In our own place, we need possible faster and huge increase in infrastructure requirement in making less of the high growth business. This is definitely a need for precedence that you can't use like in the United Kingdom, who would like to put in a stable pipeline at least until the next decade and face a massive investment on clear regulations. We need to build a unique combination of laws, modern revisibility, and geographical areas which are more than ready to make this opportunity thanks to our proven existing talent who are working in different organizations to build an exchange of basis that can buy care in advance. Indeed, 60% of the development is in the capacity, 15% is in the legal agencies, 20% behind in other U.S. And we will be 90% of the total year investment in the discussion of profitable projects in long-term PCAs of.
A perfect example of how international job requirements are the same as our domestic rewards is expressly copied with the same case 20 years later in our area of the new startup. In addition, in a context where volatility due to increasing level of penetration in existing systems, our expected in volume of 120 GWh of operation and our pipeline of new projects of 100 stories and batteries will allow us to obtain additional margins. Finally, 90% of the global investment to be made in nearly great countries is clearly explicitly. We'll snatch this unprecedented expansion serving our strong balance sheet and our commitment to a BBB+ rating by the different. Increasing cash flow generation per new investment, asset rotation and partnership, the Russian capital increase, the compatible equity position, and our ongoing access to the market.
In 2028, in more than 32 years, Russian investment reached EUR 58 billion, including close to what we expect to be the EUR 20 billion. And this EUR 8 billion may be contributed by our Telegram partners. Two-thirds of this are already securing here. We're shooting all these EUR 12 billion of net investment. It's two-thirds in net worth and one-third in novels and customers. By geographical areas, the United Kingdom and the United States will consolidate their position as key investment destinations, increasing their combined share by 20 points to reach 65% of total investment through the period. 15% of investment will be allocated in Iberia, 8% in other EU countries and Australia. The remaining 12% to Brazil, including this Previ transaction, which is a perfect example of our strong relation with our partners.
As soon as Previ expressed its intention to sell its 30.29% stake in Neoenergia, we started a conversation and closed a transaction that is fully aligned with the plan we are presenting today. Increasing our presence in net worth, which contributed more than 90% of Neoenergia's result, with an asset base of more than 700,000 km of distribution lines and 8,000 km of transmission lines. Serving a population of 14 million people in a country with a strong track record of stable and attractive regulatory frameworks and consistent dialogue between the government and the industry, as demonstrated by the official signature yesterday of Pernambuco Concession Renova. Including this transaction, our total net worth investment will reach EUR 37 billion in 2028, with more than 70% in the U.S. and the U.K.
Two-thirds of this amount will be invested in distribution and one-third in transmission, increasing our total regulatory surveys by more than EUR 20 billion to reach EUR 70 billion by 2028. This means that in just eight years, we'll be more than doubling our regulated net worth asset thanks to the increase in investment in the U.S. and EUR 21 billion. Especially in the U.K., where our asset base will triple to reach EUR 25 billion, as much as the whole group related to us just 10 years ago. I try to remember the numbers we had already when I joined the company. I thought it was something between EUR 4 billion and EUR 5 billion per hour. Now we are reaching EUR 70 billion, and in 2030, it will be EUR 90 billion. I think that gives you an idea how we've been moving in this direction across these two decades in the group.
As a result, in 2028, the U.K. and U.S. will represent 65% of our total net worth surveys. I think our growth is going to come by U.S. and U.K. massively in this business. Focusing on distribution, our EUR 25 billion of investment will be primarily located as well in the United Kingdom, 80% covered by the current RIIO-ED2 framework, and the United States, mainly in New York, where negotiations of the new rate progress at a good pace, and we have positive precedence for other utilities across the state, reaching total combined investment of EUR 15 billion in these two countries, 60% of the total, after an increase of more than 40% compared with the last four years. Investment will also grow in Spain and Brazil up to 14% to EUR 4 billion across, even including this EUR 2 billion related NeoNegia transaction.
As a result, our total distribution-related asset base will grow by EUR 22 billion in just four years to at least EUR 50 billion, doubling the asset base in this area in only eight years. Transmission investment, transmission was already a business which was integrated into net worth, but I think it's important to give visibility. Transmission investment will rise by more than 90% compared to the last four years to EUR 12 billion, fully transforming the profile of this business to become one of the most relevant growth drivers at the group level. From 2020 to 2024, we already doubled the regulated transmission asset, reaching EUR 11 billion, a similar figure to the combined asset base of Spain and Portugal transmission systems together. In the next four years, we are doubling once again to reach EUR 20 billion.
This massive growth is fully secured in the U.S., where we will invest EUR 3 billion based on the rate case and a specific investment project approved by the regulators in New York, Connecticut, and Maine. The U.K. with EUR 8 billion in investment base in RIIO-T2 and T3 framework. These three large transmission projects already approved by the Ofgem, Western Link, and Eastern Green Link One, and PAW, will reinforce the resiliency of the U.K. system, reducing containments, and transporting renewable electricity from Scotland to the demand centers of England and Wales. As a result, U.S. and U.K. will combine and contribute to 80% of our EUR 20 billion of transmission asset base by 2028. Gross investment in power generation customers will reach EUR 21 billion, with 17% in projects under construction.
EUR 1 billion will be allocated to our offshore wind farms that, like East Anglia II in the United Kingdom, of in Germany, all under construction. EUR 5 billion to offshore wind in different projects across our geographic areas. EUR 2 billion to solar PV, mainly in Spain, Italy, and Australia. Another EUR 2 billion to storage, including almost EUR 1 billion batteries in Australia, as well as other battery projects in Europe and storage in Iberia. Of this total, EUR 7 billion will be contributed by our tier one partners, mainly in our offshore wind projects. As you know, 77% of this amount is done thanks to the partnership closed in Schleswig with Masdar, Binhai with Kansai, and we have an additional 15% well advanced. This increase in investment will also drive a significant improvement in our results. By 2028, EBITDA will reach EUR 18 billion, up EUR 3 billion from 2024. Also increasing our geographical diversification.
Together, the U.K. and the U.S. will make 50% of the total EBITDA, up 15 points in just four years, with Iberia representing 30%, Brazil 13%, and the remaining 7% coming from Australia and other European countries, after doubling their operating results through the period. The investment plan will be fully materialized and structurally shift toward regulated net worth business. They will contribute 51% to the total operating result by 2028, 20 points more than the historical average. Thanks to an increase of EUR 3 billion through the period to reach between EUR 9.5 billion and EUR 10 billion by 2028, driven by investment in the new rate case that had been settled or that is in advanced state of negotiation with an expected return of 9.5% on average. Full consolidation of our electricity in the northwest from 2025.
Renewable power and customer EBITDA will remain at around EUR 8.5 billion, as the impact of asset rotation will be offset by new investment, mainly in offshore wind and storage, in projects that are already under construction, and we have PPAs or CFDs secured across the geographical areas. This growth in net worth and renewable, with revenue secured by PPAs and CFD, will increase the share of regulated and long-term contracts in the bid from 60% in the last four years to 75% once the projects included in the plan are fully contributed to result in 2028 and 2030, limiting our exposure to energy prices just to 25% of the total EBITDA. In addition, following our initial approach, this plan is based on conservative approach assumption in terms of energy demand and prices, as Pedro will explain shortly, leaving upside potential to our estimate in case demand growth accelerates.
This strong operating growth, together with our prudential financial management, will drive an increase of EUR 2 billion in adjusted net profit to EUR 7.6 billion by 2028, with a high single-digit growth across the period. Beating the plan we presented to you a year and a half ago, as in 2025, we will exceed by far the EUR 5.8 billion we estimate by 2026. We expect additional growth in 2026, 2027, 2028, thanks to this new investment, regulatory frameworks, and efficiency measures. Following the model based on quantitative forecasts and a successful execution, the hustle was to consistently exceed the expectation over the last 25 years. In terms of our shareholder remuneration, we will maintain our policy to increase dividends in line with results, with a payout between 65% and 75% of earnings per share, and a floor of EUR 0.64 per share.
In addition, we will continue our Iberdrola flexible program, including share buybacks, to maintain the number of shares as stable as 6,575,000,000 shares, combining an increased remuneration with full flexibility for our shareholders. We are preserving our financial position at a comfortable level with the current BBB+ rating, thanks to increasing cash flow generation up to EUR 52 billion in the period based on predictable network business with a rate case closed and in advanced negotiation. With renewable projects already operating or under construction, we secure revenues thanks to PPAs or CFDs. This, along with our EUR 5 billion of capital increase, reinforcing security, EUR 13 billion of asset rotation and partnership, 75% already completed, our liquidity of EUR 20 billion, and our access to the financial market in active condition, will secure the full financing of this plan with no need for additional equity raises.
Following our traditional approach, we have designed this plan to combine rising rural and shareholder remuneration with a strong increase in our social dividend, making at least 15,000 new hires by 2028 and EUR 65 billion of purchases to thousands of suppliers who sustain more than half a million jobs, contributing with more than EUR 40 billion in taxes through 2028, investing at least EUR 1.6 billion in research and development to consolidate our leading position in the utility business worldwide, and reinforcing our full commitment to governance, which continues to receive several international recognitions. We will continue reducing our carbon footprint to become carbon neutral by 2030. To conclude, let me highlight our expected outlook until the beginning of the next decade.
Based on the certainty provided by our long-term regulatory framework, we expect to continue investing in an average at least of EUR 15 billion per annum, of which more than EUR 10 billion will be directed to net worth, two-thirds in distribution, and the rest in transmission, mostly in large projects already identified, reaching a total regulated asset base of more than EUR 90 billion, 80% above 2024 levels. In addition, we expect to invest around EUR 5 billion per annum in new renewables in our current market, with road to market secured through PPAs or CFDs. This additional investment will allow us to continue improving our result, at least mid to high single-digit average growth over the next six years to 2031, reinforcing our financial strength and maintaining our increased dividends.
On top of this, and in line with the energy perspective I shared with you at the beginning of the presentation, the increasing demand and the acceleration of electrification expected in all our markets will surely bring upside potential to this outlook. Once again, we have preferred to follow our usual prudent approach to give the low visibility on the long-term evolution of external factors such as interest rates or exchange rates. In any case, you can be sure that the 46,000 women and men working in Iberdrola will be fully focused from today to the execution of the plan, with ambition to beat once again the target fees. Thank you very much. Now, Pedro will give you more details of our business-provided investment plan. Thank you.
Okay. Thank you, Chairman. Good morning, everybody. Starting with your last comments, I can guarantee that everybody in the company is going to work very hard to get this plan done, as we have done for 25 years. I think, as the Chairman has introduced, over the next four years, we will be investing around EUR 58 billion, with 85% of that investment basically allocated to countries with AAA, AA, and A rating. These countries have a strong expansion potential and provide material opportunities for further growth beyond 2028. This translates into EUR 14.5 billion per year, and almost EUR 1 billion more per year than in the previous plan. Notably, almost 2/3 of our investments, EUR 36 billion of the EUR 58 billion, will be concentrated in the United Kingdom and the United States, consolidating our position in stable, high-potential markets.
The plan places a strong focus in transforming networks, which will receive 65% of the total investment, EUR 37 billion out of the EUR 58 billion. Of that amount, EUR 23 billion, 60% of the EUR 37 billion, will be allocated to expanding our asset base. The remaining EUR 21 billion, representing 35% of the total investment, will be directed towards power and customer solutions. Of that, EUR 16 billion, close to 80%, will be focused on capacity growth through a highly opportunistic approach, as most of the capacity additions are already under construction. Of the EUR 37 billion that we will invest in networks over the next four years, including the Neoenergia Prevê transaction in Brazil, more than 70%, EUR 25 billion, will be allocated to the United Kingdom and the United States, followed by Brazil with 18%, EUR 7 billion, while Spain will receive the small remaining, you know, 12%, only EUR 4 billion.
Iberdrola has a proven track record of delivering larger scale network projects across all geographical areas. We are now significantly scaling up, as our investment of EUR 37 billion in the period represents a 50% increase compared to the previous four years with EUR 25 billion. This translates into more than EUR 9 billion per year, supported by well-defined, stable, and predictable regulatory frameworks, which offer attractive returns with an expected weighted average nominal return on equity of 9.5% between 2026 and 2031. In terms of regulated asset base, driven by increased investment in net worth, this concept is projected to grow by more than 40% between 2024 and 2028, reaching EUR 70 billion, up from EUR 49 billion in 2024 and EUR 31 billion in 2020, material increase. Of the total EUR 70 billion, EUR 46 billion, or 65%, will be concentrated in the U.S.
and the U.K., which will further grow beyond 2028, while Spain's share is expected to decline to 15% from 30% in 2020. This is one of the reasons why, as you can see now, some of the dynamics in Spain, other companies, which are mainly businesses in Spain, when we have issues, it's a problem. Diversification for 25 years allows us to be in a much more comfortable position. Distribution will remain the core of our asset base, accounting for over 70% of the EUR 70 billion, reaching EUR 50 billion by 2028. At the same time, we expect to nearly double the regulated asset base of transmission over the next four years, reaching EUR 20 billion, thanks to the significant investment needs in the U.K. and in the U.S. We expect this growth dynamic to remain very significantly well beyond 2028.
Our outlook for net worth is supported by stable and well-known regulatory frameworks, and we have a track record that proves that. One-third of the EUR 37 billion will be dedicated to transmission, totaling EUR 12 billion, again with a strong focus on the U.K. and in the U.S. The remaining two-thirds, EUR 25 billion, including the Neoenergia Previ transaction, will be invested in distribution all across the regions. 90% of planned investments in distribution through 2027 and 80% through 2028 are already secured under approved or advanced regulatory frameworks, many of which, among others, will include inflation protection mechanisms. These frameworks provide strong visibility and attractive returns. Starting with the U.K., we operate in Scotland, England, and Wales through our three distribution licenses: Scottish Power Distribution, Scottish Power Manweb, and the recently integrated Scottish Power now Electricity North West.
Over the next four years, we plan to invest EUR 6 billion under the RIIO-ED2 regulatory framework that ends in March 2028, while we are preparing already for the next one. In the U.S., Avangrid will direct approximately EUR 9 billion of state-regulated investments throughout its utilities in the Northeast: New York, Maine, Massachusetts, and Connecticut. Notably, the company recently filed a multi-year, five-year plan in New York, and then also a long-term plan in Maine, extending those periods from the three-year already approved and the two-year both in New York and Maine. Based on the comparison with other rate cases recently approved, I think a three-year case is probably the minimum we should achieve in those conversations.
I think, independent of the outcome, it's important to highlight that our utilities in New York and Maine, with a regulated asset base of EUR 11 billion, keep in mind that more or less the amount of rate base right now in Spain, and EUR 2 billion respectively, together represent approximately 80% of Avangrid's total EUR 15 billion regulated asset base just in distribution. In total, we're investing nearly EUR 15 billion in the United Kingdom and the United States from 2025 to 2028, with 85% of this investment secured and under finalized or close to be finalized regulatory frameworks through 2028. We also remain committed to Brazil, where we will invest around EUR 5 billion through our five distribution licenses. The Brazilian regulator has approved, as the Chairman mentioned, the renewal until 2060 of the concession from Neoenergia Pernambuco, a distributor that serves 4 million customers.
Neoenergia Coelba, Cosern, and Elektro are expected to renew their concessions in the coming months. In Brazil, we're confident in the regulatory environment, as periodic tariff reviews are scheduled for Pernambuco, Coelba, and Cosern beyond 2028, while Elektro in Brasilia will be dealt with in 2027 and 2026. In Spain, the regulatory framework from 2026 to 2031 period is currently under review, with final approval expected by the end of the year. We have planned investments of EUR 4 billion, with an estimated return on equity of approximately 8%. However, this investment could vary EUR ±1 billion, depending on the final conditions approved. As we mentioned before, in a global environment of competition for investments, Spain risks falling behind if the necessary regulatory measures for the development of net worth are not taken.
In our case, it's a very small part of the business compared to some of the other players in Spain, which is the majority of it. I think it's important that our regulated base is well diversified. You will see this afternoon with our teams in the United States and in the United Kingdom. You know, you will have the opportunity to take a deeper dive into our network business in both countries. It will be, I think, quite entertaining and also, you know, allow you to learn about those two businesses. In transmission, we plan to invest around EUR 12 billion. Out of this, nearly EUR 8 billion will be allocated to the U.K. and their upcoming RIIO-T3 regulatory framework, which is due to be approved in December. We anticipate that the final conditions may improve compared to the assumptions currently reflected in the plan.
The RIIO-T3 framework includes major transmission projects such as Eastern Green Link I and IV, as well as Western Link II, as Nicola, Keith, and the team will explain this afternoon. In the U.S., we're investing approximately EUR 3 billion in regulated transmission assets. This includes EUR 1 billion allocated, you know, to CMP transmission and nearly EUR 700 million to UI transmission, both in Maine and Connecticut, both under FERC jurisdiction. In New York, under the CLCPA, we call it now Power in New York Environmental Protection Legislation, our planned investment amounts to EUR 1 billion already approved.
An additional EUR 1 billion is allocated to contracted transmission projects, such as the New England Clean Energy Connect project in the U.S., a project which will be commissioned before the year end, as well as some of the transmission projects we are developing and finishing right now in Brazil, all of them under construction and nearing completion. Something important is affordability. The investments outlined will play a key role in strengthening the electricity system and improving cost efficiency. By enabling the integration of additional demand, they contribute to a lower cost per megawatt hour, as the costs, which are mostly fixed, are diluted. Upgrading aging infrastructure and improving grid automation with AI and digital solutions are essential to creating smarter, more resilient networks. We are shifting from recurrent O&M costs to long-term investments, which are more sustainable. New investments are more cost effective.
This afternoon, you will be explained how, in the U.K., for example, an estimated approximately GBP 6 billion per year of shifting constrained costs can be avoided in the decade. This transition also supports the adoption of more energy efficiency solutions across transportation, buildings, and industry. New demand drivers, such as data centers and AI, are changing the traditional usage patterns, which steady 24/7 electricity needs make electrification the only viable path forward. This creates a positive cycle in which improved infrastructure supports demand growth, reduces system cost, and enhances efficiency, ultimately reinforcing long-term affordability. Now turning to power and customers, we're taking a very conservative approach. In addition to the significant investment needs driven by aging infrastructure, new electricity uses, such as data center transportation and industrial electrification, are now the main drivers of demand growth.
On the demand side, we expect an increase in electricity consumption across our distribution areas, plus more than 2% in the U.K., around 2.3% in Brazil, and more than 2% in Spain, are slightly below national system forecasts. Retail customer demand is projected to remain stable. Regarding pricing, our assumptions are aligned with forward market levels, which represent a normalization in price levels around EUR 60 - EUR 65 per megawatt hour in Spain and approximately GBP 75 in the U.K.. Looking at the main drivers in the power business by country, in the U.K., we are progressing with the construction of East Anglia III and East Anglia II with expected COD in 2026 and 2028. Additionally, our offshore pipeline provides potential opportunity for future growth, only on a very opportunistic basis. In the U.S., we are only considering the commission of projects under construction.
Vineyard Wind One construction is on track, with more than 50% of the turbines already in operation, and we will be fully commissioned in the upcoming months. In Brazil, we are considering no capacity additions in the short term. In Spain, we're assuming the nuclear phaseout is scheduled in line with the current protocol, preparing for the closure of Almaraz I in November 2027 and Almaraz II in October 2028. In other regions, our priority includes Australia, where we are focusing on new storage capacity, Germany with the completion of the Windanker offshore wind project, and Italy, where we are expanding and increasing our solar photovoltaic capacity. These assumptions, along with a highly opportunistic investment approach, guide our EUR 21 billion investment plan in power and customers. Within this plan, all projects have already been identified, with 75% of them already under construction.
