there something you're looking at in a few years' time where that could meaningfully increase? Thank you.
Okay, Harry. This is José Bogas. Let me tell you something, and then I will pass the questions to Luca. In relation with gas, as we have said, what we have forecasted in the future, 2020 onward, is not selling in the wholesale just because we are going to be short in gas.
So what we have been doing during this year and we will continue doing the next year with the excess of gas, we are not going to do in the future. Nevertheless, we will try to optimize our portfolio in the sense that, for sure, we will sell and buy gas in the future. And in relation with our balance sheet, what I would like to say is that we always have thought that we want to maintain a sustainable equity story. That means just to have a healthy balance sheet. And also, having this healthy balance sheet, having room for new opportunities, it will give us the opportunity if some kind of opportunities arise just to study it and if it has sense for us and our shareholder to take advantage.
Harry, on the first question, I mean, why the EUR 200 million increase in EBITDA in 2019 doesn't, let's say, move or we confirming the net income target is because in round numbers, we have an increase in D&A by approximately EUR 100 million and is mostly related to capitalization of CTAs or IFRS 15 and IFRS 9, and about EUR 100 million more in taxes due to the higher results and higher tax rate. The tax rate for 2019 is about 23% in this plan, was slightly above 21% in the previous plan. With this question, I'll address also the 2020 because it's going to be the same question. Basically, here, again, we are increasing our EBITDA guidance by EUR 100 million, but it doesn't translate in an increase in net income guidance.
Here, the negative effect is about EUR 100 million just for taxes due to higher result and higher tax rate vis-à-vis the previous p lan.
Next question comes from Alberto Gandolfi from Goldman Sachs.
Thank you. Good morning. I also have three questions, and thanks for taking them. It's just all of them on guidance. The first one, looking at generation and supply, could you maybe give us a bit more granularity on the about 30%-40%, I think, expansion you're talking about there in margins? You are planning to grow your customer base, which is a little bit counterintuitive versus what's happening to other incumbents across Europe. And maybe to understand that, if you can't provide maybe more basis, could you maybe tell us how the EUR 8 megawatt-hour is broken down in the free market versus the regulated market?
I'm just trying to see the 1 million customer transfer, how much that brings to you. The second question is on the renewables. It's 1.9 GW, EUR 2 billion investments. Is it fair to assume you are targeting broadly EUR 200 million increments at EBITDA from these investments to fully contribute to the plan? And the last one, could you please maybe give a little bit more details about what type of contingencies you put in the plan when it comes to regulation? There's a discussion about windfall taxes in hydro nuclear. I was wondering if there's any concern there. Did you put any cost performance clawback? I see you're assuming power prices to stay broadly flat. Am I right in assuming that you see no impact to power prices by 2021 from the acceleration of renewab le investments in your home market?
Thank you. Okay, Alberto.
Again, I will try to say some things, and then I will pass the question to Luca. In relation with the supply, as you can see, we are going just to, or we are thinking that we are going to be able to increase our customer base. And more important than this increase in our customer base that will continue more or less the same is that we will move from the regulated market to the liberalized market, almost one million customers. First of all, the margins in the liberalized business are higher than the ones in the regulated business just because the service that we give to the customer are different. That is the first thing. In relation with renewable, as we have said, here in Spain, we have or we are in a very good position in the sense that we don't need to add new capacity.
The only thing that we need just to reach the European Union objectives is to add renewables. As we have said, we need to add, at the level of Spain, something between 55-60 GW. That means that we will face an incredible increase in renewables in the future. Going forward, we think that just because we want to be one of the leaders of this transition period, we will be involved, as you could see in our 2019-2021 plan, we will be involved in this deployment of renewables. In relation with the contingencies taking into account in our plan, first of all, I would say that we think that the nuclear power plants will continue operating in the year 2030, and there are many reasons for that.
Perhaps the main reason or the last reason that I could add to the ones that I have been given in the last presentation is that in the climate change law draft, let's say that if you read carefully, you will realize that nothing is said about the nuclear. That means, at least in my opinion, that it's going to be in the year 2030. There are another reason. You remember very well the CO2, the security emission, the security of supply, and the competitiveness of the price. Also, as you know, we or let me say Endesa and the auxiliary nuclear industries not prepared just to dismantling altogether these power plants. And even more, we need just to cover all the funds needed for the waste management and the dismantling. In any case, as I have said, talking about contingencies, we maintain our nuclear power plants.