Of these EUR 21 billion, approximately EUR 8 billion is allocated to the completion of offshore wind projects that are already under construction. Onshore wind projects follow with EUR 5 billion in planned investments. Additionally, EUR 2 billion are also for storage, including battery systems and pump hydro facilities. This investment will deliver 9.5 GW of new capacity in the four-year period, 75%, as I said, already under construction. At the same time, 75% of the new capacity will be sold either under regulated schemes, such as contract for differences, or under long-term power purchase agreements with tier one customers. Iberdrola's current installed capacity stands at 56,800 MW, which is expected to increase by 4,000 MW, reaching nearly 61,000 MW, with out of them a 90% emissions-free by 2028.
Where we will be adding close to 9.5 GW of net growth is largely offset by the sale of assets in Mexico, asset rotation, and the close of the two nuclear facilities in Spain that we just mentioned. Going into detail, in offshore wind, we currently have four projects under construction, totaling 3.5 GW. We expect to complete the commissioning of Vineyard Wind One by the end of the year, while Windanker and East Anglia III will be expected to be commissioned in 2026, and East Anglia II will be commissioned in 2028. Our participation in future offshore auctions will continue to be limited to regulated frameworks that offer adequate returns with risk minimized through secure supply chains and route to market. In onshore wind, we plan to install 1.9 GW of new capacity, 90% of which is already under construction.
This includes repowering projects in the U.S., in Spain, and the United Kingdom, such as the 50 MW repowering of Molar del Molinar in Spain and 98 MW of Lean Juniper in the U.S., as well as some landmark initiatives like the hybridization of our Tamega Hydro project in Portugal, with a 274 MW onshore wind farm. The plan includes the installation of 2.2 GW of solar power photovoltaic capacity, 70% of which is already under construction, including hybrid projects incorporating battery storage, such as the Broad Sound in Australia. We will also add 2 GW of batteries over the period, with 0.5 GW under construction, like the aforementioned Broad Sound in Australia and 100 MW in Spain benefiting from public subsidies. The remaining 1.5 GW will be mainly allocated in Australia and Spain. This will be executed with a highly opportunistic approach, supported by regulatory frameworks and customer contracts.
Furthermore, we have several investments in the period allocated to pump hydro storage projects to be commissioned after 2028, with a pipeline of 3 GW of pump hydro storage in Iberia in the Duero, Tajo-Sil, and Juca rivers that will provide future storage capacity beyond 2028. The increasing penetration of renewables is creating both the need and the opportunity to invest in storage technologies, with potential across daily and seasonal arbitrage. Both technologies are essential to the system. However, long-duration energy storage offers superior performance compared to batteries. Pump hydro is nearly six times more effective than two-hour battery storage systems in terms of security of supply. It does not suffer from degradation, has a longer asset lifespan, and is three times more effective than two-hour batteries in supporting decarbonization and the integration of renewables.
As a result, we have a pipeline of more than 3 GW of pump hydro storage projects in existing dams in Iberia, where the margins are 10 times higher than six years ago and where the load factor is expected to further increase in the coming years. On the other hand, batteries could also offer some advantages, such as faster response to balancing market, lower development time, and smaller space requirements. Our plan also relies on the commissioning of 2 GW of batteries, with a special focus on Australia. Moving into our route to market strategy, access to multiple sales channels is one of our key competitive advantages. It enables us to maximize asset profitability while limiting exposure to market volatility.
New capacity additions expected over the next four years will contribute between 15 TWh and 20 TWh to our current production available for sales, which stand at 105 TWh, bringing it between 120 and 125 TWh by 2028. Our production is sold through a diversified mix with 21% sold to retail customers, 59% to industrial customers under power purchase agreements or other arrangements, and 20% under regulated contracts, such as CFDs and feed-in tariffs. This approach ensures a stable and predictable revenue across all regions. In fact, 90% of our revenue for 2026 and 75% for 2028 is already secured, reflecting our strong contractual coverage and strategic positioning. In our customer business, we plan to invest EUR 2.5 billion between 2025 and 2028, mainly to continue with a profitable business, to preserve our market share, and to secure long-term contracted revenues across all regions.
In the retail segment, we serve more than 11 million customers in Spain and the U.K., with an average of three contracts per customer. The majority are in Iberia, 80%, and the U.K., 20%. While we expect no growth in this period in line with our conservative assumptions, our focus will be on cost to serve optimization, excellence, and digitalizations to enhance value and efficiency. In the industrial and commercial segment, strategic partnerships have enabled us to secure over 250 teras in contracted volumes through 2030. This reflects the strength of our commercial relationships and the trust placed in our energy solutions. We're also leading the way in the data center energy solutions, already supplying over 11 teras annually to top-tier customers in the U.S., 7 teras to Amazon, Google, Microsoft, Meta, etc., and the U.K., 1 tera to Amazon. In Europe, 3 teras to Amazon, Microsoft, Telefónica, Vodafone, etc.
In Iberia, where demand from data centers is expected to exceed 10 teras by 2030, one of our flagship initiatives is a joint venture with Ecolon, featuring a major data center project in South Madrid. This is an example of a single project data center creating an additional demand of 1 tera. 11 of such projects will represent approximately 5% of Spain's current electricity demand. We have seven more projects in Spain with secure land and green connections, positioning us to meet demand with agility and scalability. Let's focus on efficiencies, as we always do, you know, for the past 25 years. We're aiming to achieve EUR 400 million in operating efficiencies over the gross margin ratio of 25.8% in 2022 to bring that, you know, to 25.4% in 2024, and then to expect to bring it now below 25% by 2028.
This improvement will be driven by several initiatives across our core areas. In networks, we're increasing optimization and resilience through technologies like ADMS, you know, which enables real-time load balancing and outage response. Moreover, we are deploying AI-powered customer applications to reduce call certain volumes. In generation, repowering opportunities and hybrid solutions allow us to maximize the value of existing assets. For our customer business, we are enhancing our understanding of consumption patterns to deliver tailored and efficient solutions. We're also improving retail costs to serve and deploying a new scalable cloud-based technology platform powered by AI for our Iberian retail operations, designed to meet the challenges of an increasingly competitive market. Our O&M processes benefit from the standardization of equipment and procedures. These processes are in continuous improvement with new tools for predictive maintenance based on data analytics and AI, optimizing asset availability.
For instance, the use of robotics and drones for lines and substations inspections is significantly reducing the need for manual site visits. Together, these initiatives reflect our commitment to leveraging digitalization, automation, and data intelligence to drive sustainable value creation. I think in the workshops today, you will see many examples of them. Moving to supply chain, another key enabler of this plan is our robust supply chain strategy. Several months ago, we delivered a webinar containing all the details of our supply chain strategy. However, today, we will provide a brief overview. 80% of our strategic equipment needs through 2028 are already secured, ensuring availability, scheduled reliability, and price stability across our operations. This proactive approach allows us to minimize exposure to commodity price fluctuations, inflation, and foreign exchange risks. A key difference is our commitment to local manufacturing, especially network, with 95% of purchases being local.
This not only supports regional economies, but also protects us from tariff impacts and supply chain disruptions. By leveraging global volume and standardization, we are achieving competitive pricing through economies of scale. For our big businesses and main businesses in network, 95% of strategic equipment, AV, HVDC components, GIS, high voltage circuit breakers, cables, and distribution transformers are already secured, thanks to a combination of centralized and local procurement strategies. In power, for projects currently under construction, 100% of strategic equipment is already secured. In summary, our supply chain strategy is built on foresight, scalability, and localization, becoming a cornerstone of our operational efficiency. In the afternoon, you will have further details and insights. Let's go now to the regions, to our geographies. Let's start, as the Chairman pointed out, as you have seen throughout the presentation, we're operating in the right countries.
These countries are where we have personnel with the right skills, where governments have shown a strong commitment, and where we personally oversee operations to ensure successful execution of our investment plan. Let's go one by one. The United Kingdom, we intend to plan to invest in our plan around EUR 20 billion between 2025 and 2028, with EUR 14 billion allocated to our networks business. This investment will result in an increase of over EUR 9.5 billion, which is 70% growth, in our regulated asset base, rising from EUR 15 billion to reach EUR 24.5 billion by 2028. Of the EUR 14 billion, approximately EUR 8 billion will go to transmission and EUR 6 billion to distribution. In power and customers, EUR 6 billion will support the construction of offshore projects, both East Anglia III and II, as well as 300 MW of onshore under construction.
The current installed capacity of 3,000 MW will increase by 2,000 MW, approximately 70%, reaching 5,000 by 2028. On the retail side, we remain focused on promoting electrification through smart solutions and strengthening customer loyalty. In the U.S., our investment plan totals EUR 16 billion over the period, with EUR 12 billion directed to networks, 70%. This investment will result in an increase of over EUR 7 billion, which is 60% growth, in our regulated asset base, rising from EUR 14 billion in 2024 to EUR 21 billion by 2028. In transmission, alongside regulated projects, we are completing, as I mentioned before, New England Clean Energy Connect projects. In power, we are focused on commissioning Vineyard Wind One, repowering onshore projects, and building new ones, all benefiting from the existing and the previous tax credit mechanisms. The current installed capacity of 10,500 MW will increase by 1,500, reaching 12,000 MW installed capacity by 2028.
In Brazil, we plan to invest EUR 5 billion in organic growth, with another EUR 2 billion in the acquisition of the previous stake in Neoenergia. 90% of this investment will result in an increase over EUR 2 billion, 20% growth, in our regulated asset base, rising from EUR 11 billion to EUR 13 billion by 2028. This will support the growing demand for electrification across jurisdictions. In Spain, the plan includes EUR 9 billion investments between 2025 and 2028, with EUR 4 billion directed to net worth. This investment will result in an increase over EUR 2.5 billion, 30% growth, in our regulated asset base, rising from EUR 9 billion to EUR 11.5 billion by 2028. As explained before, this is contingent to the regulatory framework that should ensure sufficient returns and increases the investment limits and guarantee OPEX recovery. Our geographical diversification minimizes whatever the outcome may be.
In power and customers, investment will reach EUR 5 billion, with 60% in generation. The current installed capacity in Spain stands at 31,800 MW and will increase by 500 MW, reaching 32,500 MW. We'll be adding around 2,000 MW, of which 600 MW will be batteries. However, the net growth in renewables is offset by the closure of Almaraz. In retail, investment will be focused on maintaining market share in a more competitive environment and supporting electrification through EV solutions and industrial decarbonization. Australia, and other European countries, is what we call our Iberdrola Energia International. We plan to invest EUR 5 billion, mainly in Australia, Germany, and Italy. This includes more than 2,800 MW, featuring the completion of the 315 MW Windanker offshore project in Germany, 1,200 MW of a storage project in Australia, and 600 MW of solar PV in Italy.
These investments will increase the current installed capacity of 4,300 MW to over 7 GW by the end of 2028, representing a 60% growth over the period. Moving to the evolution of the business in terms of EBITDA, in summary, our investment plan is not only ambitious, but also transformative. By 2028, we expect to reach an EBITDA of EUR 18 billion, an increase of EUR 3 billion compared to 2024, driven primarily by growth in our net worth business. This segment will represent 55% of the total EBITDA, 40% up from 2024, clearly reflecting our strategic pivot towards regulated income and long-term value creation. In terms of country, geographically, the shift is equally significant. The U.S. and the U.K. will jointly contribute 50% of our EBITDA by 2028, compared to 37% in 2024. These figures underscore our commitment to focusing on high growth, high return markets.
To conclude, this EUR 58 billion plan reflects a disciplined approach to capital allocation, focused on stable, high return markets, and supported by strong regulatory visibility. Thank you very much, you know, to all of you, and we're confident that the team will deliver, to the Chairman, all of you, this plan. Thank you.
Okay. Following the agenda, we are going to have now a coffee break. Just here. It's a question of 15 to 20 minutes. Thank you.
Nothing can stop me.
Following with the setup presentation, it's a pleasure to give the floor to Mr. Pepe Sainz.
Hello, good morning to everybody. Before I start, I have a special announcement for analysts and investors because my IRD is very worried because apparently, our EBITDA is slightly below the numbers that you have. They have asked me to explain to you a couple of reasons of why this is the case. I hear that you were kind of expecting around EUR 19 billion, and we are giving you EUR 18 billion. Actually, it's a little bit higher than EUR 18 billion. It's closer to EUR 18.5 billion than to EUR 18 billion. In addition to that, they have asked me to tell you first we are not including, obviously, Mexico, which is EUR 600 million because we are going to sell it.
We are deconsolidating also East Anglia III, which was adding EUR 300 million to the EBITDA. Also, as we explained to you, due to the capital allowance, our revenues in the United Kingdom are lower, so this is another EUR 300 million. If you add these three things, then we'd be above the EUR 19 billion. In addition to that, and this is something that I have been thinking during these 10 minutes, first, we have EUR 500 million less of EBITDA due to the devaluation of the dollar and the real, which actually is much lower at the net profit level because, as you know, part of our cost is in interest costs in these currencies. Second, take into account that we have been acquiring the minorities of Avangrid, and we are buying the stake of Prevy, which adds to our net profit, but not to our EBITDA.
All in all, if you add all those things, probably it would be an EBITDA of around EUR 20 billion, which is not bad. Okay. Giving this announcement, let me start the presentation. After the Chairman and the CEO's convincing presentations, it is clear that Iberdrola has a unique business and financial model that combines predictability and profitable growth with a strong financial profile and a dividend policy that grows in line with our earnings. Our business model that is based on regulated and long-term contracted business, being networks, are key investment decisions. While we continue to invest in renewables through a selective approach, securing long-term cash flows through CFDs, PPAs, and our retail position, we focus on A-rated countries, which generate over 90% of our operating profit.
It is supported by our centralized financial model that I will detail in this presentation, with a strong commitment to the BBB+ BA1 rating, has provided in the last years a total shareholder return of 350% over the last 10 years, outperforming the market and peers with a higher net profit growth with lower volatility. Despite this, Iberdrola trades at a lower P/E ratio than other industry leaders and indices, making us an attractive investment opportunity in an industry that, as the Chairman has explained, will provide substantial growth in the future. As I have mentioned, and as you can see in the slide, Iberdrola has provided shareholders with a total return of 359% in the last 10 years, beating the global indexes such as the S&P 500 and the MSCI World Index, and almost tripling the Utilities Index.
We have also outperformed other defensive sectors, luxury, healthcare, and staples that have higher multiples than us despite this worse performance and a more uncertain growth path than Iberdrola, as we are very well positioned in a global context in an industry of rising demand for electricity and grid infrastructure that offers an attractive future growth for an extended period of time. Iberdrola not only offers growth at an attractive multiple, but also more certain and predictable. As shown in the slide, Iberdrola net profit growth from 2019 to 2025 has clearly outperformed our major European integrated peers during a period of global uncertainty, with the COVID, with the Ukraine-Russia conflict, with new trade tariffs, with supply chain problems, and with less appetite for renewables. We have passed all these different, volatile periods with very little volatility in our case.
Our net profit standard deviation is close to zero, offering an attractive risk-return combination compared to others. Our 9% net profit cumulative annual growth over the last 10 years has also consistently outperformed global indexes. Our shareholder remuneration has been fully aligned with our net profit and earnings per share growth, providing a strong visibility and consistency. Let me review quickly the 2024-2026 plan, which we are already overdelivering. Our first half 2025 adjusted net profit grew 7%, excluding one-offs, fully in line with our mid to high single-digit target, but coming from a higher 2024 close that allowed us to predict a higher net profit for 2026 than was forecasted in our capital markets date, below what we are going to provide. In terms of financial strength, our FF over net debt ratio increased to 24%, comfortably aligned with the BBB+ BA1 rating that agencies require.
Regarding asset rotation, our EUR 12.2 billion target has been exceeded in terms of volume, timing, and profitability, supporting the group's strategic reorientation towards networks, as this, partnership and asset rotation has made possible the acquisition of ENW, the Avangrid minorities, and the Prevy stake in Brazil. On the sustainability side, the most critical metric for contributing to the energy transition, emissions intensity reduction, it has improved by 21% from 83 grams to 65 grams of CO2 per KWh produced, even before the last thermal divestment, which will further reduce emissions to close to zero. Regarding our 2025-2028 plan, first, let me point out that it is mostly funded. We have taken the necessary steps to finance this ambitious investment plan. We have successfully executed our EUR 5 billion capital increase, which takes away any need for additional equity at least until the end of the decade.
This is a special announcement for bankers. We are not going to issue more equity at least until the end of the decade. Our asset rotation and partnership activity has been extraordinary. 75% of our current target for the 2025-2028 period is already completed, and up to 90% is advanced at attractive PE multiples. Iberdrola will continue to fund the investment needs for stable and predictable cash flow generation and its diversified sources of debt financing. During this period, we will need to fund approximately EUR 83 billion. CapEx will represent 72% of our total needs, including EUR 2 billion for the ENW debt. EUR 58 billion will be the group investments, including EUR 5 billion of work in process.
Shareholder remuneration and minority interest will account for around 24% or EUR 20 billion, and the remaining 4% will be working capital, or around EUR 3.3 billion, of which EUR 1.4 billion is related to one offshore wind farm, OFTO, that will be recovered in 2029. Half of this working capital will be recovered in 2029. As shown in the slide, 63% of our funding needs will be covered by our funds from operations, which will grow by EUR 2.3 billion in the period, reaching EUR 14.1 billion in 2028. Asset rotation and partnerships will contribute around 16%, of which 90%, as I have mentioned, is already completed or in advanced stages. The remaining 6% comes from the already executed capital increase. As a result, our financial solvency will be strong, given the limited increase in financial debt, as it will be only 15% of our total sources.
As I was mentioning, we have developed an extraordinary partnership model capable of attracting tier one investors, allowing us to raise equity at attractive PE multiples, making these transactions in general accretive for the company. Our current plan sets a EUR 13.2 billion target for the 2025-2028 period, EUR 7.6 billion from partnerships, 58%, EUR 5.6 billion from asset rotation, 42%. As shown in the slide, 90% of this target is either completed or in advanced stages, assuming the successful closing of the latest Mexico transaction. As I mentioned previously, this has allowed to increase its exposure to the network business. The key macro hypotheses of the plan are aligned with the market forecasts. Compared to our previous plan, we estimate a slightly higher inflation, mitigated in the eurozone by the euro appreciation and lower energy prices.
A higher interest rate environment, which compared to the forecast we had in our previous plan, will reduce the net profit by EUR 186 million. Our short-term rates will be higher, except in the eurozone, and long-terms will be higher, driven by debt sustainability concerns and European reindustrialization. GDP growth is expected to be slightly lower due to the trade tensions, geopolitical risks, and macroeconomic uncertainty. On the foreign exchange side, a worse scenario compared to our previous plan has led to a EUR 160 million reduction in 2028, and as I mentioned, an over EUR 500 million reduction in the EBITDA, EUR 160 million in net profit. The U.S. dollar is depreciated from EUR 1.09 to EUR 1.18 . The British pound is slightly appreciated due to the persistent inflation and favorable rate differential. The Brazil real is depreciated due to the concerns over higher fiscal deficits from EUR 5.63 to EUR 6.45.
You can find the detailed macro hypothesis set and its comparison to the previous CMD plan in the annex. When it comes to value creation, our plan prioritizes, as the Chairman has pointed out, regulated and long-term contracted business in A-rated countries with favorable regulatory environments. This strategic focus ensures attractive and predictable returns across the group. In our network business, investments are aligned with well-established regulatory frameworks, securing an average return on equity of 9.5% nominal post-tax, which is consistent with an average IRR of over 8% and an EBITDA over CapEx ratio of 10% or above.
Empower renewables and customers, our selective investment approach with CFDs, PPAs, and retail positions covering around 85% of the expected production allow us to achieve an IRR range of 7%- 12 % and a spread to WACC of more than 200 basis points, depending on the cost of equity assigned to the investments as the risk differs depending on the technologies and markets. As a result, we expect the group CapEx will generate a spread to WACC over 200 basis points on average with a low risk profile. Iberdrola, as I mentioned, will maintain a solid credit ratio throughout the 2025-2028 plan, reinforcing its commitment to the current credit rating. The evolution of our financial ratios reflects the progressive transformation of our business model. Iberdrola is transitioning towards regulated networks by 2028. 55% of our EBITDA will come from regulated activities.
If we include long-term contracted business, this share increases even further, bringing us closer to the profile of regulated companies that, as you know, rating agencies demand lower ratios. Our estimated ratios for 2028 are leverage increasing moderately from 45.4% to 47% in 2028, FF over net debt of around 22%, and retained cash flow over net debt close to 19%. Although our internal ratio calculations differ from those used by rating agencies, these levels are comfortably within the threshold required by them to maintain our current rating as our business profile continues to improve due to our increasing exposure to A-rated countries and the growing weight of regulated and long-term contracted business. The evolution of Iberdrola net debt and its interest rate and currency structure reflects its commitment to maintaining a prudent financial profile.
From EUR 52 billion in 2024, net debt is expected to reach around EUR 55 billion in 2026, an increase of only EUR 3 billion over two years, despite higher investment. This is thanks to the fact that we had made the capital increase and the asset rotation and partnerships that have been made upfront. From 2026 to 2028, net debt will reach around EUR 64 billion because we will basically, the plan has been funded in advance. Our debt structure will remain prudent, with 73% of the total debt at fixed rates, covering more than 68% of the fixed EBITDA. In the U.S., we'll have around 88% of our debt fixed, aligned with the regulatory frameworks. The majority of our renewable assets also are under fixed price schemes, such as PPAs.
In the euro area, or in the euro, around 72% of the debt is fixed, reflecting the higher share of liberalized business in the EBITDA. Within the British pound, our income is balanced across fixed, floating, and inflation index components. We have around 58% of our debt fixed. In Brazil, our debt is inflation indexed as it is our EBITDA. Regarding the currency structure, we follow a natural hedging policy financing the group in the same currency as our FFO. For the first time, the euro-denominated debt falls below 40%. The remaining 60% is in other currencies, with the pound and the dollar having a higher share. We will reduce our Brazilian exposure by 4 percentage points in 2028 as we finish our transmission investments. Our cost of net debt is expected to decline throughout the plan, reaching 4.4% by 2028, down from 4.8% in 2024.
Excluding Brazil, the cost would be around 3.6% compared to 3.7% in 2024. The average debt balance in Brazilian reals will decrease from 13% in 2024 to 9% in 2028. This, together with the devaluation of the real and the dollar versus the euro, contributes to real improvement in the group's cost of debt. Nevertheless, we are facing higher interest rates compared to the capital markets day of 2024, where the 2026 net financial cost expected was 4.4% below the 4.8% in this plan. The higher rates are expected to reduce 2028 estimated net profit by approximately EUR 186 million compared to our expectations in the last capital markets day. Regarding hybrids, Iberdrola remains confident and committed to its current hybrid portfolio, which will be maintained at EUR 8.25 billion throughout the plan. Our hybrid strategy continues to support our credit ratings.
During this plan, our focus will be on refinancing the outstanding hybrid stock. We expect investor demand for our hybrids to remain strong, driving lower spreads. We will maintain moderate financial needs, as I was mentioning throughout the plan, around EUR 32 billion. EUR 20 billion will be refinancing maturities, along with EUR 12 billion of additional debt. Around EUR 6 billion of new needs are already signed, making even more comfortable our maturity profile, as you can see. Our financial needs will be covered according to our centralized financial model, financing from the holding up to 72% of the total, except for regulated companies in the U.S. and Brazil. U.S. will take around 20%, around Brazil 8%. By product, we will cover our needs mainly through the bond market. One thing that I have to mention is that we will try to do as much as we can in the U.S.
market, which is the largest market in bonds that we have not tapped in the last year. There is a huge possibility of issuing in this market, and we haven't tapped it because up to now it has been more expensive than the euro market. The rest mainly will be covered through multilaterals, export agencies, and development bank loans that have more and more possibility of having loans from them because they are increasing their financing targets. This is a very interesting market because it's not subject to the capital market volatility, provides financing at very competitive prices. Bank loans will be only around 10% at low level that allow us to maintain non-use capacity for other products like credit lines, derivatives, letters of credit, etc. Our liquidity position will comply with rating agency requirements for what they call a strong or adequate.
We will end 2028 at around 22 months coverage with EUR 24 billion of liquidity. All the new credit lines will be based on KPIs, fully aligned with the sustainable targets of the company. Our expected average life of debt will be above six years as we prioritize the regulatory cycles versus the asset usage life. We found ourselves with a longer duration than the regulatory cycles. Also, the six-year average life of debt optimizes the risk-cost perspective. Our FX strategy hedges our most important solvency ratio to protect this financial solvency and the rating of the group from the FX fluctuations, as we have seen, for example, this year. Our aim is to minimize the FFO over net debt ratio volatility, adjusting the amount of debt in the different currencies to the funds generated in the equivalent currency.
In addition, annually, we hedge the net profit exposure to protect the P&L from currency depreciation. FX risk management has consistently, in the case of Iberdrola, delivered good results. In addition, in this plan, as I have commented, we face a worse context compared to the CMD of 2024, with more depreciated currencies, especially the dollar and the Brazilian real, that will reduce around EUR 160 million from our net profit. It will reduce around EUR 500 million for our EBITDA, but taking into account that, as I have mentioned, because we finance ourselves in dollars, in Brazilian, and in pounds, the FFOs, obviously, the devaluation of the currencies protects us a little bit. For example, we lose EUR 500 million in the EBITDA, but we gain EUR 200 million in our financial expenses due to the devaluation of the currency.
Actually, the impact in the net profit is less, EUR 160 million, something that you have to take into account for your EBITDA calculations, please. We expect adjusted net profit to grow every year throughout the plan. By 2028, it will have increased by EUR 2 billion, reaching the previously mentioned EUR 7.6 billion, equivalent to a high single-digit cumulative average growth over 2024 to 2028. Net profit figures are adjusted to the capital allowances that will be around EUR 300 million in 2028, in order to exclude the deferred taxes accounted for in the regulated electricity results in the United Kingdom that artificially represses net profit and EBITDA, with the aim of more accurately reflecting these numbers, the net profit and EBITDA numbers, and better aligning the results presentation with other U.K. companies. As you know, National Grid and SSE already do this capital allowance adjustment.
You will find a more detailed explanation in the annex, and our investor relations team that has already briefed analysts on this technicality remains available for any further clarification. As shown in the slide, we expect adjusted net profit to grow every year from 2024 onwards, and we expect to exceed the previous CMD for 2025 and 2026. As we had the expectation there, it was between EUR 5.6 billion and EUR 5.8 billion for 2026, so we will be clearly above these numbers for 2026. Adjusted net profit is expected to grow at a high single-digit rate from EUR 5.6 billion to EUR 7.6 billion. Let me show where these numbers come in. There is a EUR 2 billion increase in the plan, which is driven by the networks contribution of EUR 2.1 billion. Renewable power, mainly through capacity additions, will contribute around EUR 400 million.
This positive evolution in both businesses more than compensates the EUR 500 million decrease in customers, mainly related to the normalization of margins in Spain and the United Kingdom, as well, as I was mentioning before, our sale of our Mexican assets. However, the Mexican sale is part of our asset rotation strategy and is more than compensated with the contribution from new investments, especially at the net profit level, where I mentioned the ENW acquisition, the Prevy stake in the energy, and the Avangrid minorities. We also expect around EUR 200 million in financial savings linked mainly to a capital increase. This is a very important slide for all of you because here we show the sensibility of our results to the different fluctuations in currencies, in interest rates, and in remuneration of networks.
As you can see in the slide, basically, the risks and opportunities, because I have to say there are also opportunities here, are macroeconomic, basically primary foreign exchange and interest rates. As you can see also, the business-specific risks have a limited impact in our net profit. The key point from here is to show that the volatility of net profit remains low thanks to the strength and resilience of our business model. You have also the same impacts at the EBITDA level in the annex. I want to highlight, as the Chairman has done, that if electricity demand grows, as we expect, for example, in the United States, impact on prices will happen and will give Iberdrola an opportunity to improve results. An impact on demand will not only have the impact in the demand, but also the effect in the prices.
Finally, and as the Chairman has stated, Iberdrola deploys a sustainable business model with tangible impact on people and the economy. This is an integral strategy structured around five fundamental pillars: boosting electricity as a clean, autonomous, local, stable, safe, and competitive source of energy, the strengthening of human and social capital, ensuring a sustainable value chain, the protection of nature and efficient use of resources, and an ethical and transparent governance. These pillars guide our specific targets. We are confirming and evolving when required our existing targets, incorporating new regulatory requirements and market demands, as you can see in the annex. Iberdrola maintains most of its KPIs in key areas such as specific emissions, smart grids, electrification, biodiversity, and resource efficiency, while we are raising ambition for others, illustrated in the evolution of smart grids and accessibility for consumers.
Specifically, in finance, 90% of our total organic investments will be aligned with the EU taxonomy and therefore will provide a large pipeline to be financed under green principles. Sustainability will be more linked to credit lines and commercial papers. During the plan, over EUR 35 billion of new financial instruments will be green or sustainably labeled, of which over EUR 30 billion will be green. As a consequence, we are forecasting that we will have more than 80% of green sustainable labeled financial instruments by the end of the plan. I would also like to highlight that Iberdrola is considered best in class in green financing, both under ICMA's green bond principles and the EU green bond standards, maximizing our access to the green bond market. In fact, we were the first company to issue an EU green bond aligned with ICMA principles.
Thank you very much for your attention, and now the Chairman will close this presentation.
Thank you, Pepe. Today, we are presenting this plan to transform, again, like we used the word transformation, to transform Iberdrola's profile into a more regulated group with even stronger focus on high growth or attractive markets. We can say we are becoming a growth Anglo-Saxon company in the defensive sector. Growth Anglo-Saxon, defensive altogether. I think that is our plan. Thanks to the increasing networks investment that will reach 70% of the total, and a selective approach to renewables based on projects already under construction with revenue secured through PPAs or CFDs. As a result, we will increase the share of EBITDA that does not depend on energy prices to 75%. We'll have higher predictability thanks to the portfolio of transmission and distribution business, with regulatory frameworks secured or advanced up to 2031, delivering average high single-digit growth in net profit through 2028.
A plan fully based on organic growth in our current A-rated countries, with two-thirds of our total investment in the United Kingdom and the United States, and rising returns thanks to an average return on equity of 9.5% in networks investment and our strict profitability criteria in renewables, preserving our strong commitment to BBB+ rating with no need of additional capital and increasing shareholder remuneration in line with results. To conclude, let's summarize this plan in a few figures. Investment of EUR 58 billion, in which two-thirds are in the United States and the United Kingdom, to increase our net profit by EUR 2 billion in just four years, up to EUR 7.6 billion by 2028, with dividends increasing in line with results, including a flow of EUR 0.64 per share, and reinforcing our commitment to financial strength.
In other words, with this plan, we are preserving the foundation of the model and the vision we started 25 years ago. At the same time, we are anticipating the coming deep changes in the energy industry, maintaining our usual prudent approach with conservative macro assumptions, as Pepe has already explained, and clear upside potential if electrification and demand growth forecasts materialize, driving energy prices above our base case and increasing the need for infrastructure investment. Thank you very much for your attention, and now we are ready to answer your questions. Thank you.
Thank you, Chairman. Now we open the floor for questions. First, we'll take all the questions from the room. Please raise your hand, and we'll bring a microphone to you. Please be patient. I'll try to be fair with the waitlist.
After that, we'll move on to the questions submitted via webcast so we can also hear from those joining us remotely. Let's begin. Fernando Lafuente.
Good morning, everyone. Thank you so much for the presentation and all the nominations. I have three questions, please. The first one, it's a general question regarding the shift to networks. My question is why changing to networks now? Why is that now the moment to invest heavily on networks? The second one, it's on the timing for the rate cases in the U.S. and the U.K., those remaining. When do you expect these rate cases to be approved? Finally, it's on the strategy in offshore. Once you finish your projects currently under construction, what should be the strategy for the company? Do you expect to continue building more projects, or it's basically what it is? Thank you so much.
Thank you very much. I think it's a good question. The first one, why this one? I think we are a company where we give little surprises. Next year, we celebrate our 125th anniversary of the company. For the last 25, I've been the one that was leading the company. I think I've been repeating in 25 years the same words: renewables, networks, and storage. I don't know how many times you listened to me say these three words: renewables, networks, and storage. For years, as we commented before, I was criticized because we decided to close our coal power plant, our oil power plant, and we started investing in renewables because we were convinced that it's needed. I think now, after 25 years, nobody doubts that renewables are already an energy solution. We can provide energy security, can provide energy self-sufficiency, can provide competitiveness of the country.
I think everybody is already in this direction. During these 25 years, we have already built 60,000 MW of renewables. We are leaders on that one by five. The second thing we said at that time is the networks. The renewables are already, by nature, distributed power. I think it's not as concentrated as the traditional power plants, which are already large power plants, which are sending the electricity to large consumer centers. The renewables are much, much distributed. The average power plant is not 1,000 MW that it was already the traditional ones, either coal, nuclear, or others. A s mall one, in some cases, 20 MW, 30 MW, 50 MW. We have one of the largest with 300 MW, but that is very exceptional. That requires some kind of a grid to take this electricity into the consumption centers. As well, during this period, the uses of electricity have already changed a lot.
If we've been burning and heating our homes for millennia, burning things. With engineers, sometimes we do something which is very useful. I think you invented many years ago the heat pumping system, which I think you can heat and refrigerate homes using electricity instead of burning anything. That requires that one. Same thing with transport, same thing with quite a lot of industries can use electricity as raw material for making other things. Green hydrogen is one of the cases. Another use, like now, is a computing data center, digital appliance, etc., etc., in our homes. Our home is full of equipment, electric equipment. I think they need already the grid we designed 100 years ago. Most of the equipment which exists in most countries is already made in the times when I was already in the university, which I think was not precisely yesterday.
I think they need to be refurbished, need to be rebuilt, need to be repowered, and need to be digitalized for already providing the services we today people require. If you add to that one, the demand of those uses, as Pedro was mentioning, is increasing. We see that now exists a very high latent demand which cannot be covered because of restrictions of the grids in the countries. I think that was our vision that is going to happen. It's happening. We had the vision of renewables. It happened. Nobody is criticizing myself because of the investment we have already done in renewables. We've been very much criticized when we make all our international expansion base in networks countries.
We bought the Scottish Power network, we bought Energis networks, we bought Brazil networks, we bought recently electricity networks, and we acquired 100% of Avangrid networks, and we acquired 100%, almost 80% of Neoenergia networks as well. In this one, some countries have already woken up properly, and I think we are preserving those countries. They woke up fast, which is United Kingdom and United States, for different reasons. In the case of the United Kingdom, it's because the demand is booming, and there are tremendous, Pedro mentioned as well, huge amount of money which is already paying the citizens because of the containment. We produce electricity in some parts of the country, cannot be transported in other parts of the country. There are already a political decision to reduce the external dependency. That why means they need already electrified uses to avoid the imports of fossil fuels.
These two things are making the regulator fully aligned with the policy of the government for making already that acceleration. If we compare our situation in Britain five years ago, kids, you can already correct to me if I'm not fully correct on that one. We've been already discussing for almost two years for the CapEx we would like to put in transmission. We present, correct me the numbers, I try to be by memory. We were asking something like GBP 1.5 billion. They said, "No, because that increases the rate of the consumers." We're discussing GBP 1 billion per month. It's peanuts. They said, "No, only GBP 1.2 billion." The reality in this period, you are going to make over GBP 2 billion. It's correct, the numbers. My memory is still not very... What is now changing? Now the position is the absolute opposite.
Yesterday, we had a meeting with the Chairman of GEM, and they're pushing us to accelerate the construction while you can do more and to make the thing faster. The demand, latent demand, they would like to be covered, because they would like to reduce the rate of the consumers, because of these containments, which can be avoided, and because that can generate a tremendous wealth of the country with the political drive. This huge investment is conducting the country growth with the investment we are putting on the sector, with the industries and with the volumes of that one without using funds from the national budget. All these new infrastructures, which are not dependent on the national budget for covering demand, which is latent there, and to accelerate that one. I think that is that one. What is the United States?
The United States, in the state where we are present, the situation is different. The design of the grid and the design and the situation of the grid is really old-fashioned. I don't like to use another word. I think it's not precisely what the country, the United States, needs. That is what America has already made, this bit, how do you call, bipartisan infrastructures.
The agreement in the budget.
To accelerate that one at the federal level, and at the state level, the same thing, pushing us to make that one. In such a way that almost 60% of the CapEx we are already agreeing or in conversation with the regulator is for changing the existing grid to make a grid more according with the needs of today. At the same time, I think the towns of the '60s, when this grid was designed, it's nothing to see with today. There are towns where at that time the people were even bombarded or the industry went to places, and now it's not any longer industries, they're homes, or they're gardens. It's changing, that one, in such a long period of time. We need to make already the grid for adapting to today's needs on that one.
The third one is to introduce things which today still are costing a lot of money, which is due to the storms, because the blackout there is costing millions to the consumers. It's cost and instead of CapEx. We are transforming that one, another one, in such a way that in the medium term, that for the consumer. Our vision was power, renewables, networks. Now we're about that one. The timing is fixed by the country. The time in the country is saying, "Now it's time. They're pushing. We have to do that," etc., etc. Related to offshore, we continue on that one. We are already in this moment, three projects in construction, one in America, one in Germany, two in Britain. It's four, two in Britain. Those ones are finishing soon in 2026, 2025, American one, 2026, the British and the German, and in 2028, another British.
Now it's another option here. Probably we will participate on the approach of VR7, which gave another project there. We have another pipeline in other countries. We will see. There are more opportunities. If there are opportunities, always based in secure prices, CFD or similar, and with proper return, always with a prudent approach on that one. We have a pipeline, and we will be ready to make that one if there are already the terms and conditions for already gaining those ones in a profitable manner. Insist on that one, nothing is new. We have 25 years ago vision, networks, sorry, renewables, networks, and storage. Sorry, storage I mentioned as well. In storage as well, we've been already transforming our dams in Spain. It's why we have more dams in reversible. We continue making that one. Pedro mentioned a couple of them.
We continue time to time, but the biggest one is done. We double the size of Cortes La Muela, and we invest already in the Tâmega River, which is pumping and storing with facilities, which is the only big one that has been built in Europe in the last 20 years. I think, and we are already, as we mentioned, in storage in Australia. In Europe, if it's profitable, we will make as well. I think certainly we have a tremendous advantage with our pumping and storage facilities, which we have the dams, and we have already the only thing we have to change is the turbines. I think the rest is already absolutely used. With little investment, we can already obtain a very good result during very long periods of time, which is crucial. It's not a question for one hour, two hours, three hours.
We can already staff for 20, 30 hours when we got to store it, electricity, and when 20, 30 hours, we can already generate electricity, not the battery, which is already much of the fuel.
I see the next question.
You can mention.
Okay. I think in terms of the regulatory filings, rate cases, etc., in the U.K., I think two different things. Transmission, as you know, first draft of RIIO-T3 is already on the table. It will be finalized by the end of the year and goes into 2031, from April 2026 into 2031. We are done. In terms of distribution, the current ED2, it goes into basically March 2028. We will just have the pending for ED3, which will be two-thirds of the year, and we will be filing that next year. I think also probably taking care. In terms of the U.S., we filed in New York. We have asked for five years. They gave a three-year rate case to National Grid right now. In our opinion, that's consistent with our previous three-year rate case that we got three years ago.