Nothing in relation with windfall profit, as we have commented on before. There is no real basis for these windfall profits, neither in nuclear nor in hydro. In relation with the CO2, let me say, in the future, CO2 will increase more or less, that will allow to maintain above EUR 50 per megawatt-hour the pool price in the future.
Alberto, regarding, let's say, the improvement in su pply within the horizon of the plan, what I can say is that the EBITDA contribution from supply is about 100 million between 2018 and 2021, of which basically 60% is margin effect and the remaining 40% is a volume effect. I mean, why we are increasing, obviously, our free customer market base is part of our strategy. And as explained before, there are several actions in order to do that. Obviously, competition is fierce and is there.
But also, let's say, having an incumbent role, we can manage this competition since we started, let's say, plan to digitalize our footprint both in back office and front office far ahead than other players. And we will, as the plan forecasted, basically increase free customers, which has higher marginality in the plan vis-à-vis, obviously, regulated customers that are with lower margins. And finally, on the renewable contribution, renewable contribution in the plan is just below the numbers that you gave, so below the EUR 200 million .
Thank you, Alberto. Next is Javier Suárez from Mediobanca.
Hi. Good morning to everyone. It's Javier at Mediobanca. One question again on the dividend guidance and the payout reduced to 80% from 2021. So I think that the CEO during the presentation has mentioned some opportunities and challenges.
I was just questioning if you can give us more granularity and how do you see challenges for Endesa in the period that goes, let's say, from 2022 to 2025 in terms of energy policy change or whatever? Or it is much more a question the reduction of the massive opportunity that you see on renewables and energies. And if the second is the case, I would just want to have an indication of where do you see the annual CapEx for Endesa in that period, let's say, to 2025, to have a sense of how significant is that opportunity for Endesa? Then the second question is related is why the company has decided to maintain just an explicit dividend commitment for a year, having the net debt to EBITDA below two times. Why the company, which is the logic of just committing to an explicit dividend for a year?
The third question is on renewables. Renewables energy, there is a slide on Slide 18 talking about new installed capacities, 1.9 GW. The total CapEx I think is EUR 2 billion. That implies a CapEx per megawatt below one million euro, EUR 0.9 million per megawatt installed capacity. Can you elaborate on how do you see in the cost of building up new renewables energies in Spain? I'm also interested on your building or business strategies through the periods. What is going to be your strategy to build up that capacity? What technologies do you think are going to be more competitive or included into your target? Many thanks.
Okay, Javier, let me again just to say something, and then Luca will complete the answers. Sorry.
First of all, in line with the dividend guidance and then the opportunities and challenges, well, what we're facing now is a new, let's say, economic cycle. In what sense? In the sense that we are facing the energy transition in which it will be needed a massive investment in renewables. Second, and very, very important for me, the digitalization, which really will give us a lot of, let's say, opportunities to reduce costs, as you have seen in our presentation, but it takes a lot of work to do and investment in the future. And also the new businesses and the new relationship with our customer that we are improving for the future. And it's one of the reasons why we are expecting to increase or to maintain the total base of customers, but really to improve our margins.
With all in mind, we are not thinking about anything beyond the massive opportunities that we will face. Take into account also that it would be needed very high investment in the distribution network also. We are thinking that the economic cycle has changed and it's going to be a lot of these kind of opportunities. We will want to be prepared just to face these challenges successfully. Nothing more. I pass the word to Luca.
Yes. Good morning, Javier. On, let's say, the addition for capacity in renewables and the CapEx spent, I mean, the EUR 2 billion on slide 18 envisage also EUR 200 million for maintenance for about 150 and EUR 50 million as a development for hydro. So actually, the multiple when you apply to wind and solar is actually lower than what you discussed.