I think the implementation, the agreement, will probably be in the second quarter of next year. It will go beyond 2028. From that point of view, we'll be done. Remember, we're not now as we were three years ago in a 10% inflation environment and things like that. We are daily, weekly with the public commission. We got the securitization bill. Dynamics both in Maine and New York are very, very good.
The relationship remains the same thing. In the third quarter next year, we had the right case, which it will be at least for two years, probably, you know, even more. I think if you see all of that, very comfortable that most of the things have been taken care of.
Okay. Alberto, Javier afterwards, and let's say Peter. Alberto.
Thank you so much, Alberto. Gandolfi, Goldman Sachs, three as well. I wanted to start on power demand, if you don't mind. It's a two-part question. The first part is, do you think Europe is ready to cope with 2%-3 % increases in demand because we have not been building backup? You know, networks are 40 years old. Many players are cutting renewable CapEx. Are we going to see a crunch point in Europe at some stage and when? The second point on the power demand, there was a slide earlier, I think, Pedro, it was in your section, if I'm not mistaken, where you're basically saying that network investments reflect growing power demand, but you don't seem to put through power demand in retail. You don't seem to have higher profits from flexible generation, and you don't seem to put through higher PPA prices in your renewables.
I guess we have the sensitivities at the back. My question is, if you were to put through 2% - 3% increase in demand throughout the entire business of Iberdrola, the entire value chain in electricity, what would the EUR 7.6 billion net income become? Sorry, that was just the first. Second question on renewables. We are starting to hear from some players in the United States that we went from a very tough situation in January, February, March to actually a very constructive situation right now with less competition, clients very willing to sign PPA, double-digit IRRs. Do you have room? First, do you agree with this? Secondly, do you have room in your business plan to accelerate the renewable investments in the U.S. if the situation were to continue? Last question, much quicker.
On the 2031 growth rates, if you keep more than EUR 15 billion investments per annum, where do you see the growth rates in the bottom line at that point? Still mid to high, high single digit, mid single digit, any indication you can give over and above what we have seen in the slides? Thank you for your patience.
Okay. I think if we see in most countries, the demand, latent demand is huge, cannot be covered now. I think we saw the other day in Spain, our network is saturated at 90%. It's not ours. The network is of all the colleagues. There are almost 60,000 MW of demands of new uses of electricity that cannot be covered. With this, I make always some correction on that one. Let's make then half of it is speculative. Even if it's speculative, 30,000 MW of new needs is huge. Nevertheless, with today's situation, our demand is growing. Even with this constraint, the demand is growing. I can tell you the number of people who are sending me letters just to try to accelerate the connection, to facilitate whatever, is huge. Only data centers, data centers are huge.
A data center, we are making the first one, we are making close to Madrid, between Toledo and Madrid. Only that one is consuming one terawatt hour. It's more than one terawatt hour, EUR 0.01. One terawatt hour is representing 2% or 1.5% of the total demand of Spain. If we make as much as is today demanded, that is huge. The same with electric vehicles. Electric vehicles, Spain is the number of new cars, electric cars is 5%, 8% of the total. Portugal is 25%. In other countries, it's 50%. Why? Because we have not enough, we have chargers with no connection. Because they're already dislodged. I'm optimistic about the demand is going to boom. I'm optimistic about those numbers. Nevertheless, I said, and I insist on that one, I don't know how many plans we have already made. Always, we have already made more than what we planned. Always.
We always have a very prudent, very conservative approach. Pepe makes some sensibilities. He makes some comments on that one. If the demand increases more than we are expecting, in that case, the prices will have the trend to increase that one. We have seen in the U.S., the prices in this moment in the U.S. are booming. Why? Because demand is booming. There's not enough power for covering that one. Automatically, the prices increase. How much it should be, I think, Sua, you have better analysis than myself on that one. Certainly, I insist, all our analysis is based on a conservative approach. It should be the first time if we are not exceeding the plans we make. I think Pepe mentioned 2026. In 2025, we are going to make more than we were expecting in the previous time for 2026. In 2026, we will exceed by far 2025.
I think that is the way we are working because the plan is not the plan. The plan is the beginning of continuing working for achieving more things. We are not already fixing this target. We are fixing this target as an orientation, but we have to do more. Renewable USA room. I think we have to be realistic. I think we have pipeline. We can make more. Realistically, the 20th is tomorrow. I think to make already a wind farm in the state of Europe, it's taking longer. I think since the moment you start having the permits, construction, etc., you are already suddenly overpassing 20. Saying that if there are projects in the United States or whatever, which are already with good profitability, with good returns, I think, of course, we are going to look at those ones.
I think our strategy is not to close our eyes toward opportunities of making business. If there are opportunities, we will find out the room. Don't worry. David will find out how to make some rotation, and Pepe will find out some money for that. Don't worry about that one. I think we will make good business. We will make. I think realistically, that's why we are showing you what are the projects which are in construction. To give you the numbers that we are not dreaming, same thing we cannot be made. If things which are in construction, 75% of those are already going to be built and generating cash flows before 2028. Another 25% you are already piloting. We can be already putting part of them in operation, but not that. I think if they are on that one.
If they are more than that, we will see, of course. They are not already limitations, not in the state, no one can control. If they are good business, we are ready to make those ones, and we will find other resources somewhere else. Don't worry. Without making an increase in share capital.
Javier Garrido here, and then after, Peter Bestiga. Let me.
Thank you. Javier Garrido, JP Morgan. I will have two questions. First would be to the Chairman. You have mentioned the word transformation a few times in your presentation. What about transformation via M&A? What are your thoughts about, particularly, if I may, a specific opportunity, German networks? I mean, it ticks a lot of the Iberdrola boxes: developed markets, transmission. What would you think about such a move? A second question would be associated to your willingness to take on opportunities and your vision about demand growth. What is your view about building CCETs? There was a time when Iberdrola built a lot. You have a big fleet in Spain, but outside Spain, there might be big opportunities in different markets. What's your view, and is that view driven by environmental drivers, more driven by economic drivers? How do you see it? Thank you.
The first one, transmission in Germany, we know that one very well, but we are not going to participate in that one. Our M&A is fully already done. I think we would like to come to this CMD with all our financial resources secured and all our, let's say, potential M&As already done. I think no M&A is any one idea on this plan. It's certain in the German we are not going to be. Clear as crystal clear. No way to be already in this one. The second one, related CCETs. I think our approach is very clear. Energy policies are made by countries, by governments. We are not making that one. I think it's the country that decides what to do. There are countries that like to make nuclear power plants, like France. There are countries that like to make offshore, like Britain or like Germany.
Now in the United States, they've been looking for renewable. They're saying that they would like to, not against the renewable, they would like to use the base load in gas. In the previous term of Mr. Trump, he was looking for coal. It's the same question somebody asked me: are we going to make things with coal mines? We could combine the coal power plants. It's not our point. That's why I think no, we are not opposed to any kind of technologies. It depends on the country. Being realistic, 2028 is tomorrow, and tomorrow is those ones you have in hand. If you start now thinking in what to make a CCET in countries with a policy asked to us to make this one, it cannot be probably in operation before 2031, probably 2032. First, because there are no turbines, there are no sites, there are no connections.
That's why our plan is three years, it's tomorrow. I think tomorrow we are renewables, those ones we have in construction, 78% in construction, and another one ready to build with immediate demand. Networks with a great case, which is signed on very advanced negotiations of that one. We have visibility and some pumping storage, what we are in this moment already just in construction, doing or starting to do rapidly. That's it. 2028 is tomorrow. The maturity end of our project takes five, 10, 15 years. I think if you have nothing in hand, we cannot show these numbers. This number is based on something we have in hand. Not impossibilities, no, those ones. Not M&A, not renewables more than those ones we have here in hand. No more whatever. Just based on that one. I think I insist on that one. Energy policies made by countries.
In the countries, we are in a country saying that now they are saying, we need you for investing more in networks. We are investing in networks because they like to invest in networks. That's the point.
Peter here. Gonzalo, and after, Rob. Manuel.
Hi. It's Peter Bisztyga from Bank of America here. Three questions, if I may. First of all, could you talk about the supply chain for networks, particularly vis-à-vis your significant transmission investment in the United Kingdom? How confident are you that you can deliver the projects along the timeline that you've set out for actually both 2028 and 2030? That's my first question. Secondly, in the United States, your current allowed or achieved ROEs are quite a bit below your allowed ROEs, particularly in Maine. There's also quite a lot of focus on the upward pressure on energy bills in the United States at the moment. Do you see any risk that regulators will push back on your rate case requests and that you may fail to achieve the returns that you're targeting in that region?
My last question, maybe a short answer, maybe a long one, could new nuclear ever be part of your strategy? Thank you.
Supply chain. Pedro has already mentioned that 95% of our supply chains for networks is already local production in this country, which I think. In the case of the United Kingdom, a few years ago, we launched an auction or a bid for contracting already for securing the transmission and distribution equipment which we feel is going to be needed. It was already a EUR 5 billion appelled offer, like it said the French people, for already securing that one. Now we have already slots for the most critical items. In certain of those slots, even it's funded by because we pay some amount of money by the regulator, by OGM. If we would like to secure our cable by 2028, cable is already an advanced payment, which is regulated payment we have already got for putting that in operation.
The rest of the equipment is already just agreed in terms for securing all those ones. The most critical item was, if I don't remember that, we are already cable, one of them, and converters. In both cases, both things are fully, fully secure. There are another ones we had in the past in other countries. We have problems with transformers, which I think now that is fully, fully secure. We are already moving transformer from Brazil to the United States, and moving transformer in Europe apart from the one, but now it's fully, fully secure, all those ones. We are not seeing risks on this supply chain at all because we made this thing in advance.
We secure already the slots for having already this production ready in the time we regard, and we pay for it, which in the case of Britain, even is already paid to us by the regulator. The return equity in the United States, Pedro?
I think in the utilities, you mentioned CMP. Remember, it's at the end of the year when you have the full year. That's why during the year, you may be up or down a little bit, but we are on target to achieve the ROE in CMP as well. The only utility that we do not have right now, the ROE, is Connecticut because it's under litigation. If we were to be successful in litigation, it will be the third year in a row to achieve all the ROEs that we have. You mentioned the pushback by people. I think to have a securitization bill just for us in New York this year with full approval in the Senate and the House in Albany, I think it's outstanding to have EUR 100 million recovered. That shows the relationship that we have.
All the storms recovered in Maine, you will have this afternoon, the team will explain it. It's non-stop in the last 18 months in both states. From that point of view, I think the pushback three years ago, inflation 10%, and we managed to get the rate cases three years ago. You don't have that pressure right now. Remember, the part of the consumption by an average family in New York or Massachusetts or Maine, the electricity bill is actually one of the smallest compared to gas fuel for the car, with telecom expenditure, with rentals, with actually retailers expenditure, etc. I think we have good arguments.
I would like to use this opportunity for mentioning that Pedro has already done an extremely good job in the U.S. the last years. I think as we start in 2025, we are achieving a lower return equity for almost all our rate cases. I think this afternoon here in Georgia, they can confirm today. We have a better rate case negotiation. I think the relation with regulators is extremely, extremely positive. Ken, you are doing a very, very good job on that one. We have almost no penalties, which I think that was an important thing. Nevertheless, I think this afternoon we have the detail. As well as Pedro mentioned, I think we had problems of cash collation. We are improving a lot on this term as well. I think that is a reality.
I think our business in the United States is becoming a very solid, consistent, predictable, and attractive area of the group. That's why we are already just betting very much in our plan to continue making so. I think they are a very strong team, which is making that one. I think Jose Antonio and Sua, he's going to follow the trend of Pedro's and with the team that has been created for continuing that one. Related to nuclear, if I'm already related to CGTs, in best case, the first one cannot be built before 2031, 2032. If we talk about nuclear power plant, probably no one will be built before the 2040s. I think it's the times of design, pre-design, security, approval, et cetera. It takes dozens of years before you get this approval. What is realistic, I think, enough for our side.
Realistic for our side is that for our side, for whatever, is what the world is doing, is extending life of the existing fleet. That is the realistic approach for keeping already benefiting of the positive effect of the nuclear power plant in terms of competitiveness, in terms of higher environment, in terms of energy security, in terms of base load. I think recently the European Commission, the president, is already just considering nuclear as green. It's not any longer treated as a special one. I think all countries are already just increasing the life, which I think with little extra costs can already continue generating and producing in a safe, competitive manner.
I used to say that as an engineer, I can say the nuclear power plant has already demonstrated from the last 60 years that they are safe, that they can provide a good service, and they are a very good alternative for keeping the lights on as base load alternative to other alternatives that it was already called in the past.
Gonzalo in the back, then Manuel, and after Ahmed, there is more question here. Rob, sorry, after Gonzalo is the round of Rob. Sorry about that.
Hi, good morning everyone. Gonzalo Sánchez- Bordona from UBS. I have three questions on my own. First one is related with the Spanish situation. I mean, obviously, Spain is becoming less and less relevant for the overall business, but I would imagine with the number of things going on in terms of regulatory developments or potential regulatory developments, I was wondering whether there's any upside to the numbers you've presented today on 2028 specifically, if things go better based on what you've been publicly saying on the regulatory review for distribution specifically. Whether you expect any sort of advancements in terms of batteries, storage, hydro, potentially any projects coming on stream by 2028 if that's even possible. That was the first question, basically upside based on regulatory decisions in Spain. Second question is on the situation of Vineyard Wind One in the U.S.
We've seen a lot of turmoil around several offshore projects in the U.S., which obviously are not this one. I just wanted to clarify whether you expect any issues. Are you seeing any issues? Is the current situation stable on that project? The third one is, I guess, for Pepe, it's been made clear you're not incorporating any sort of M&A or not expecting any M&A in this plan. Looking at the FFO net debt of 22% that you're targeting, looks like there is a little bit of space there. I'm just wondering, what is your minimum threshold of comfort in terms of balance sheet and debt and whether that means there's room for potential opportunities if they appear at some point. Thank you.
Thank you very much, Gonzalo. I mentioned that energy policy is made by governments. Government and the regulators have been already coherent or consistent with the energy policy of the country. I think that is the case of the U.K., which I mentioned to you, which I think the regulator is following the energy policy of the government. I think in the case of Spain, the government is as well pushing, making or trying to make the related to networks a policy which incentivizes more investment in networks. I think that's why I expect the regulator taking note of what is the energy policy of the country, which considers the government, the networks is crucial for the future growth in the country. Nevertheless, in our case, it's very clear. As you mentioned, Spain is the fourth in terms of our regulated asset base. We have another alternative.
I think if we make more or less investment, it's not affecting at all because if we are not making such an investment in Spain because the conditions are not really attractive, there are plenty of places where we can put the money there with better return. In other words, nevertheless, we are planning in the country, in Spain, investing EUR 9 billion in the next four years, in the next few years, which I think I saw yesterday, Iberdrola is the industrial company which is investing more in the country, in all sectors. We are investing almost EUR 3 billion per annum. There are not many, there is not one company in Spain which is making that one. Saying that, we are the company, industrial company, we are paying more taxes in the country.
I think it's two banks and ourselves, but the industrial is the largest, the largest investor in the country, in all sectors, and the largest industrial company paying taxes. I think Spain is important for us, but it's very important for the country. We would like to help the country as much as we can. I think we have to be realistic. If the policies, if the decision of the regulator is not aligned with the policy of the government, they have to solve these differences. In Britain, they solve these differences. The regulator is fully aligned with the energy policy of the country. That's why it's already pushing us to make more things in an attractive manner.
Yeah, I mean.
Vineyard Wind, I have not already made this comment. You can already, as far as I know, Jose Antonio, I can tell you that today, 50% of the turbines are exporting energy in Vineyard Wind. We are cashing money for those ones. At the moment, Massachusetts is desperately needing power. The prices are like that. I think we are helping the state to keep the lights on in a very competitive manner. We have all the permits on that one, and the construction continues already in a normal manner. We have not had at all any problem. Nevertheless, if you have any comment on that one, Pedro, you can already complete that one.
Probably the only comment is, as you expect from the Chairman and some of us, is we're working with all the administrations all the time. The Chairman and I were in Houston with Secretary Morgan and Secretary Wright. We were two weeks ago in Milan with them again. We have announced EUR 9 billion investments since the new administration was there. We've been helping New York in some of the conversations with D.C. We have gas pipelines in New York, so we are a party to those negotiations. I think this is a fully litigated project. There is not even one appeal pending on anything. That is why, and it's very cheap, this energy. That is why right now what we need to do is to continue working with the new administration.
Pepe? Sorry.
We have some space, but obviously not for a big M&A, but taking into account that we always want to have opportunities there. For example, as we were commenting before, we are not including the possibility of doing more offshore in the United Kingdom, or we are not including here more renewables in the United States when people have asked about prices and demand. We always like to have a little bit of margin because obviously opportunities can happen, and also margin is good for, you know, the thing in case things, for whatever, interest rates, the currency, whatever. It's always good to have some margin in the ratios.
Rob Poulin, here. Microphone, please. Manuel Palomo, and after.
Thanks very much. Rob Poulin from Morgan Stanley. Just following up with that comment, Pepe, on the U.S. What would you like to see to invest incrementally in repowering the U.S. onshore wind fleet, something you've talked about in the past? Secondly, Pepe, just two questions this time. Thanks for the clarity earlier on the EBITDA guidance. That was super helpful. If I can just dig into that a bit more. The 2028 renewables and liberalized EBITDA implies EUR 8.1 billion. That's obviously down from 2024. It includes the Mexico disposal, but 9.5 GW of new capacity. Very rough calculation. It seems to imply about a 20% decline in your customers' EBITDA over the period, which seems pretty conservative. Can we just understand the profile of what's in the assumptions for that guide if we've got it correct? Thank you very much.
Pepe, before you make this answer, I think I would like to tell you that in the case of repowering, I think we have repowered, if my memory doesn't fail, something like 250 MW, 300 MW already, which is already in operation. I think now we have in construction another 400 MW, 500 MW, which is in the list, and Pedro has already put that there. We challenge the construction repower as well. We have already made a repower in Spain. We are making a repower in the United Kingdom. I think we have a strong pipeline for continuing making in the future. That is an economic thing. I think it has sense we make. If it's not sense, we are not making. We have already, in those ones we are repowering, I think what the expectation is a good return, so over 200 basis points, 100 basis points.
I think certainly it's already an advantage because we have a lot of things we have not to repeat, and I think that that's good.
Pepe?
You're exactly correct in your number in clients. We have a 20% fall in the EBITDA, as you say. I think the Chairman has said, or Pedro, that we are assuming that, for example, we don't increase, even despite the fact that on the macro numbers, we are assuming that there is a demand increase. We assume that in case of our client business, we are flat during the whole period. Obviously, that is a relatively conservative assumption. The other element, obviously, we come from prices that were higher in the previous year. We have a relatively long-term policy, and obviously, as you know, we renew some of the consumer prices. Obviously, as prices normalize, we have less margin coming from that. These are the two elements that drive this 20% decline in the consumer EBITDA.
I think Mexico, which is not...
No, Mexico, but I think Mexico you have already...
It's EUR 100 million, no?
Okay, Manuel Palomo.
Morning and thank you very much for the presentation. I will stick to three questions as well. The first thing is about the Spanish investments, because if I'm not wrong, compared to the day of the capital increase, it looks like you've changed a bit your mind regarding the evolution of the RAP in Spain. I think that at that point, you were pointing to pretty flattish RAP. However, today, you're looking at a significant growth in the coming three years. I was wondering why the change in mind, whether you can anticipate anything else about how the regulation will look like in the future. That's the first one. The second one is on demand. Again, in Spain, it seems to be quite well constructed on the Spanish demand that I guess will be largely reliant on artificial intelligence, data centers, and so on.