I mean, in terms of the plan addition, it's going to be about 700 MW in solar, more than 300 in wind, and just a small addition as well as in mini hydro. As far as the pipeline, obviously supporting these additions, the pipeline is actually expanding. We expect to have about 2 GW of pipeline by 2021 in renewables that obviously we will further expand going forward. And as far as the dividend certainty, which is only based on one year, I mean, I think the plan that we are presenting is pretty solid in terms of conservative assumption as far as growth in terms of EBITDA, but also growth in terms of bottom line. And given the delivery that the company has demonstrated in the past few years, we think it's fair, as we said also last year, not to basically include another security for next year.
We have now Enrico Bartoli from MainFirst.
For taking my question. First of all, I'd like to go back to slide 27 on the integrated margin in electricity. If you can give us a hint of this 4 euros per megawatt-hour increase that you expect by 2021, how much is due to the scenario, to the higher power prices that you expect in the Iberian market, and how much is due to the commercial policy, I guess, linked to the increase in the free customers? And always on the liberalized business, I saw in slide 51 that EBITDA from liberalized business is expected to step up significantly in 2021 compared to 2020 to EUR 1.4 billion. If you can give us some details of the driver of this significant increase. A second question is related to the distribution.
You mentioned that the margin you expect is going to be stable in 2021 despite the reduction in the return due to other revenues or incentives. Could you give us some more details about this and the impact on the margin that you expect at the end of the plan? And finally, on the regulated businesses, if you can give us the RAB values at the end of 2018 and what you expect in 2021 both for distribution and non-mainland power generat ion. Thank you.
Thank you, Enrico. As far as I'll start with the last one. As far as RAB values for 2018, we have in non-mainland RAB, which is basically 1.6 going down to 1.3. So we have a slight RAB reduction, as mentioned before, for the part of non-mainland. And as far as distribution, the reduction is just 2%, so from 11.7 to 11.5.
As far as the regulated margin, again, on distribution and how we are offsetting basically the decrease in regulated margin on chart 23, you have the impact from the new regulatory period, which is about EUR 130 million on the slide, and let's say the others, which are for about EUR 30 million, comes from basically other revenues, which is basically a slight increase in client contribution and a slight increase from basically the part of meters that is not a regulated margin, as you know. For the scenario, moving to the bridge basically of EBITDA, what I can say is that basically we have, as far as what is scenario and what is basically the contribution of supply in the integrated margin, we have basically a positive impact of a scenario, which in terms of prices, which is about EUR 130 million.
And then obviously we have a positive impact from the sales already achieved during the plan that is another EUR 150 million more or less. So that's the impact that we have. We commented before on the renewable capacity addition. As far as supply, as I mentioned before, the positive impact, it's about EUR 100 million, of which you have a margin effect for about 60%, and the remaining is a volume effect. And then I think you have another question on how we bridge basically 2020 to 2021.
There basically the increase is basically driven by an integrated margin that steps up basically more or less EUR 200 million, and it's driven by higher prices, basically the part of non-hedged sales, because as you know, 2020, we have only hedged so far 15 terawatt hours, which has a positive impact given the differential in price and negative impact as far as thermal spreads, which are driven by the dark spreads as well as non-availability incentive for some of our plants, thermal plants, and higher supply margin. Obviously, you have a contribution to reach this increase from the renewable additions of about EUR 50 million.
Thank you. Next question comes from Javier Garrido from JP Morgan.
Good morning. Thank you for taking my questions. First, a couple of clarifications. I think that Luca mentioned that you are targeting a return in the investments in renewables in excess of 9%.
What return is this? Is leverage and leverage, nominal real? You could clarify? And then the second question would be on your comments about nuclear. Technically, would it be possible not to see a nuclear life extension in line with the statements of the Secretary of State of Energy that lives are not going to be extended beyond 40 years, but still see ad hoc licenses allowing you to get to 2030? What I'm trying to understand is from a legal point of view, how can nuclear run till 2030 or beyond without nuclear life extensions? And the third question is more detailed on opportunities. Can you comment on what is your view of the opportunity of getting concessions for electricity distribution in Portugal? What amount of capital would you be ready to deploy into that opportunity?
Let's say how plausible it is that you can capture that opportunity and what is, in your view, the main attraction of getting involved in that business, if you see any? Thank you.
Okay, Javier, I will try to give some comments on nuclear and in the distribution of Portugal. In relation with nuclear, you are right in the sense that from a legal point of view, you need to obtain the approval of the life extension of the nuclear power plants. So you should ask for this extension. What we think is that we will see what happens, but as I have said with the draft of the climate change law and all things that we are discussing, there is no alternative for the nuclear, at least currently. There is no alternative for nuclear.
And that means that, well, it would be needed just to extend the life for security supply, etc., etc., etc. So we think that we will see in the new law at the end how the government of Spain is expecting to reach the year 2030. And I'm sure that we will need these nuclear power plants. Then we will ask for this life extension. In relation with Portugal, we are interested. And also how much capital we are ready to deploy. Well, we will deploy just capital, the firm capital that will or would give us the rate of return that would create value for our shareholders, let's say that.
The only thing is being Portugal, Portugal in the Iberia market, being the distribution, one of our core business, and having very high know-how of this business, it has sense, it has all the sense for us just to look for this concession renewal. We will do it for sure, but again, taking care about what we offer and taking care about the value creation for our shareholders.
And on the 9% excess in terms of returns, we're talking about equity levered IRR for renewables.
Next question comes from José Ruiz from Macquarie.
Yeah, good morning. Just very quick questions. The first one regarding the renewables, the additional one giga, can you explain a little bit what are your competitive advantages? For example, if your regional presence in distribution and your current relationships with the municipalities, you would consider that a competitive advantage.
And the second, also related to this one giga, if you could split a little bit, it doesn't have to be very precise, but what is the split between PPA and general retail? Thank you.
Okay, José. First of all, talking about competitiveness or competitive advantages in renewables, let me say, let me explain to you that we are the Enel Group. Enel is one of the world leaders all over the world. And that means a lot of advantages, and we belong to the Enel Group. Also, we have local advantages, two types of local advantages. First of all, we are an integrated utility. That means that we manage our integrated margin, that it is different from the only suppliers of renewable production. We could manage this energy inside of our portfolio output, and then that gives us advantages.
And also, let me say, we know very well the grid, the network, and we have enough resources just to manage in a successful way this. So we have within a lot of advantages in relation with other industrial players. And the split between PPAs and merchant or whatever, one of our advantages being an integrated utility is that we could hedge or cover or close our renewable production with our portfolio customers. So that is great news for us. We are thinking that we will do it having PPAs. You should take into account that the customer is open just to sign these PPAs, but on the other hand, if you want to sign a contract for 10 years or 20 years, it takes some kind of doubts in the customer just because of the long term.
Again, we have an advantage in this case because we could manage the energy with our customers, giving them attractive products with PPAs, with some kind of the supply index to the power price, and with some formulas that I should say we are using today with our customer. It would depend on the customer, on the aversion, risk aversion or not, and a lot of things. The most important thing for me is just to have the confidence of the customer, of the clients, and give them an excellent service.
Next question comes from Antonella Bianchessi from Citi.
Yes, so we have two quick questions. The first one is on the cash for generation. The previous plan was talking about EUR 6.7 billion in three years. Now we are at EUR 8.4 billion. Clearly, they increased a little bit there. But can you detail what is the impact on working capital provision and all the other elements? And the second question, if you can remind the hedge position on 2019 in terms of forward sales and power price. Thank you.
Good morning, Antonella. As far as the improvements for cash flow generation in the plan, as you pointed out, you have an improvement vis-à-vis the previous plan. And the improvement is mainly driven by basically the cash component of our EBITDA, which obviously grows by about EUR 400 million in the plan, and mainly by an improvement in terms of regulatory working capital that is for about EUR 200 million. That's more or less the drivers. Provisions stay more or less stable throughout the plan. So those are, I would say, the items.
Obviously, you have slightly, as I mentioned before, higher taxes, slight adjustments here and there, but basically it's core business type of improvement in terms of cash flow generation. As far as hedges for 2019, we are 70% hedged at an average rolling price of 73.5 EUR/MWh. Obviously, this corresponds only to low-voltage customers. We expect, obviously, the prices to normalize in and around 70 EUR/MWh as far as we're going to furthe r hedging in 2019.