At the same time, you are assuming the pre-agreed shutdown of the nuclear. I wonder to what extent it could be coherent or whether that shutdown of nuclear could maybe scare some of the newcomers asking for electricity demand. Lastly, I wanted to ask about a bit about numbers, because I was looking at my model, and historically, the EBITDA to net profit ratio was around 33%, give or take. For the year 2028, it looks like that ratio will increase a lot up to both, I think, 40%. I was wondering whether you could share with us if, other than maybe some decrease in minorities, you're assuming a much lower tax rate, or if you could give us some light, that would be great. Thank you.
I think the first point related to investment in networks in Spain, you have to be aware that still we are keeping the cap. We cannot invest as much as we like. I think they improved a bit, but they have already put a lot of restrictions. We have to be approved investment by investment. They will supervise all those ones. They are not already in an open door to make what we like. We will make what the regulator allows us to make. It's the first thing. Even though we are already putting a number, we consider which is the minimum needed, but still that number is not already approved. They have to approve case by case and supervise all those ones. Things which are not in another country. In another country, we have a broad analysis globally, and with that, we'll go ahead.
They are already putting more restrictive things on this one. That's why with this one, you know, the regulated asset base is growing. The regulated asset base is moving in two directions. For one side, it's reducing the depreciation and increasing with investment. If the investment is not much higher than the depreciation, the regulated asset base is not growing. That's the point. If we are depreciating for EUR 500 million, EUR 600 million, if we are not making more of this investment on that one, the regulated asset base will maintain flat. That's the way. In terms of the nuclear, first, the demand is growing in Spain. The demand is growing in Spain. It's growing in all Europe. The main reason why it's growing more is because of this limitation of the grid. As I mentioned, there are 60,000 MW waiting to be connected.
Even half of this one are already speculative. It's still 30,000 MW, which represents a lot of new demands on that one. Nuclear, I mentioned already, the closing nuclear, the first power plant is going to be closed by the end of 2027. It's going to affect 2028. We are in Almaraz. We have 50% of that one. That way, the effect is 500 MW in a fleet of 30,000 MW. You can see it's irrelevant for our total power on that one. Only with those power plants we have now in construction, it's more than covering those needs. Another one related to the bid net profit ratios, Pepe?
Yeah. Clearly, as we were mentioned, as we are increasing our stake in Avangrid and in Neo, obviously, the minorities are falling. I'm making the numbers, and I don't see such a large difference, as you were saying.
In any case, I can review it with you. Clearly, our minorities from 2025 to 2028 are going to be half of what we, you know.
Ahmed, and then James Brand, do you want to after Ahmed, please? Sorry.
Hi, Ahmed Farman from Jefferies. A few questions from my side. Firstly, on the 9.5% return on equity, could you give us a little bit more granularity on that number? I'm just trying to understand the scope for upside, downside to that. Does that include outperformance? If not, then anything you can say about the regional makeup of that number? What's the number behind for U.S. or U.K. or some of your key markets? My second question is on electricity demand sensitivity. The sensitivity, it sounds like from what you were talking about earlier, is fairly conservative and does not include the potential margin effect if this was, say, some scenario was to come through.
Could you talk a little bit about actually the volume that might be uncontracted within the portfolio and the business plan that can benefit from upside in electricity demand to help us just understand the upside potential to your 2028 net income guidance? Finally, you've given us a very clear guidance on net income and outlined very clearly the underlying drivers. I just wondered if you could help us a little bit with the profile of EPS as well, particularly starting from 2024 as a starting point, when could we expect the dilution effect from the equity raise to be offset? Thank you.
Okay, Pedro, can you already clarify the thing related to return on equity?
Yeah, I think this is a weighted number, and I think if you see one of the slides in the U.K., we're swimming at 8.7%. As the number for those calculations, we weigh because of the weight of each of these jurisdictions. I think in the U.S. it's 9.5%. That's a very homogeneous number all across the jurisdictions. Remember, FERC regulated, it goes up above 10%. You can be around 10.5%. That's the number for the transmission part, which is FERC regulated. In Brazil, we're using 16.4%. I think in Spain, as I said, approximately 8%, 7.8%. That's the number we're using for those calculations. No upside, no earnings sharing or anything like that at all.
Pepe, sensibility to demand and the upside potential in EPS analysis, can you?
I don't know if we have a number, which is quite good, on increasing the amount of 1% per annum from what I have and the impact on prices. This could have a relatively impact on the net profit, which is quite nice. I don't know if the Chairman will allow me to tell the number.
In EPS?
In EPS, it will be similar, you know, because obviously we are assuming the same number of shares during the whole period. It will have a similar impact. I understand increasing demand, no?
Then?
How the EPS grows during the period, it goes a little bit less than the net profit because obviously we have a little bit more number of shares. We are going from 6,140 to 6,550. If you divide by the 7.6, there's more, let's give you.
I have the number that you said.
If I'm already thinking in a very simple manner, in what way we grow at a high single digit, and we grow at a high single digit, a bit less in EPS, but high single digit in both cases.
You can find the number of shares considered in the slide of the dividend explained by the Chairman. James Brand in the back. There is more people who like.
Sorry, hiding away here as James Brand from Deutsche Bank. A couple of big picture questions. First is on renewables. Obviously, you've stated, you know, your enthusiasm for networks, but you also obviously invest quite a lot in renewables as well. You have a clear preference for networks. In the renewable space, we're still seeing very aggressive targets from governments, and it seems like there's less capital going into that space in a way, given that some utilities are pulling back, some big oil are pulling back. I guess the question is, why are we not seeing a significant improvement in the competitive environment in renewables that would make you be as enthusiastic about renewables as you would be for networks, given those drivers? The second question is on demand. You kind of talked about this potential of kind of 2% to maybe 3% per annum demand.
We, in Europe at least, still haven't really seen any demand growth in a lot of countries. We've seen a little bit over the last year, but it's been pretty muted. Demand is still often 7% below where it was pre-energy crisis. How confident are you in a long term? I think everyone believes in high demand, but if we look at, say, the next five years through to 2030, how confident are you that we're actually going to really start to see this demand growth coming through? Thank you very much.
I would like to come back to the first question. I think we are not becoming enthusiastic about networks and against renewables. I think we are consistent. What we have already, our vision of 25 years. I think we are already investing a lot of money in renewables. We have 60,000 MW in construction or in production, and there are 9,000 MW now in construction. I think we are going to invest EUR 20 billion in this plan in renewables. In the country, in those what we have today, let's say in construction, we are not already dreaming to say that we are going to make things that we cannot already still even depend from making. I think we are EUR 20 billion. I don't know how many people are putting EUR 20 billion in the next three years in renewables.
Give me the list of my colleagues to see how many are putting EUR 20 billion. The second thing is that we have the opportunity to participate in a very, very good manner in the new era of the electrification. The new era of the electrification is not only passing for renewables that we did. It's passing for networks. I think we have the fortune that we have already a presence, a footprint in countries with that already waking up about transforming the country to coming into the new era of the electrification. That is the sense of our transformation. We are the chance that our vision of 25 years now is not only materials in renewables, where we own 60,000 MW and we have already another, we are putting another EUR 20 billion for the next three years already in renewable.
As well of benefiting of this extremely huge demand of new infrastructure of transmission and distribution with very good return, with stability, with predictability in countries with very demonstrated and very good rule of law. That is what we are making. We have the chance and the opportunity of benefiting of this new era of the electrification with saying that we were benefiting of our investment in renewables in the last 20 years, now with the opportunity of benefiting of our investment in networks because we have this opportunity. Those ones which are not in Britain cannot invest in Britain. In networks, those ones which are not in New York cannot invest in New York. I think as simple as that one.
I think we are fast movers in networks, saying things that we are fast movers in renewables when nobody believes that renewables are going to become already such an energy solution. I think that is the point. I think we've been ahead of the rest of the people. We have the vision, we have the execution, and we continue with our vision and making the execution. EUR 20 billion renewables, I don't know how many people are putting EUR 20 billion, and almost EUR 37 billion in networks because we have the opportunity, because we are in those countries that not very many people are there. It's very, very restricted. It's not something that the transmission in the United Kingdom are three, what we can benefit of this transmission, which is distribution in New York. I think there are two, what we are there. That's it. It's no more.
We are not allowed to make that one. Okay.
Jorge is saying goodbye today for us. We will welcome Pablo Cuadrado, who is around. We don't know, JB Capital.
Good morning. Three questions related with Spain. The first one is if you can clarify the remuneration scenario that you have in the guidance, namely in terms of financial rate of return and OpEx Alliance evolution. The second is related with the evolution of supply margins. If we can assume that in Spain over the long run, they will stabilize above where they were before COVID. The third one is if we could see some upside on the storage. You have a very good advantage in storage in Spain if you could invest more. If the occasion arises, if you could develop new assets of storage, of pumping, either of pumping in Spain. Thank you very much.
I think the first one is related in networks of Spain, remuneration. I think we are already putting something what we consider that is already something which is a minimum that you see, even though the numbers we are putting are far below those of another country we have present. That's why our expectation is then that has to increase. Nevertheless, that is a word that has to be fired by those who have not another alternative. I think it's not we have another alternative. We are to invest in networks. If the conditions are not the good ones, we can go to other countries. Our colleagues there have to fight for improving that one. We will benefit of the work that they need to do if they would like to improve their results. Related to supply margins, I think if I understood well, it's true.
We have already had some extraordinary margin after the COVID. We are, I think you mentioned the word normalizing. We are coming to normal terms on this one, which has a logic, which I think is the prices which are similar to those ones which are in the rest of Europe. I think, especially Portugal and France, we are similar in that. Storage, of course, we have, Pedro mentioned, we have another pipeline, but as well, it's three years, it's tomorrow. To make a storage, even exchanging the turbines, it takes longer than that one. I think even if we would like to make probably we will start somewhere else, but it will not be operative in this framework period. We continue on their plans. I think you mentioned 3,000 MW of another alternative for making that one, but I think realistically it's impossible to be made.
You have to take into consideration that I'm already an engineer. Sorry, the numbers are already, the number has to be something behind. We cannot put numbers if I, as an engineer, see that realistically cannot be built. I think here are these things where realistically we feel can be built, not numbers which can be written, and afterwards we don't know how to be built. When I sit down with my engineers, I would like to show numbers that realistically they can already afford.
Okay, more questions from the room? Okay, thank you. All the questions from the web have been already answered. We are around 25 minutes ahead of schedule. As we say in Spain, [Foreign language] . Good things if brief are twice as good. Mr. Galán, you're around.
Thank you very much. I think it has been a very, very constructive session. I'm more than delighted to have the opportunity of replying to all your questions, always as intelligent as normally you make. Be sure that all the questions you make force ourselves to reflect. I think this target you are fixing and this question you are fixing about what is the potential upside on that one, we are going to work on that one because certainly, as I mentioned in the beginning, the plans are the plans to be fulfilled, but not only fulfilled, have to be already over-fulfilled. I think your question helped us to make so. Thank you very much. Now we can already enjoy with some drinks, and we can already share your thoughts personally. This afternoon, you will have the session with those ones which are already making this company transformation.
This company transformation in business with more networks and more countries to become more Anglo-Saxon and the new era of electrification with transforming Iberdrola in this growth company in the FNG sector. I would like that you make as much questions as you make to us today because I'm sure that they will have already as much as better answers that we have already made for you. Thank you very much. Now we join all of us for a drink. Thank you.
We were young and naïve, never a doubt in my mind. You said we'd make it, but I'm letting go. It's like running on memory, losing my energy, watching my world fall apart. It's like fading away again, and I don't want to pretend. Closing my eyes in the dark. Now my heart don't feel the same way. I barely know you, and you won't say how am I supposed to do this if there's no one to blame? Because my heart don't feel the same. It's like fading away.
Good afternoon, everyone. I hope you're enjoying the day. We now move to a topic that sits at the core of Iberdrola's long-term strategy, our investments in networks. In these sessions, we're going to take a closer look at how we're building resilient, modern infrastructure in our two key markets, the United States and the United Kingdom. We're going to start with the United States, and for that, we're joined here by these senior leaders: Jose Antonio Miranda, the CEO of Avangrid, Kim Harriman, Deputy CEO of Avangrid, Joe Parrington, President and CEO of Avangrid Networks, and Justin Lagasse, the CFO of Avangrid. This presentation will be followed by its own Q&A session, so please feel free to ask questions. I'll introduce that session afterwards. That's it from my side. I'll hand it over to Jose Antonio. The floor is yours.
Good afternoon, everyone. Thank you for staying with us after the lunch. That shows a lot of commitment, so that's going to make it worth it. As you have heard in the previous presentations, the investment related to our related business in the U.S. is an instrumental part of Iberdrola's plan. We will dedicate now this time with you to take a deep dive on the topic. I'm sure all of you know that Iberdrola owns 100% of Avangrid, which operates eight electric and natural gas utilities in the Northeast, serving a population of more than 10 million people, mainly in New York State and the state of Maine, and also in a smaller footprint in the state of Connecticut and Massachusetts. Our regulated business is a combination of transmission, sub-transmission, and distribution assets, which are remunerated through different mechanisms.
Some assets are regulated at the federal level by FERC, and some others at the state level in the so-called rate cases. Avangrid was created in 2015 through a consolidation of different acquisitions to shape what we are now proud to tout as a first-class performer utility company. Especially during the last three years, thanks to the team under the leadership of Pedro, we have seen a leapfrog improvement in different areas. We were able to settle and agree a stable multi-year cases successfully in both New York for three years and in Maine for two years. Based on a sound project execution, we were able to achieve the returns on equity allowed in all the rate cases with the exception of Connecticut, which is under litigation. We endured and succeeded in continuing the project known as New England Clean Energy Connect, NECEC.
It's a 1,200-megawatt high-voltage DC system, such as mission infrastructure that is delivering hydropower from Canada to New England, mainly to Massachusetts. We are happy to share that this transformative project is now in its last months of commissioning phase. We consistently deliver our financial targets year after year. As an example, we enjoy an adjusted net income of more than EUR 900 million in 2024, out of it EUR 779 million in net worth. Last but not least, as a result of all above, we greatly improve our cash flow generation and our trade metrics. What is more important, we did so while improving our quality of service, meaning improving the frequency and the duration of the service interruptions to our customers, who are always the center of our attention. As you can see from the charts, we have transformed operations with measurable results.
The average duration of interruptions has improved nearly 20% since 2021. Overall customer service metrics in the compliance has improved from 75% in 2021 to 90% currently. This continued operational excellence is instrumental for delivering on our goals as it mitigates regulatory penalties, protects earnings, and consolidates the reliability of our financial targets. The most important message for you today is not about what we have achieved in the past, but about what we plan for the future. For that, we need to understand the current environment that we're living in. The harsh reality is that the infrastructure in the U.S. is really old, in urgent need to be replaced. The volume of assets requiring upgrade or replacing is staggering.
Transmission has become a critical bottleneck across the entire country, and the need for the expansion of the grid is uncontested on both sides of the aisle and supported through a clear bipartisan agreement. Reinforcing the grid is not a nice-to-have luxury, it's a must-have if we want to keep the lights on. This is even more crucial in light of new electricity dynamics in the demand. It's well known that the demand of electricity is shifting in the U.S., and specifically in the Northeast, from a past of declining electricity use to a surging need of electricity due to electrification of many activities as transportation, building, reshoring of manufacturing, and the exponential growth of data centers.
At the same time, in the last years, we have experienced more severe weather-related events than ever in recent history, underscoring the need of a resilient and modern infrastructure to serve properly to our customers. In summary, there is a clear consensus that Avangrid's activity and purpose are now even more needed and important than ever before. The grid is facing three undeniable challenges: aging infrastructure, limited capacity to support demand growth, and increasing severity of weather events. That is why we are committing EUR 13.6 billion in transmission, sub-transmission, and distribution investments between 2025 and 2028. 65% are directed to replacing obsolete assets and modernizing the grid topology. 20% is focused on expanding capacity to support electrification and economic growth. Finally, 50% is targeted to resilience and hardening against the storms.
This balanced allocation allows us to fix today's issues while preparing the grid for tomorrow and delivering reliability to our customers. Importantly, a significant share of this spend is already secured, and in fact, EUR 5 billion of the 2025-2028 investment plan is already authorized, while the remainder, as we have seen, are investments addressing critical maintenance and modernization works that cannot be deferred any longer. We have a clear focus not only in distributing energy to our customers, but also in enhancing the transmission and sub-transmission systems that allow such energy delivery. This results in over EUR 22 billion in plan investments through 2030, with transmission and distribution equally important in the plan.
My colleagues, Kim and Joe, will explain in some more detail why we are confident in a successful outcome of our recently filed rate cases and why we have all the means to execute them as spotlessly during the next years.
Thank you, Jose Antonio. The regulated investment opportunity for our company is tremendous. As you have heard from both the Chairman, Pedro, and Jose Antonio, the need is real through the rest of this decade. Our investments are recovered through federal and state mechanisms that provide predictable and stable frameworks. Moreover, a significant amount of that investment we have proposed, as you've heard, has already been supported or approved by federal and state directives. Before getting to the specifics of our investments, as you see on the slide here, it's important to understand the regulatory structure in the U.S. As a regulated business, through the filing of rate cases and other mechanisms, we are able to recover the costs and a reasonable return associated with serving our customers under the laws, rules, and regulations of each state we operate in.
We file rate cases to update our rates to reflect current and forecasted costs to serve and earn a reasonable return on our investments. In fact, in New York and in Maine, we have recently filed five-year rate plans for consideration. A little bit about the process of a rate case. Each case starts with the filing of thousands of pages of testimony and exhibits. They detail the cost to serve our customers, including CapEx and OpEx, plus depreciation, any reasonable return. Stakeholders intervene in these cases, and they ask questions, sometimes thousands of questions. They file testimony where they provide their own input to the regulator on what should be permitted. In response, we provide testimony detailing why we believe the investments are necessary.
After the cases have all completed the filing of testimony, the case can go to litigation before an administrative law judge, which would entail cross-examinations and briefs. Often, the case goes to what we call settlement. This is where the stakeholders and the regulatory staff and state agencies come together to discuss a path forward for resolution. Successful settlements, every one that I've ever seen, always includes an agreement among the stakeholders. Stakeholder management is key and critical, and I believe at Avangrid we excel. With respect to the intervention process, and they do this on a voluntary basis, we work with each stakeholder to identify their needs and their wants.
That has recently included the unions, who have become vocal advocates for our filings, speaking from a firsthand account of what it takes to run the electric system and advocating the importance of positive regulatory outcomes to support the workforce and economic development. Make no mistake, our interaction with all of these parties is constant and not limited to the filing of a rate case. We hold thousands of meetings with them during the course of a year. I mean thousands, from state agencies to the regulators at both the state and the federal level, to key customers, environmental organizations, and other groups. We want to educate them about the condition of the current grid and the challenges it faces in keeping the lights on while we meet state policy, mandates, and our customer demands.
These meetings, in addition to rate case-focused meetings, ensure stakeholders understand the why of our rate case before we file, which increases the likelihood of settlement. Our New York and Maine teams have put the legwork into providing the best foundation possible for successful rate case outcomes, which, as we know, is foundationally built on the investments needed to maintain grid resiliency, reliability, meet the electrification, and the other demand growth for the future. Now I'm going to get into this slide, which is our distribution investment forecast. For 2025 through 2028, we forecast EUR 6.3 billion of investments for our electric distribution system. These investments are included in our current rate plan in New York, as well as the recently filed rate cases for New York and Maine for a multi-year period.
They represent significant investment in growing our capacity to serve our customer needs, replacing aging infrastructure, and hardening the system. In New York, we have seen positive regulatory outcomes, which include the current three-year rate plan we're in, which provided for an over 50% increase in rates. We have successfully achieved language certifying cost recovery, and we have an unprecedented passage of a law called securitization and swift regulatory approval that, when taken together, the regulatory language certifying recovery of costs and the securitization of the storm costs represent nearly EUR 1 billion in value for the company. New York's distribution investments comprise 60% of the EUR 6.3 billion in planned investments and are focused on recovering state-mandated policy costs, including infrastructure investments to support deployment of broadband and electrification of buildings and transit.
Our rate case filings come on the heels of rate decisions from the state regulator, including a recent decision issued for National Grid US, who achieved a three-year settlement at a 9.5% ROE. Our rate filing also focuses on the capacity expansion of our distribution and sub-transmission systems to meet growing customer demand, some of which is notationally approved under current state policy requirements. As you've heard from the Chairman and Pedro and Jose Antonio, the electric grid in the U.S. is expanding. In New York, we are no different. I want to give you a data point that I think really exemplifies growing demand. We have portions of our system that have received a 135% increase in customer connection requests between 2022 and 2024, with the size of those customer load requests increasing 93%.
This is an important data point because the state law that requires all buildings to move to electric doesn't take effect until 2026. We're not even seeing yet the uptick in electric demand from that act alone. It's already happening by inertia. We anticipate a second quarter 2026 negotiated resolution of the New York rate case for a multi-year period, which at a minimum will cover the three-year investment period. In Maine, we have seen great success as well with achieving a two-year settlement in our current rate plan, which was the first multi-year settlement in many years. We've seen swift approval of our sale of Maine natural gas and timely recovery of EUR 446 million in storm costs.
As Jose Antonio mentioned, increasing storms, aging infrastructure, and growing customer demands are driving our investment plan in general and in particular in Maine, which represents about 22% of our EUR 6.3 billion investment plan. State regulators in Maine have provided guidance for our electric rate case through two dockets: a storm resiliency and an integrated planning docket. Those dockets examine how to strengthen the grid and what the utility of the future needs to be in order to meet customer demand and electrification of buildings and transit. The rate case filing made earlier this month for Maine takes direction from these two dockets and provides resulting capital investment plans to meet the demands of the regulator and the expectations of our customers. The case is focused on investments that harden the electric grid, minimize disruptions of power, and grow internal crews for responding to storms.
These steps will help minimize storm costs in the long run for our customers. In addition, we're proposing a significant growth in distribution investments to support growing demands for electricity consumption, a trend we see for years to come. For Maine, we anticipate a negotiated resolution for a multi-year rate plan in the third quarter of 2026, which should cover at a minimum a two-year period, if not more. Lastly, in Connecticut, it's our smallest part of our investment plan at only 16%. We are happy that there is change on the horizon with the recent announcement of the resignation of the chair of the state regulator, a development we hope will result in the lessening of the current hostile regulatory environment and more credit-supportive decisions. Regardless, we remain vigilant in our capital investment program, keeping investments at the pace of depreciation to minimize exposure and to remain disciplined.
We are focused on ensuring rate recovery of all investments in operation for our customers and minimizing any lag in the recovery of those investments. Lastly, our gas companies in Connecticut, CNG and SCG, received rate decisions in December of 2024, and we expect our electric company, UI, will receive a rate determination in the fourth quarter of 2025. Again, keeping our investment plan consistent in the electric case with levels equaling depreciation. Now let's turn to transmission. Avangrid has a clear path to invest EUR 7.3 billion during the 2025 to 2028 period and will continue this pace of investment through 2030, reaching nearly EUR 12 billion. 50% of our New York investments for transmission are currently underway and provided for in the existing rate plan. In our filed rate case, we are continuing these investments and looking to reinvest in the foundation of a transmission system.
18% of our New York-focused transmission investments are comprised of two items. The first is what we call powering New York. This is the investment plan that is directed by the state climate law. It contains transmission investments that, in fact, the state regulator has already told us we need to do in orders issued by the state regulator in February and September of 2021. In addition, we have secured approval for the cost recovery mechanism in July of 2024 for the second part of powering New York, which comes at the federal regulatory level. Included in our New York rate filings that we provided, the only thing we're asking for is for the cost recovery of the projects I just mentioned under the two directives issued in 2021. This is not a question of do we need the projects.
It's a question of they're going to confirm our costs, and they will include it in rate recovery. We also belong to a joint venture in New York with other New York utilities to focus on competitive transmission projects. We were recently awarded a contract by the New York Electric Grid Operator for construction of a transmission line to build out grid capacity. That line goes from the northern shore of Long Island into Westchester. The joint venture is always looking for more work to do in the years to come. Lastly, Maine represents 22%, and Connecticut represents 10% of our 2025 to 2028 transmission investments. These investments will focus on rebuilding aging infrastructure under what we call the Asset Condition Program at the federal level and expanding transmission capacity to meet growing customer needs.
Cost recovery for these programs is done by the federal regulator, where regulatory structure is highly predictable and provides a swift process annually, and that includes a robust return on equity. Transmission investments are unique in New England. They favor and they are spread across multiple utilities in multiple states. It reflects that when you make a transmission investment in the New England region, generally that investment is done for the benefit of the whole region. Instead of just our Maine ratepayers paying for the transmission investment, it actually gets spread across all the New England states and all the electric customers in those states. Now, it is my pleasure to turn the presentation over to Joe Parrington, our Network CEO, who will provide a little more detail around the basis of our rate case investment proposal and how we intend to deliver on our plans.
Thank you, Kim. At Avangrid, as Pedro and Jose Antonio and Kim have mentioned, not only our geography is different, our regulatory environments are different, but our systems are much different. To further illustrate this, in Connecticut, our customers experience first quartile reliability, while in New York and in Maine, our customers are experiencing fourth quartile performance. The capital cost invested per customer in Connecticut is amongst the highest in New England, while compared to Maine and New York, which are among the lowest. Therefore, our investment strategy focuses on New York and Maine, where the system needs are the greatest. We have completed a comprehensive system assessment of our electric transmission and distribution systems. This effort, coupled with our maintenance and inspection programs, which are using AI technology, including drones for structure inspections, provides a holistic view that allows us to prioritize our grid investments.
This slide illustrates a snapshot of some of the planned system improvements. In New York, we serve 1.3 million electric customers, and our service territory covers 21,000 sq mi, from Western New York, where we can receive over 100 inches of snow annually, to Eastern New York, where we can feel the impacts of coastal storms. The New York system consists of 60,000 mi of mostly uninsulated, obsolete, and undersized conductor in a non-contiguous service territory. The foundational background elements are aged and in need of upgrades. For example, the New York system has 725,000 poles that are greater than 50 years old. That's 53% of our infrastructure. Additionally, severe weather in our New York service territory resulted in approximately EUR 775 million of storm costs in the last three years. In Maine, the system is not much different.
The most heavily forested state in the U.S., our service territory is 11,000 sq mi. Approximately 60% of the 680,000 customers live within 20 mi of the coast, where our system is battered by coastal storms. From 2022 to 2024, storm costs averaged EUR 180 million annually, which is almost equivalent to our distribution capital system investments. Our Maine system consists of 25% of poles and over 50% of substations operating beyond life expectancy, along with 90% of our 25,000 mi of conductor uninsulated against tree contacts and undersized to meet load growth. Meeting the expectations as electrification accelerates means our systems need foundational investments to meet the forecasted demands. Smarter through technology, thousands of reclosures, stronger through construction materials, tens of thousands of steel poles versus wood poles we use, and more resilient with hundreds of mi of installed insulated wire, with redundant sources and enhanced vegetation management programs.
The unplanned repairs that we are performing are far more costly than supporting a robust capital investment portfolio that addresses aged assets, relieves capacity constraints, and modernizes our grid to improve reliability while reducing storm costs. Our regulators recognize that the model of underinvesting is not sustainable. Our relationships with suppliers and service providers are execution enablers. Our supply chain team is recognized as one of the strongest in the U.S. and in our industry. They are focused every day on ensuring we have the materials needed while negotiating the best prices for services. We are fortunate to be part of the Iberdrola family. The power of a global company ensures that we have options for materials that other U.S. companies do not have. However, in the U.S. alone, we are partnering with over 7,000 suppliers across 50 states, including EUR 4.3 billion of investments in 2024.
The value of multi-year rate plans and transmission investment portfolios allows predictability for our supply chain team. They can then capitalize on securing materials at the enterprise level versus individual operating companies. This results in lower costs and improved supply chain readiness. The dedicated purchasing professionals establish early supplier engagement sessions to secure cost and schedule certainty. This is most important for multi-year projects with specialty equipment like the New England Clean Energy Connect project and the Powering New York effort. Relationships in our industry matter. Having strong construction partners at a national scale with regional expertise provides us options. This, coupled with our forecast in materials, securing long lead time equipment while preserving capital flexibility, are foundational to our success in executing projects where other companies fail.
Circling back to the benefit of being an Iberdrola company, I'd like to illustrate one example that the Chairman mentioned earlier in his comments. Recently in the U.S., when the industry struggled with distribution padmount transformer availability, we were able to swap manufacturing slots with Brazil to overcome the production cycle slowdowns in the U.S. This allowed us to meet customer commitments again when other utilities could not. Our organization stands ready to deliver. Understanding the reality of investment needed in the grid over the next decade requires focusing on operational and project discipline. We need clear accountability throughout all levels of our network's organization. That shift started with Pedro Azagra. Over the last few years, we have migrated to a jurisdictional model, providing each operating company the necessary structure to simplify execution. Building internal expertise is the cornerstone of these changes.
To that point, we are insourcing key functions historically performed externally. This includes purpose-driven teams like project execution and dedicated planning and scheduling teams to drive efficiency and schedule adherence. Projects being on time and on budget are the capstone of our efforts. Simplifying our construction standards and materials provides the groundwork for repeatable quality across our projects. Establishing uniform processes, including certification of both ISO 14001 and 45001, serves as guidelines for completion of our capital investment plans. We are demonstrating our ability to execute. The execution of the New England Clean Energy Connect project will start generating electricity into the New England market, as Jose Antonio Miranda mentioned, six months ahead of schedule. Energy costs are top of mind for our regulators and our customers. They are also top of mind for us. We have to demonstrate value of service to our customers for the price they pay.
Our nonstop focus on how the system is performing through daily reviews of the previous 24-hour operating periods has established a culture of operational excellence. Every day, we are working on the system, making it smarter, stronger, and more resilient. The system upgrades that we are implementing are targeted at improving reliability and reducing unplanned expenses associated with outages while improving customer satisfaction. Examples of this are numerous. Implementing a ground-to-sky vegetation management program versus our normal maintenance programs. Utilizing materials like steel poles versus wood poles to better withstand the weather extremes we are experiencing. Installing insulated wire versus bare conductor. Implementing an automation program targeted at reducing the number of customers impacted by each outage. Using AI to help determine the best investments. Negotiating flexibility in work schedules with our workforce to reduce overtime expenses. The results speak for themselves.
In the last four years, we continue to see significant improvement in reliability metrics. Over this period, safety has improved by 10% and SAIDI 19%. These foundational actions provided opportunities to change how we communicate with our customers. Real-time updates to our customers who now receive outage alerts within 15 minutes of a sustained outage. Additional communication on the progress of restoration, including when restored. These results have been significant. Our net promoter scores for customers who experience an outage have improved by 17 points, which equates to 950% in the last four years. Furthermore, our customers' experience has been enhanced through a variety of easy-to-use tools. For example, our customers now receive usage alert messages to inform them of current usage and any usage patterns that change so that they can identify anomalies prior to receiving a bill.
Our energy manager solution allows customers to quickly review what time periods their usage peaked. In today's virtual world, we're adapting how our customers want to communicate with us. Using AI on the front end with live agents on the back end provides our team the critical tools needed to quickly respond to customer questions. Our efforts have resulted in a 15% improvement in our customer service metrics in the last four years. Bottom line, we are poised for success moving forward. Thanks for your attention, and I'll turn it back over to Jose Antonio.
Thank you, Kim and Joe, for providing this granularity and color to our investment plan and our execution. As a summary, this plan will result in a growth of our rate base. You can see an increase of more than EUR 8 billion since 2024 compared with 2028. We have to remind that in 2020, it was only EUR 10.7 billion. We are reaching or projecting to reach by 2031 EUR 32 billion. That means a double-digit compound average annual growth above 11%. On networks EBITDA, it is forecasted to grow double-digit on average per year in the same period. This plan is based on delivering solid, stable, predictable, long-term value through the incarnation of our strategy based on the following pillars. First, top-line certainty provided by multi-year rate cases reflecting on the need of electricity as a result of the aged infrastructure and the consumption growth.
Second, stable, predictable returns provided by FERC-regulated transmission assets growth needed to solve grid bottlenecks and to maintain and replace the old infrastructure. Third, improving the customer experience by providing a resilient grid, a storm preparedness, and modern equipment, resulting in Avangrid as a flexible and affordable energy provider. Finally, world-class execution. Avangrid is uniquely positioned because we have the knowledge, we have the people, we have the means, we have the purchasing power, and we have the financial strength to execute and deliver our transmission and distribution investments for the years to come. Thank you all for your attention to our presentation. We now open the floor for questions and answers.
Thank you to our speakers for such insightful presentations. Now, we'll open the floor for questions. First, we'll take all the questions from the room. Feel free to raise your hand, and we'll give you a microphone. After that, we'll move on to those that are connecting via webcast so that all those remotely connected can also join. Let's start. Javier Garrido here. No, no, it's not working. Wait a second. They'll work it up.
Yeah, can you hear me now? Yes.
Yes.
Hi, Javier Garrido from JP Morgan. Thank you for the presentation, and particularly thank you for the lot of detail on the drivers of the bigger investment plan. What I was missing was a similar level of capillarity on your returns. If you could elaborate a little bit on where you see you can get to that 9.5% allowed ROE, where you think it's going to be more challenging. I'm thinking particularly in the distribution business because transmission FERC-regulated is a totally different space. It would be interesting to see why you think you can close the gap with the allowed ROE on a sustainable basis compared to what has happened in the past. That would be the first question. Second question would be on what is your views, your judgment on the regulatory noises that we hear every now and then.
I mean, sitting on this side of the pond, it's difficult to have an accurate view on how realistic some headlines that we hear every now and then from state senators here or some regulators there about the need to tighten the allowed ROEs in a context where power prices are increasing, where affordability is coming to the fore. What is your take on such comments? Thank you.
Thank you, Javier. First of all, about our returns, we have achieved our allowed ROEs in the past, actually, in the last years. We see that we are also in a good path to achieve them in the future. As you said, very well said, FERC has normally a higher return. In the States, you have, compared with FERC, a lower return, but always in this mix that finally is giving us the 9.5% that we are projecting. About the regulatory noises, maybe here the best thing is to be factual. Just very recently, National Grid got approved for its rate case in New York, which is our main jurisdiction, by far. The approval was for three years at a 9.5%, so a similar level of the returns that we are envisioning.
We think that we are in the range of what we have seen in New York, but also we see it recently in Florida and in other parts of the country. Maybe, Kim, you can give some more color to it.
I think that the best way to sum that up is the Chair of the New York Commission recently, during the deliberations, not only on National Grid, but on Central Hudson, which had outcomes similar to each other, said very bluntly, "You can't get electricity for free." There was a discussion among the sitting seven commissioners talking about the laws that are passed in the state that demand the investments that they're having to approve. I think there's two things. One is the facts are we have to invest in the system because the law, the regulations, and the orders require it. Two, the commission acknowledges that and the decisions that they've rendered. Three, we are working around the clock to talk to every legislator. When I said thousands, sometimes I feel like I've actually participated directly in thousands.
We have teams that are located in New York in every region of the state, over 15 of them. They deploy at the local level and the state level. The other thing we're doing is we're bringing them to see the investments. We've had multiple tours of substation work, new conductoring, and we explain to them how their money is basically at work. We tie it to the projects we've proposed in the current filed case. It's education, it's recognition of results, of actions from state legislators and regulatory bodies. We have a very positive regulatory environment in New York. I don't think Maine is any different from this.
As I talked about, there was a grid resiliency plan and an integrated grid plan preceding where they brought all the stakeholders in and they said, "This is what we expect the system to do: storm response and how are you going to integrate electrification of buildings and transit?" They set the rules of the road. Our rate case filing responded to that signal and put in the investments. The question is, how much investment, what's the pace of it, and when does it happen? Our assumptions are conservative and there is plenty of capital demand between all of our network states.
Thank you, Jay. Any other question? Oh, wow. Everything is very clear currently. Okay, Andrew. Thank you.
Yeah. Hi. It's Andrew Moulder from CreditSights. I'm probably going to be cheeky because I'm not asking a question about networks, but I am asking one about the U.S. I figure you guys are well placed to answer. I really just want to know what the mood is in New York and in the U.S. towards offshore wind. I mean, we hear Trump and all his pronouncements and everything else and Ørsted. I also hear that you haven't actually written down the value of your lease areas connected with, I think, some of your offshore projects. I guess that means you do actually expect offshore wind to come back sometime in the future. Could you perhaps just sort of summarize what the view is that you have of U.S. offshore wind?
Yes. Happy to talk about power a little bit. First of all, as was commented by Pedro and by the Chairman this morning, our Vineyard Wind One farm, which is the offshore wind farm that we are building as we speak, now is more than 50% operational. It's delivering energy, and I think we are in a good trend to continue finishing in the next months to come. As you are saying, we have other leases in the United States. We have to maybe remind that we didn't acquire the leases through very expensive auctions that others did in nearby areas, etc. In our case, we bought the leases at a very, let's say, affordable price compared with what you could see later on in these auctions that I mentioned before in New York, right? Yes, you're right.
I mean, I think these leases, they are there for the future, and there is a long runway for them to be exploited because they are unaffordable to maintain. Therefore, we have to see in the future if there is any change and there is any possibility to move forward. The only thing that we can say is that we will be always very prudent. We will move forward only when we see that this is creating value to the society, to the shareholders. Also, in New England, there are many other options. If you want to really have the power that you need for the future, probably offshore has to be part of the equation. As any other source of energy, we are really very much resonating on all of the above, thinking that every electron that you can produce in the country will be absolutely needed.
Let's see what happens in the future.
Hi. Gonzalo Sánchez -Bordana from UBS. I have one question. It's a little bit of a follow-up. Most of the bigger part of these plans are based on rate cases that have not been finished or completed yet. I'm assuming you probably, I guess this is the question, are you taking a conservative view on the investments there, particularly in the context of inflation? Obviously, it's slowed down a little bit, but that continues to be a situation there. I guess the bigger question is how conservative are you on those assumptions and whether you see room for having more investments? Same sort of approach also for the returns. I mean, you seem very confident that the returns are improving, but obviously, this has been an issue in the past for Avangrid in terms of the achieved versus the allowed ROE.
I understand the energy dynamics and the energy demand evolution, obviously, is quite different now than it has been historically. Any color, I mean, you provided already a little bit of color, but I was wondering whether we're looking at a conservative plan and things could get better from here, or you are pretty sure that this is basically what it is. Thank you.
Yes, Gonzalo. The intent is to have a prudent plan always on the table. That's been the intent. Actually, we saw that EUR 5 billion are already authorized. You have to also remember that an important part of the investments, they are FERC-related. Not only the rate cases are incorporated into the pot, into the numbers, right? We are expecting to close, as we said in the morning, the rate case of Maine somehow in the third quarter of next year. The duration we are filing for is five years, but even if finally it were three or two, still we will be covering the 2028 period that we are discussing today here. In the case of New York, we are expecting to have a solution for the rate case in around Q2 2026. Again, the same thing, we're filing for five years.
Even if we had three years, as we have now today, we will be covering the whole 2028 period. Yes, there are more opportunities, but we are not putting them on the table because we want to be prudent with our numbers. Something that is really staggering, and for you, for the people that have been visiting the U.S. recently, the reality is that infrastructure is very old. We have, as Joe mentioned, a very high percentage of our assets that are 40, 50, 60 years old. Here in Europe, sometimes we complain about 30, 40 years old. In the U.S., we say, not at all. That's the case that we're facing. We think that the numbers are prudent. Yes.