We have now Meike Becker from Bernstein.
Thank you very much for taking my questions. I have three quick ones left. On renewables, the one gigawatt of additional capacity, how much of that is already under construction or secured or still open and to be targeted? The second one is also on renewables.
Considering the two gigawatts you are building now until 2021, including from the auctions and the additional capacity, how comfortable are you with that? And is that a realistic run rate to extrapolate beyond 2021, considering all the new capacity and renewables that Spain needs overall? And the third question is just coming back to nuclear. Could you confirm the numbers you have given before? If we are looking at 40 years of life for the nuclear fleet, are we still looking at EUR 190 million, I believe it was for Almaraz, of faster write-off of the assets and EUR 60 million additional contributions to the nuclear dismantling fund? Thank you.
In relation with the pipeline, the two gigawatts, let me say that it is very sure this pipeline because under construction, we have today the 900 MW that will be in operation at the end of the year 2019, the beginning of the year 2020. This pipeline today, if we take into account the last year of our plan, that is the 2021, we have a very certain pipeline on top of the one gigawatt that are under construction and over one gigawatt. But we are expecting and we have a lot of under development pipeline just to reach a figure close to 10 GW. In nuclear, let me say that Luca will explain you.
Yes, and complementing to the second question, basically how comfortable we are with the development. I mean, I think we are very comfortable. I mean, all the auction developments are under construction, which is not the case for other players which won the auctions. The run rate, going forward, are we comfortable with that? Whether we see an increase in run rate. Potentially, we see an increase in run rate beyond 2021 as far as renewable additions. That is driven by all the scenarios that José Bogas presented before. As far as the impact on nuclear when it comes to a useful life of 40 years, yes, I confirm the D&A increase on a yearly basis will be EUR 190 million.
As far as the contribution to the Enresa fund, according to the latest projection of the fund, the yearly contribution will be EUR 130 million on a yearly basis, which will bring, obviously, the Enresa tax from 6.7 more or less, which is in our plan, to more than 13, which is what is needed to basically get all the fund, let's say, in profit, I mean, in balance.
Next is coming from Manuel Palomo from Exane.
Good morning and thanks for taking my questions. I've got two questions and two clarifications. I would start with the clarifications. Does the plan include any M&A impact? You mentioned bolt-on acquisitions in renewable or potential bolt-on acquisitions in renewables. Just wanted to make sure that it does not include it and all is organic CapEx.
The second one would be on the net debt guidance and is whether the net debt guidance includes the regulatory receivables. I guess so. And if so, if you could share with us the amounts considered for the years 2018 and 2021. And then the two questions. The first one is a little bit conceptual. What is the rationale for you to think that the peak demand will increase in Spain by almost 20% from 41 to 49 GW by 2030 despite efficiency measures and the fact that it has remained flattish or even slightly down since the year 2005? And the second one, it has to do a bit with the guidance and potential first.
In the guidance, you are assuming an improvement in the EBITDA for the generation and supply from EUR 0.9 billion in 2018 to EUR 1.4 billion in the year 2021. This is EUR 500 million.
However, the generation output remains pretty flattish, 75 terawatt hours. And also, I would say that the energy to be supplied; it's pretty flattish. These EUR 500 million divided by the 12.4 million clients gives you about EUR 40 per client increase in bills on a yearly basis. Don't you fear that similar to in other countries, regulators will start getting concerned about such a huge increase in the margins? Thank you.
Well, Manuel, I will try again to give you some clues and then Luca will answer. Well, first of all, in our plan, only is included organic CapEx. That is, no M&A included. The rationale about the price increase, well, the rationale about the price increase, even more, let me say, we are not projecting the price increase as the one that should be with the current context. I will try to explain myself.
In our business plan, what we consider is some kind of demand management in the sense that the peak will increase lower than it had been increasing in the past with the increase in the energy consumption. So it is going to be perhaps higher than the one that we have taken, but we think that in the future, we will develop these kind of new services, the ones that could be new ones in relation with the energy transition, that is, the demand response, etc. So the rationale is, if you allow me just to say, even not, it's a reduction in the increase that should be seen in the future.