Ahmed, over there.
Hi. Ahmed from Jefferies. Can you just remind us what is the overall allowed ROE today and what is the achieved ROE expectation for 2025? Talk a little bit about the path to this 9.5% because it seems like a lot of the rate cases in the distribution business are going to be in 2026. Is this really 9.5% a number for 2027, 2028? Let's say you don't really see a huge improvement into 2026, and then there's a step improvement. I'm just trying to understand what's the starting point and the profile.
I want to say that in order to make the compound, you have to do an average between FERC and the rate cases. The FERC system is quite different to the rate cases because it's just based on prudent investment that is reviewed every year. That's it. Justin, maybe you can give it more color about it.
Sure. Good afternoon. To answer your question, if we look at our current composite ROE as it sits today in our distribution rate cases, it's around 9.2% across our jurisdictions. As Jose Antonio said, for transmission, it ranges from 10.6% up to 11.7%. When you take the composite of both the distribution and transmission ROEs, you're effectively just below 9.5%. As we consider what is the evolution of the ROEs in the four periods and how do you consider that, recall that the Maine rate case was agreed two years ago, the New York rate case two and a half years ago. If we understand what happened with interest rates, interest rates have gone up. That's why you have seen more favorable ROE outcomes in New York.
As we look into the evolution of when to expect, whether it's in 2026, 2027, 2028 for this ROE, we're almost already at the 9.5% ROE because of the transmission investments. In addition to that, we're investing more heavily, as you've seen in the plan, into transmission. That's also going to help with the weighting of the ROE. Therefore, it drives a higher ROE on a composite or a consolidated basis. In addition to that, we would expect higher ROEs out of the outcomes, which again will be for the second half of 2026.
Apparently, now everything's very clear. Thank you very much to our presenters. Now we move on to the U.K.. Thank you. Moving on to the U.K., we have here today our panel of experts composed of Keith Anderson, Scottish Power CEO, Nicola Connelly, Scottish Power Energy Networks CEO, Guy Jefferson, Scottish Power Energy Networks Transmission Managing Director, and Stephanie Trubshaw, Scottish Power Electricity Northwest CEO. As before, you will have the chance to ask questions after the speeches. Now I'll just hand it over to Keith. Keith, the floor is yours. Let me take my things.
Thank you. Welcome. Thank you for staying. It's been a marathon. We're doing well. I think Pedro said as the challenge earlier that we were to be entertaining. I can guarantee informative. Whether we keep to entertaining, we will see. Who knows? Look, just a quick overview first of what we're talking about in terms of the U.K. and the network business. Historically, when the company was set up, we owned Scottish Power Transmission, which is the transmission business in central southern Scotland, and the distribution business in central to southern Scotland as well. We celebrated the 30-year anniversary of acquiring Manweb and bringing that distribution into the company back in 1995. That was just after the market had opened up in the U.K. and deregulated. Last year, obviously, we announced the intention to acquire Electricity Northwest. We completed that transaction and all the regulatory hurdles this year.
That now gives us the three DNOs and the one transmission business, which is fantastic for the future of the company. Obviously, you see the geographic synergy is very obvious. We've linked the three DNOs down that west coast of the country, and that brings with it lots of benefits for us. One of the biggest things it does for us is it allows us to distribute electricity into some of the biggest cities across the U.K.. We're now the distribution company for Edinburgh, Glasgow, Manchester, Liverpool, Warrington, Blackpool, Preston. We're a huge part of the U.K. and of the DNO network. We have a RAV of knocking on the door of EUR 13 billion, over 170 km of cable. That makes us the second largest DNO in the country. The acquisition of Electricity Northwest and bringing that into Scottish Power, the timing of that couldn't have been better.
We're part of the way through ED2, but we're lining up for the next big increase in investment and distribution at ED3. We're now perfectly placed to take advantage of that. Let's look at this thing from a U.K. perspective. What's going on in the U.K.? I think it's fair to say in the last 12 months, 18 months, the political and regulatory discourse in the U.K. has shifted and changed. It all used to be about decarbonization, and decarbonization is still important. The discourse has shifted now to being as much about security, reliability, demand growth, and more critically, probably, U.K. economic growth and the linkage of that economic growth to electrification and the need for better infrastructure. Our American colleagues joked about the age of assets. We think 30years, 35 - 40 years is quite old. It is a system that we've lived off for a number of years.
Maybe just anecdotally for a second, earlier this year, we dismantled Scotland's oldest transmission line. It was 100 years old. While on the one hand, I could very proudly tell you that's because Scottish engineers are the best in the world and we build assets that last, the truth is, as a country, we've lived off infrastructure our grandfathers built. What we need to do now is invest in infrastructure for the future of the country. That's the mission we're on as a country and as an investor in this country. We're investing now in the future generations. We're investing in infrastructure for our grandchildren. We're investing in infrastructure that will be fit for purpose for the 2040s, 2050s, 2060s, and beyond. That's what's driving the big uplift in investment. That's also what's driving the conversation around speed.
We need, as a country, to do this faster and faster to capture the growth opportunity and the economic opportunity. If you look at it from a demand perspective, you see the same thing. All demand scenarios that you look at in the U.K. will tell you the same thing. Electricity demand is going to increase. There can be some debates about when that big increase happens. Is it 2030, 2031, 2032? The demand rises all the way out through the 2030s. The important thing is this is just not a short-term increase. That demand keeps growing through the 2030s and out to the 2040s as well. You see that demand being driven by all sorts of things in the system, but it is sustained growth. That's the growth that delivers value for us.
As I said, the U.K., probably the U.K. and bits of Europe, had been more focused originally on decarbonization, whereas other economies such as China and other parts of the world were probably more focused on electrification first. The U.K. is now switching. Not that decarbonization is not important, but the U.K. knows that electrification is what will drive economic growth in this country. Unless we keep electrifying and improve the infrastructure in the U.K., we will not generate economic growth. That's what delivers, again, that big opportunity for us. In terms of economics, this is also part of the driver. You heard earlier, the U.K. system is jam-packed. That's driving constraint costs higher and higher. Constraint costs right now are running at about GBP 2 billion per annum that consumers pick up.
If we do nothing to this system, the projections are that probably in a few years, we'll hit GBP 8 billion of constraint costs because of the increase in demand and the increase in need to connect to the system. We need to manage that. This investment will get rid of those constraints in the system. It will deliver a better system, a more secure system, a more reliable system. That flexibility and security is part of that transition and part of the goal and part of the opportunity. We need to be able to drive economic growth the length and breadth of the U.K.. We need to have a system that is more secure and a system that allows us to shift power in a much more efficient and faster way.
You can see on the right-hand side of that slide the amounts of power that we need to shift around this country to maintain the system, to keep the system stable, and to allow that economic growth. That security, the speed, the flexibility, all equals increased investment, increased growth. Why should you. Confident
I know you'll all believe me, and you should be confident in me. You don't need to just listen to me. This is a story that is backed by all the critical organizations in the U.K.. You have the system operator, the independent system operator, driving the Clean Power 2030 plan. To deliver that plan, these investments must take place. The U.K. cannot deliver clean power without this massive wave of investment in the transmission system. You have Ofgem at the heart of this. They've already delivered the draft determination for T3, and that determination allows all of these investments to go ahead. Ofgem wants this investment to happen. They believe it's the right thing for the system, the right thing for the future of the country, the right thing for consumers. We have a government 10-year infrastructure plan sitting behind all of this.
That infrastructure plan is inherently linked to electrification and to the investment in all of this infrastructure. We are working really, really closely with the government to drive this forward and to build that relationship. In fact, in the last two weeks alone, the Chairman and I have met the Prime Minister, the Chancellor, we've met the Secretary of State for Business, the Secretary of State for Energy, we've met the First Minister, we've met the Chair of Ofgem, and we've met the Chief Executive of Ofgem. This is an ongoing day-by-day conversation about how we deliver this and how this benefits the whole of the country. All of it is about economic growth, energy security, decarbonization. It's not just about doing that now. It's about doing it for the next 20 years- 30 years. For Scottish Power, for Iberdrola, what's the size of the prize? What does this deliver?
As you heard earlier, what it means is in the U.K., 70% of our investment coming forward is going to be in our networks business. That is driving the bulk of our investment. In the period from 2025 to 2028, that's knocking on the door of GBP 12 billion of investment going into that network system. If you look at what does that mean year by year, historically, we've been delivering about GBP 1 billion a year of investment into transmission and distribution. That grows from now to GBP 3 billion a year. It's all about that big step up in investment, grabbing that opportunity, and it's about speed and speed of delivery. This is, in effect, our commitment back to the government.
The government is saying they want the infrastructure, the regulator is putting in place the regulatory settlement to allow us to make the investment, and our commitment is bringing forward the money, delivering the projects, delivering the investment, seizing the opportunity, and giving the U.K. economic growth. I'm going to hand over to Nicola now, and Nicola is going to take you through some of the detail of exactly what it is that we're doing, what we're delivering, and how we do that over the next few years. Thank you.
Thanks, Keith, and good afternoon, everybody. In the next few slides, I'm hopefully going to give you a bit more insight into the networks business in the U.K., a bit more detail on what we are spending the money on and why we are confident that we can deliver our plan. We've heard from every speaker today about the growth in electricity demand as society increases the reliance on electricity. This societal decarbonization will drive unprecedented growth over the next two decades. Across our distribution network, demand is forecast to double as we accommodate over 10 million electric vehicles and heat pumps powered by over five times current levels of renewable generation. During ED2, we've been laying the foundations to accommodate this growth. We'll be spending GBP 6.8 billion from 2025 to 2028, the vast majority of it during ED2, bringing our total five-year expenditure in ED2 to GBP 7.4 billion.
Some examples of what we are spending that on: we are deploying a low-voltage network strategy to proactively upgrade the network so that customers can safely connect their electric vehicles and heat pumps when they want to connect them. This includes upgrading electricity supply into over 50,000 homes, increasing to over 500,000 homes in the longer term. We're accelerating over 5 GW of renewable generation connections and facilitating a pipeline of over 20 GW through innovation to maximize the use of existing capacity and infrastructure to install new capacity. Using advanced data analytics and rolling out wide-scale enhanced network monitoring to increase network visibility to ensure that we can make capacity available when our customers need it. We're in the process of developing our RIIO ED3 business plan for the period 2028 to 2033 to be submitted to the regulator next year.
ED3 will continue to build on the foundations laid in ED2 with a forecast TOLTEX growth of between 30% - 50%. This will include increased investment to meet capacity requirements, strategic investment to provide capacity in areas which provide regional economic benefits, enhancing network resilience, reliability, and customer service, and investing in our people and supply chain to increase our delivery capacity. This sustained growth is forecast to continue over the next two decades, taking us into ED4 and beyond as networks provide reliable capacity to meet the country's decarbonization needs. In transmission, in line with the rest of the sector, we will see investment levels increase substantially from T2, with the niche case for the vast majority of it already confirmed. In the period 2025 to 2028, we have almost GBP 7 billion of investment planned to replace and reinforce existing infrastructure and build new infrastructure across our transmission network.
This investment will bring a range of benefits to the country and the consumer, reducing the country's reliance on energy imports and lowering wholesale costs by stimulating greater competition in energy markets with 66 GW of connections critical to the government's CP 2030 targets. In transmission, we're in the process of recruiting 1,400 roles. That's one and a half times more than in T2 at a time when the renewable sector is downsizing. Across GB, this investment provides 11,000 long-term boosts to jobs, GBP 2 billion long-term sustained stimulus to GDP, and annual savings on customer bills from the avoidance of around up to GBP 8 billion per annum of constraint costs. The T3 draft determination was issued by Ofgem in early July of this year, and our detailed response to that can be found on our website.
We welcome the positive movement in the T3 package from the sector-specific methodology, and we were encouraged by the positive feedback on our best-in-class engineering justification papers. However, when the final determination is published later this year, we hope that it will detail a package that can deliver the 9 %- 10% nominal returns that we believe are required for high-performing networks. The scale of change in transmission from T2 to T3 is unprecedented, and we think that there are levers that Ofgem have at their disposal to get us there overall. During RAIO T3 and beyond, we're investing in a number of strategically significant projects. The largest of these are the HVDC projects, which transport large amounts of electricity in both directions from one end of the U.K. to the other via subsea cables.
Eastern Green Link One, Eagle One, is a new HVDC link between the Torrens area in East Lothian in Scotland and Hawthorn Pit in the northeast of England. It has the capacity of 2 GW, which is enough electricity to power 2 million homes. The route length is over 180 km, the majority offshore, and it connects our new Branxton 400 kV substation. This is a joint project with National Grid. Costs are agreed with Ofgem. Contracts are in place, and construction started earlier this year. Eastern Green Link Four is a second HVDC link, this time between Westfield in Fife in Scotland and Walpole in Norfolk in England. Similarly, it has a capacity of 2 GW, and its cable length is over 640 km, of which over 100 km is onshore.
We'll rebuild the existing Westfield 275 kV substation to 400 kV to connect Eagle Four as part of a coordinated development with the TCUP onshore project, also connecting storage developments. Western Link Two is a highly innovative 2-gigawatt multi-terminal HVDC link, which will also integrate an offshore wind farm. We'll build our converter station in Ayrshire with an onshore cable to a new switching station in southwest Scotland, and the switching station will connect the developers' cable to the offshore wind farm and Scottish Power Transmission's cable to North Wales. We also have a number of onshore projects reinforcing the network and increasing the capacity across the border between Scotland and England and facilitating the connection of onshore wind. These projects will add over 500 km of new 400 kV overhead lines. We continue to drive tangible value for customers through our strong operational performance and continuous improvement.
A key area of focus is the reliability and resilience of our network. This is amongst our customers' top priorities, and our focus on this can be demonstrated through the downward trend in the customer minutes loss metric over recent years. Throughout ED2, we've been deploying new technologies, control systems, and over 4,500 network controllable points to enable increased automatic reconfiguration of the network during faults. This reduces the number of customers impacted by network faults and the duration of any interruptions. Our focus on working with customers to enable their connections is demonstrated through our customer satisfaction scores at both transmission and distribution. This is against a backdrop of around 500% increase in connections activities over the past few years and supporting our customers through a period of change as the industry reforms the connections queue.
We've consistently exceeded a stretching target, which measures how satisfied our customers are with the full connections process from pre-application to completion. We've maintained and improved this despite a massive increase in the numbers of connections and a queue of over 800 GW, which is four times that required for 2030 and double the 2050 requirements. The NISO's connections reform process to prioritize first ready, first needed, first connected developments has been challenging for developers, so it's a real credit to our teams that the scores remain high and have, in fact, improved. This excellence in network resilience, customer service, and innovation has been recognized by the industry in a number of awards. The Chairman and Keith talked earlier about the political and regulatory support for the scale of investment in networks in the coming years, and specifically the Clean Power 2030 plan.
Often, the focus is on transmission because of the scale and complexity of the large transmission projects, but it's distribution investments that will deliver the real electrification of our customers' lives. Investment in distribution will enable customer decarbonization, and it requires innovation to maximize the availability of existing capacity alongside the delivery of infrastructure to provide new capacity and maintain a safe, secure, and reliable network. Some examples include as part of our low-voltage network strategy to proactively upgrade the network, we've already delivered over 12,000 domestic service upgrades to customer homes, along with the upgrade of the wider network in the same areas to ensure that they are future-proof. We've deployed over 10,000 LV monitors to provide real-time data enabling smart solutions like network automation.
These complement our data and analytics activities using smart meter data and digitalizing our network planning tools to understand when, where, and how we need to intervene in the network to accommodate long-term growth. We've accelerated over 5 GW of connections activities through the use of network automation and load management schemes. We've successfully pioneered and trialed a technology to monitor fault levels in real time, and this enables us to safely facilitate more renewable generation. We've deployed advanced voltage control techniques at over 260 locations to provide class services to support the NISO with wider network balancing activities. These are the investments that will unlock the benefits of electrification and automation for communities, for businesses, and for our customers. The scale of investment in our business is unprecedented. It's a once-in-a-generation opportunity, and we have the supply chain and the resource plans to make sure that we can deliver.
We've reorganized our transmission business to bring a clear focus on T3 delivery, and transformation plans are well progressed with the changes to be complete before the start of T3. We've carried out a strategic review of the skills and resources required to deliver ED3, T3, and beyond, focusing on recruitment, retention, and upskilling our workforce to address any skill shortages. We're investing in our people, creating opportunities, and supporting career development. I welcomed around 150 new apprentices into our team earlier this month, the biggest intake we've ever had, with a similar number set to join our graduate program. 12% of our workforce are trainees, well above the industry average of between 3% and 8%, and a growing number of them are women, with our highest intake of women in our training programs to date. Many of these trainees will work in and around their own community.
We believe not just in investing in infrastructure, but also in people and in places. We're investing significantly in developing talent to meet our future requirements, for example, partnering with key universities to further develop and upskill existing staff on engineering, data, and tech skills, and collaborating with the industry and our supply chain to ensure resource agility and resilience. There's never been a more exciting time to be part of our industry for our existing workforce, particularly for new apprentices and graduates. The growth opportunities in networks across multiple disciplines and the range of future careers open to our staff as part of the Scottish Power and Iberdrola Group makes us an employer of choice. This significant step-up investment also means we need to approach our supply chain differently.
Our long-term strategic agreements secure capacity from 19 suppliers, giving them visibility of the forward order book to support their investment and long-term planning. These range from smaller local suppliers like INH Brown to larger global companies like Siemens Energy. The agreements contain flexible delivery models that allow us to contract specific works, for example, civils or electrical works, or larger EPC works where we put together multiple scopes, which can include equipment. This allows us to make choices dependent on the project size and risk and seek to realize synergies where possible. Strategic equipment lead times have at least doubled in the last five years, with some key items such as 132 kV cable reflecting an increase of four times their lead time.
Our focus is managing risk via long-term partnerships, securing manufacturing slots, and seeking to expand our supply base, for example, in the area of power transformers, where we've diversified and expanded our supply base and approved some suppliers in South Korea. We've placed over GBP 5 billion of supply chain contracts as part of our joint ventures with National Grid to develop the Eastern Green Link One and Eastern Green Link Four projects. For Eagle One, we've placed the cable and converter station contracts, and for Eagle Four, we've placed the converter station contract and are currently at the preferred bidder stage for the cable contract. We are contracting early on the Eagle Four project due to the worldwide constraints in capacity to ensure that we've positioned resources to meet the program. We're also currently utilizing the advanced procurement mechanism, which allows us to secure supplier capacity earlier with regulatory certainty.
This mechanism is essential to growing the long-term capacity of the supply chain and will help de-risk delivery for RAIO T3 and beyond. The portfolio-based fund, which isn't tied to individual projects, increases flexibility in our supply chain engagements. This will allow us to have access to up to 20% of the estimated contract value to secure equipment and related services, and it will allow us to facilitate a larger and extended order book with the supply chain into the 2030s by securing further ahead of specific project needs. To manage our higher volume, lower cost distribution requirements, we've secured local supply chain via long-term service and works frameworks. Our contracts allow these specialist contractors to seek to grow in the local communities in which they are deployed. All of our agreements contain flexible extension options, allowing us to re-access the competitive markets where it's appropriate.
In line with transmission equipment, distribution equipment has also suffered at least a doubling of lead times in the last five years. Again, our focus is managing risk via long-term agreements, securing manufacturing slots, and expanding our supply base, for example, in the area of distribution transformers, where we've worked to diversify our supply base and currently have six suppliers contracted across three continents. We work closely with our contractors, building relationships, and establishing ways of working to make sure that our teams work together to deliver, and we will continue to work with them as we build our ED3 plan. Hopefully, this has filled in more of the detail to complement this morning's and the presentations earlier this afternoon, but I'll now hand back to Keith for some concluding remarks. Thank you.
Okay, thank you. Thanks, Nicola. Hopefully, what you've taken away from Nicola's session is the reality of this. These are real projects being delivered with a real supply chain we're securing, with real innovation to bring efficiency to the future of the grid, and it's being delivered by real people that we're recruiting and training. What does all of this mean for the future of us, for the future of the company, for investors, for the country? I truly believe this is the ultimate in win-wins. For the company, this gives us the growth. It gives us an investment opportunity. We get to recruit and employ and train more people and create careers for life, and we deliver value for customers and for the country. For investors, you get to come along on that journey. You get that investment. You get the double-digit EBITDA growth.
You get the RAV growth, and we get the returns. For the country, we get the infrastructure this country needs, deserves, and it wants for economic growth, for job creation, and for wealth creation for the coming decades. If you look at the RAV bar chart there, you see that back in 2020, we had a RAV of GBP 7 billion. By 2024, we'd virtually doubled it to GBP 13 billion. By 2028, it will grow to GBP 20 billion. When you get out to 2031, we'll hit GBP 30 billion in terms of RAV. From 2020, in that 10-year period, we will have quadrupled the value of this business. That's a fantastic opportunity. If you take that RAV and look at it, most people in the United Kingdom would probably value a networks business at 1.4, 1.5 times RAV. That's a GBP 40 billion - GBP 45 billion company we will have grown in that period.
That'd get you in the FTSE top 20. This is a huge opportunity for us. It's an opportunity that's real. It's an opportunity that will create growth, and it's an opportunity that will create value. Conclusion. Why have one conclusion when you can have five? Number one, the United Kingdom needs us to do this. Unless we and the other transmission companies deliver this investment, the United Kingdom cannot continue to grow its economy and it cannot add value. Number two, this is real. You just look at the real T3 draft determination. The government wants this, the regulator wants this, and they're putting in place the mechanisms to allow us to deliver this. Number three, stability.
The real mechanism we are familiar with, we're confident about, we understand it, we know it works, we know it delivers the returns, and it will deliver that double-digit CAGR and EBITDA and RAV by 2028. Number four, this is for the long term. This is not a one-hit short-term wonder. This growth and this investment opportunity carries on through 2030, all the way through the 2030s to 2040. This is a long-term growth opportunity for us. Number five is having confidence. Confidence in the fact we've got the right people, we've got the engineering quality, we've got the engineering design capability, we've got the supply chain, and we've got a track record of delivery. Thank you.
Thank you, Keith, Nicola, for your speeches. They were very interesting. Now we open the floor for your questions. Back there, I have one question. I'm sorry, I can't see you very well.
Hi there. Yeah, it's Dominic Nash here from Barclays, please. Thanks for your presentation. Three questions for me, please. Firstly, on Rio T3, in the draft, I think you got 5.65% real return. Could you just tell us whether you think that was good enough? Earlier today, I think we were given guidance on your blended sort of 9.5% achieved, regulatory RORI, that the 8.5% was going to be expected from the U.K.. Could you just give some color to whether that doesn't seem like very much outperformance versus the 5.65%? Give some color on that. The second question I've got is when you're in the room with all your energy ministers and Ed Miliband and all the rest of it, I noticed that you have three priorities: energy security, economic growth, and decarbonization.
Can you let us know what impact on bills you think all this spend is going to have, and are you worried that the U.K. consumer will be able to take that? Finally, could you just give us some color on data centers and what conversations you're having with data centers connecting to your networks, and sort of the scale of that, please? Thank you.
Sure, thank you. We've got on T3, the 5.65. Obviously, you inflate that up. If you do that at 2%, that's you up to 7.65, 7.7. Ofgem, right now we're seeing in the T3 draft, they believe there are 200 basis points of incentives for us to go after. That's one of the main conversations now with Ofgem between now and the final determination. One is about the base cost of equity and pushing that, but secondly, it's about making sure there's greater clarity on the deliverability and achievement of the incentives and the incentive mechanisms. There's still quite a lot of work to do there with Ofgem. The good thing is the three transmission companies were very, very strongly aligned. We're all in asking for exactly the same thing. We're in asking for exactly the same clarity.
In fact, when we met the Chair of Ofgem yesterday, he quoted back to us almost virtually what we were saying to him from a conversation he'd had with National Grid. It's a big strong message. What I would say is, you know, the draft determination is good. If you go back to T2, when we were sitting with the draft determination, I think the expression we used with the regulator was they hadn't just missed the target, they'd actually missed the wall the target was stuck on. For T3, the draft, we're all in the same ballpark. We're there, we're close. It's about getting more clarity on the incentives, it's about getting more certainty about how you achieve those incentives, and it's a bit of a conversation around cost of equity. We are confident we'll get a bit more movement, but we're headed in the right direction with them.
On conversations with energy ministers and Secretaries of State, etc., around security and decarbonization, the conversations are all very positive, but clearly, you know, politically, all politicians, ministers are looking at costs, costs to consumers. They're looking at inflation, they're looking at the economy as well. I think Ofgem had stated when they looked at T3 and the network investment that it could add about GBP 54, GBP 55 to an average bill. That's about GBP 17 a day. Now GBP 17 a day doesn't sound like much, but GBP 54, GBP 55, you know, that's the kind of number that starts to bother people. All right, if we do what we're saying we're going to do, which is we get rid of the constraints on the system, that puts GBP 55 back into the consumer's pocket because it reduces the cost of running the system.
We create the jobs, we create the value, we create the manufacturing in the back of this. We directly are employing another 1,400 people. Our supply chain are employing somewhere between 10,000 and 12,000 people. It's those jobs that create that. The apprenticeship scheme you and Nicola talked about, we're bringing more apprentices in. When you go around communities, I know people might want to have conversations about bills and they have conversations about community benefit. If you tell people their children are going to get a job and they're going to get trained in a career for life, that's of huge value to people as well. That's what we're going to do and what we're going to deliver right across the country. We're going to get people into work.
We're going to get youngsters straight out of school earning an income, getting a training and getting a career for life, delivering this future system and the future network, which is brilliant. On data centres, there are lots of conversations just now. You'd have heard on the back of the state visit of the U.S. president, a huge wave, a promising wave of investment from AI companies, data centre companies wanting to invest in the United Kingdom. That's one of the great things for us. That is driving the political conversation. It's driving the economic growth conversation, which is this country needs this infrastructure we're going to build. Otherwise, that investment cannot happen. That's a huge part and a huge boost of what we're doing is we will allow the United Kingdom economy to grow by delivering this investment.
There are also specific conversations going on with the government about data centres and specific areas and specific zones, and we're involved in those conversations as well. Do you want to add anything?
No, nothing specific to add. I mean, I think on that affordability point, the way that we can get bills down in the long term, part of the answer is investing in networks. I think, thankfully, government and regulation is lined up in that. It's about making sure that consumers understand the impact. The headlines in terms of the cost, you can make, you know, that GBP 50-odd. When you look at that long-term benefit, by investing in networks, we can potentially help move the country towards security of supply as well and decouple us away from that reliance on fossil fuels in Europe and therefore have less price volatility. For the long term, then absolutely the right thing is to continue to invest in networks.
Thank you. Thanks, Dominic. Javier Garrido here.
Thank you. Thank you for your presentation. I will have two questions. One is specific on RIIO-T3. One of your peers is not particularly happy with the capitalization ratio in the draft determinations. What are your views about that specific topic? The second question would be, Keith, you have mentioned about the further clarity needed on incentives. I guess that's also on the flip side on penalties. I was wondering what sort of risk would you see at this stage of not getting enough clarity and that jeopardizing some of your investment projects? We are talking in some cases of very long-term, very complex pieces of infrastructure that historically have seen delays and could see delays. How big a risk you would see of not getting enough clarity and not feeling comfortable with delivering some of those complex pieces of infra? Thank you.
Okay, fine, good. On our competitors, I won't talk about our competitors directly and where they are, but obviously each company has its own challenges. We're in a very fortunate position being part of the Iberdrola Group, and as Pepe made it very, very clear, we have the money secured. We know we can make these investments and deliver these projects. The capitalization rates for us are fine as a company, but each company has a different situation and a different challenge to tackle in terms of the size and scale of their investment compared to the funding availability and their capitalization rates. In terms of incentives and penalties, the great thing about the mechanism, about the real mechanism, is it has built-in incentives, and that was always part of it. It was about outputs and delivering outputs.
When I say we're looking just for some further clarity on them, it's really just the detail of how some of the incentives work. For instance, we would like a little bit more of an incentive and a bit more clarity around a connections incentive because what we're saying to Ofgem is if the government, the government are saying we want this, we want it done, we want it done on time, then you should be incentivizing us to hit connection dates and make that clearer. The incentives just around some of the innovation programs aren't particularly clear in terms of exactly how they get triggered and how they work. We are confident that will get sorted out by the time we get to final determination because these also have to be referenced to in the license and the license conditions we end up getting.
They will have to give that clarity and give us all of that information. On the penalty side, yeah, we always knew, particularly when they brought in the accelerated strategic transmission incentive, the ASTE projects, there would be an upside and a downside, and we need to deliver on time everything that's within our control. There are safeguards built into that in terms of those delivery dates. If it's because of planning issues out with our control, then we get exempt from the penalty mechanism and we get relief. We think the balance of that risk-reward is acceptable to us. I'd say we just want a little bit more clarity. In terms of potential delays, what we'd always said to, we said to the previous government and we said to this government, if you fix the planning system, you get stuff through planning.
I’d originally said to them, I would double our investment. We’re tripling our investment. They need to deliver on that, and that’s part of the work we’re doing with them. They’ve made changes to the planning system. We’re seeing further changes coming through. There’s lots of engagement going on with local communities. As a country, if the U.K. wants its economy to grow, it needs to have to learn how to build infrastructure.
James Brand from Deutsche.
James Brand from Deutsche Bank. I have three questions, actually, and thank you for the presentation. The first is, I think, unforecastable, but I'm going to ask you for a forecast. The grid service costs, such as re-dispatch, that you kind of said some people think they could have gone up from 2 to 8 if there was no transmission infrastructure. Where do you think they will go? Obviously, a key determinant of that will be the next auctions for offshore. Some people are saying we need 15 GW of offshore, like in the next auction to hit the 2030 target, which I kind of personally doubt will procure that much. Are we adding this transmission infrastructure to deal with the renewables that were already there? We're going to need another wave to deal with the new wave of renewables.
Just some thoughts on that would be super interesting because I don't see many forecasts out there. The second question is on the distribution CapEx. You mentioned that would take a step up at the next regulatory review. Could you give us any detail on where you think that might be going? Thirdly, we see building a lot of cables in the U.K. that go underwater to support future energy demand. There's obviously been a few incidences of cables being cut. I was wondering whether you could just share some thoughts on how you or other parties such as the government think about the security risks of building so many subsea cables. Thank you very much.
Thank you. Thanks for the questions. In terms of future and future constraints costs, I'm going to start throwing acronyms all over the place in a minute. Apologies. Quite a while ago, there was a piece of work done called HND, the Holistic Network Design, which was driven through the system operator working with the transmission companies. There was a second one, beautifully called HND2, Holistic Network Design 2. Those design processes took account of the future generation needs and the future build-out. They've also been ratified by the Clean Power 2030 plan. The current plans for investment in the transmission system, and this is also why we're doing the HVDC subsea cable links, take account of the renewables that have to be built as well as what's currently on the system.
The only real additional thing that's coming into play now on top of Clean Power 2030 is the conversation about data centers and AI technology. The Holistic Network Design and Clean Power 2030, to an extent, were more focused on generation and how it satisfied demand and where we need to shift the power. What we also need to do is take account of where the data centers are going to go and where they're going to suck power off the system and make sure the grid's also strong enough for them. There's also a huge piece of work going on just now around queue management. The system operator has now put in place a new process for looking at what sits in that grid queue because the grid queue is also jammed.
That's going to free up, to allow more critically important generation projects to come through the system faster and push some of the other projects back up the system. It's quite well documented that there are hundreds of gigawatt of battery projects sitting in a grid queue that are highly unlikely ever to be built. They will accelerate other projects on top of those and start shifting the queue around to make sure we get the right stuff built in the right place at the right time. That all feeds into that Clean Power 2030 plan as well. Delivering that plan will avoid the GBP 8 billion of constraint costs. I'm not going to tell you it gets it to zero, but we'll see, but it will significantly change the constraint management system across the whole of the United Kingdom. That's particularly around those subsea cables.
They allow us to shift huge amounts of power north, south, south, north, and that's where a lot of the constraints currently come on the system. In terms of, EV3 and the shift to EV3, I think we'll probably have it hidden away in some of the slides somewhere, but the likelihood is, we think right now you're likely to see a 40% - 50% uplift in CapEx when you move from ED2 to ED3. That's the big opportunity for us. It's a brilliant opportunity. It's been the same opportunity now with ENW. In terms of cables, yeah, look, that's a, yep, there's a huge amount of infrastructure under our seabed as a country, not just electricity cables, gas, pipes, telecoms, everything. There is a lot of planning, discussion, and control with the U.K. government around the security of all of those cables, given the criticality for infrastructure.
Because we are classified as a CNI business, a critical national infrastructure business, we get direct conversations with the security services and with all of those critical teams in the government about how this gets managed, how it gets controlled, how it gets planned, and how it gets protected. You would have seen, I can't remember, earlier on this year, you know, the Navy chasing a couple of Russian ships away from the U.K. coastline. It's a constant ongoing conversation. Okay, do you want to say anything else?
Maybe just pick up a wee bit on the distribution investment. Keith's right, you know, up to 50% step up from ED2 into ED3. A lot of that is driven by the change in how we use electricity. The Chairman touched on it a bit this morning. If you think about when the distribution network was built, predominantly people used electricity to light their homes. They had a coal fire. They didn't really have much electricity demand. If you look at the requirements for electricity now, particularly when you add electric vehicles and heat pumps into the mix, our infrastructure needs to be upgraded. Quite often in many of the states, I think I mentioned an unlooping program. This is where the cables that go into people's houses, you need to almost separate them so that you can make sure they've got enough capacity in each home.
There's a program right across the U.K. that we are working on to do that. A lot of that step up is an investment to support that electrification of people's homes and businesses. That's really what's driving a lot of that big increase.
Ahmed from Jefferies.
Yes, hi, Ahmed from Jefferies. A few questions from my side. Obviously, the regulation is structured in five-year sort of time periods, but I wonder if you can just talk about the longevity of the CapEx cycle in U.K. transmission. Is this sort of the T3s where the bulk of the work is done in terms of undersea cables, offshore gets connected, and then it sort of tails off, or are there already markers because of the health of the network, etc., that you see that actually this is a much longer duration cycle, even if regulation is just structured in five-year terms? My second question is just on data centers. Is that a bigger lever for transmission network CapEx or distribution networks? Where does the sort of the incremental investment when we think about the RAV growth and associate that with data center comes in?
Finally, for T3 final determinations, is there any sort of big point of discussion from your side on base cost allowances and where you need to see significant improvement, or is that not a big point of discussion from your perspective? Thank you.
Thank you. I'm going to pass some of this to Nicola and Guy. I'll just give you a quick high-level response. CapEx life cycles do not fit beautifully with real five-year life cycles. They work in different ways. Projects coming in and out of a real period, some of them will have started before the period goes through it. Some of them will start in the period and go out the other end of it. Guy can talk a bit about the CapEx life cycles of some of the big projects we're doing, because particularly, again, some of the big HVDC projects have got a long, long duration CapEx investment. On data centers, just briefly, it kind of depends on the size of the data center. I suppose quite simplistically, some of them are below 50 MW. They're in the distribution system
A lot of them, a lot of companies are talking about hyper data centers, big, huge, big data centers, and you tend to find them wanting to focus in and around the southeast of England where they're up at 200 MW, 300 MW, 400 MW, 500 MW. They'll be transmission connected. Some of them are looking for their own power sources. There's all sorts of complex conversations around them in terms of how they fit in the system, where they fit in the system, and how much power they need to draw down from the system. On our final determination, I'll hand that one to Nicola in terms of what's in the base and what else we're looking for. Guy, maybe you want to talk about CapEx cycles?
Yes, good afternoon, Guy Jefferson. Yes, we are moving into a long duration cycle. Our transmission assets in particular can take up to 10 - 15 years from initiation to actual completion. I think Keith alluded to the HVDC links. That's a great example. Obviously, we're due to deliver Eastern Green Link 1 on the East Coast in 2029. EGL4, which we're currently out contracting for and just secured the major contracts for, is not due to be delivered until 2034. Western Link 2, which was briefly touched on by Nicola, is in development at the moment. We're putting a lot of work into that exciting project, which is not due to deliver until the late 2030s. We are planning way ahead of the traditional five-year cycle.
To be honest, the five-year cycle is moving towards an end in some ways because in the past, 80% of our baseline expenditure was agreed in that five-year cycle. In this case, for T3, it will be 20% and 80% will be uncertainty mechanisms, many of which you've heard about today already, as the HND, etc. Our CP 2030 projects, for example, have been outside that five-year period as well. We see growth in transmission for the foreseeable future well into the 2030s and beyond to facilitate the net zero targets that we have.
Picking up on the T3 final determination and the base CapEx, the draft determination as it currently stands, over 90%, I think it's closer to 94% of our baseline CapEx already being agreed as part of that draft determination. In fact, Ofgem commented on the quality of our engineering justification paper. I think that's a pretty good response to the quality of the plan that's gone in. In fact, we did well in terms of the reward for that in the draft determination. From that perspective, we're fairly confident as we head towards final determination around the base CapEx. There are a couple of areas that we are still in negotiation with Ofgem. As Keith said, the conversations have been constructive and in line with the rest of the industry.
We are hopeful that we can move things along, particularly on the incentives where we just need a bit more clarity because we need to see a way that we can earn that 150 basis points- 200 basis points from incentives. At the moment, we just need to see a bit more detail in that rather than what's in the draft determination. The discussions have been positive and we're hopeful that we'll get there as part of the final determination.
Back here in the back of the room.
Yeah, it's Richard Alderman, BTIG. Thanks for the presentation. Just following on from those comments about the final determination, I was intrigued in your conversations yesterday with the Ofgem CEO, whether he paid any lip service to any requests you might have for a higher return, base return, and specifically whether he admitted that they would have to take notice of whatever the CMA might say in the next few weeks on the water review. Clearly, last week, I think there was a well-informed leak suggesting that the five water companies that are appealing might get something like a 30 basis point uplift in their base return. Is that providing you with any ammunition for that debate?
Yeah, so there are always some good competitors there. I think the final decision on the CMA for the water has been pushed back a week or 10 days. I think it was originally an expectation of it coming out this week. There's always been a kind of competitor between what does the water sector earn and the electricity sector gets an uplift beyond that. We will see where that ends up and we'll feed that into the conversation. There's also a competitor always done between gas and electricity, particularly around the gearing level where we're at 55, gas is at 60, and should they be equalized as well. The regulator is fully aware of those conversations, those dynamics, and the possibilities of where we push that.
Right now, our focus is not having to rely on those things, but it's more about the justification of making sure the regulator understands the significant uplift in CapEx and investment, the significance of the delivery time scales. That's what should be pushing the returns a little bit higher. That's what should be pushing clarity around the incentive mechanisms because we should be getting incentivized to go faster and faster, do more and do it better.
Okay, no more questions. Maybe one last, was one last one. No? Okay, thank you very much for your presentations, your participation in this Capital Markets Day. Thank you to all the participants here who have joined us for the day. Bear in mind that if you have any further questions, the investor relations team is always at your disposal. Do not hesitate to ask. Thanks, thanks, and good afternoon.