In relation with the increase in the EBITDA generation and supply, let me say, you have said that you are dividing the total EBITDA or margin with the customer, but you should take into account that the integrated margin are compound by the generation margin and the supply margin. As we have said, our supply margin will remain in the level of 8, a little bit higher than the 8 that we have today in the year 2018. But that means that it's not going to be a huge change in the margin with the customer. If you take into account what is happening in other system and countries, we think that it's very reasonable, the margin that we have here in Spain.
Regarding the debt guidance over the plan, the regulatory assumption for 2018 and the one that I explained when we had the nine-month call, so 1.1-1.3 regulatory working capital for 2018. 2021, we have a reduction in terms of assumption that goes in and around EUR 600 million, and this is on the back of a payment that we expect, I would say, beginning of next year in terms of the but those are included in the guidance that are in the plan.
Next question comes from Anna Maria Scaglia from Morgan Stanley.
Hi. Three very quick questions for me. The first one is, can you confirm whether in the plan you assume the renewables to be merged? And basically, that's what I understood. The second question is, can you eventually explain the tax rate increase, what's driving that in terms of your assumption?
The last one is regarding the nuclear capacity. Given that your expectation is actually for the nuclear to run further and therefore implicitly assuming life extension, are you assuming some CapEx already in the plan for that to happen? Thank you.
Ana María, I will try to explain the last one, the nuclear capacity and the nuclear investment. We are considering in our plan the, let's say, extension life of the nuclear power plant. So it is included this I don't like to say extra capacity, but extra compared with the 40 years of life.
And as far as tax rate, basically, we have a tax rate in the plan that goes from about 23% in terms of tax rate to 21% in 2021 with slight improving. It's a bit higher than the previous plan given by, obviously, higher results and by other means, but it's marginally higher.
We're talking about less than 2 percentage points in 2019 and about 2 percentage points in 2020. And as far as the renewable capacity, yes, I mean, the assumption is merchant, but obviously, having the retail side of the business or being an integrated player, we might also decide along the way to switch part of this development to potentially PPAs with clients. But again, there is no need. So at the moment, the assumption is going to be all merchant.
And the last question comes from Jorge Alonso from Société Générale.
Hi, good morning. Couple of questions, please. Can we say that maybe on the supply side, the more volatile part would be on the gas supply because of the moving parts would be the TTF and Henry Hub for the procurement cost and the other one as a reference for the selling prices?
And is there a way that you have been able to manage to lock as much as possible the increase in the gas supply margins? On the other hand, is what are the clean dark spreads assumed in the plan? We have seen that you are expecting now lower than in the previous plan. So just to have an idea more, what could be the level of the clean dark spreads expected in the plan? Thank you very much.
Hi, Jorge. Yes, you are right in the gas volatility as far as we have seen in the past. Talking about tendencies, in the last plan, what we said is that we were seeing an oversupply, depressed Brent prices, high TTF prices. So it was a nightmare, let's say that.
Then in the last business plan, what we assume is a gradual recovery of the market that it would take place in the year 2022, 2023. It was our assumption. What we have seen is, yes, because this volatility, recovery, but recovery in the sense normalization of the market. If you allow me, the market today is more normal than before, more close to what it should be. We are thinking about an anticipated recovery than we thought before. Nevertheless, if you could see, we have improved our margins in the year 2019 and 2020, but gradually going to the same assumption that we had in the last plan. No one knows how the burn will evolve in the future and all the issues around the gas market. Again, we think that this normalization is in the good trend.
And we expect that the total normalization will be in the year 2022-2023. In relation with the clean dark spread, we have assumed a reduction, but Luca will answer you.
Yes, we have clean dark spread in the plan on an average of EUR 5 megawatt-hour, obviously starting in 2019, a bit higher, closer to 7 basically, and then going down in 2020 and 2021 on an average of 5.
Thank you, Luca. There are no more questions from the call. And all the questions received by email have been covered during the presentation or during the Q&A session. So that's all. Thank you very much. And just remind you that the IR team will be available for any further questions you may have. Thank you very much.