[Foreign language] Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2020 Capital Markets Day, in which we have the pleasure of sharing with you our plans for the period to the end of 2025, and even some of our plans beyond that. Secondly, we hope that you, your families, friends, and colleagues are all safe and keeping good health during this global pandemic. Today's agenda has already been shared with all of you, but to recap, firstly, we will begin with an overview of the energy context and a detailed description of our operational and financial targets.
Afterwards, the business positioning, and finally, the financial details and the closing remarks given by the senior executive team that we usually have with us, our chairman and CEO, Mr. Ignacio Galán, Mr. Francisco Martínez Córcoles, business CEO, and finally, our CFO, Pepe Sáinz. Following these three presentations, and after a five-minute break, we will move to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web. Please ask your questions only through our webpage, www.iberdrola.com. Additionally, it is a pleasure for me to introduce you to a small selection of our younger, multinational, committed, and experienced management team that we have with us today from various locations across the group.
Some of them physically near to us, and others virtually, as a consequence of the travel restrictions and compulsory social distancing that we must adhere to in these difficult times. Anyway, that is enough from me. I hope that you find the presentation to be useful and informative. Now, without further ado, I would like to give the floor to our Chairman and CEO, Mr. Ignacio Galán. Thank you very much again. Please, Mr. Galán.
Good morning, thank you very much for attending this Capital Market Day. We would have liked to meet you in London as usual to maximize personal interaction. As this is not possible in the current circumstances, we have organized this event virtually, trying to maintain the same level of transparency and to give you the opportunity to ask as many questions as you like. Today, we present Iberdrola's current position and prospect in the short, medium, and long term, updating our targets for 2022, giving you detailed information about our outlook over 2025, and sharing our vision for the next decade up to 2030. As Ignacio Cuenca said, we have structured this Capital Market Day in three different presentations. Firstly, I give you an overview of the energy context and describe our operation and financial targets. In other words, what we are going to do.
Paco Martínez Córcoles will explain our operational capabilities to reach those targets. That is, how we will do it. Finally, Pepe Sáinz will provide all the financial details of the plan to maintain our strong balance sheet. In other words, how we will finance it. After my closing remarks, we will move to the usual Q&A session. We have also with us, connected and ready, as Ignacio mentioned, to answer any questions, the three global business directors, the head of control, the CEOs of our main subsidiaries, and other members of our management teams, as is usual in our Capital Market Day. The energy industry is reaching a real turning point. The consensus of the urgency to fight climate change is already almost unanimous. All the analysis show that transforming the energy industry to electrify energy uses is the most efficient way to decarbonize economies.
This will lead to a dramatic increase in investment in clean electrification to change the way we produce and consume energy. It will also constitute a unique opportunity to accelerate economic recovery and job creation after the pandemic. In this context, we need an energy group with the commitment, the skill, the technology, and the financial strength to lead this process. Iberdrola's track record over the last two decades proves that we are one of those companies. Back in 2001, we identified the building blocks for our model. A strong belief in social market economy and a practical contribution to sustainable development, following the same principle that 10 years later defined United Nations Sustainable Development Goals. Today, these goals are fully integrated in Iberdrola's strategy in our corporate governance system.
Following this principle for the last 20 years, Iberdrola has been anticipating and shaping the energy transition, investing strongly in cleaner and more reliable power systems based on renewable networks and storage, closing polluting generation plants and concentrating our asset portfolio in our core businesses to produce, distribute, and sell electricity and related services. Maintaining a constant commitment to efficiency in our operation and increasing our agility in decision-making and execution. Taking an innovative approach to technology, customer relation, and energy policy to capture the acceleration of change in the industry. Over time, following this business model, we have had the courage to implement different energy solutions, often against general trends, but always looking for the effectiveness and efficiency.
In renewables, for example, we firstly bet on hydro, onshore wind, and hydropower storage, then invested as well in other technologies like solar, offshore wind, and batteries as they become competitive energy solutions. In terms of geographies, starting as a company fully concentrated in Spain, we implemented a deep internationalization strategy in areas with attractive rating and ambitious climate policies like U.K. and U.S., then expanding the new geographies in Europe and other continents, always with quick and successful integration process, thanks to our friendly approach to mergers. In terms of financing, Iberdrola growth history has been based on conservative policies preserving financial strength through cash flow generation and efficient approach to liability management, ensuring open access to different market structures, and leading development of financial products such as green bonds.
The outcome for these 20 years is a larger and stronger group that has created sustainable value for stakeholders, as shown by our environmental, social, and governance metrics like investment in renewable energy, reduction of emissions, measures to promote diversity and equality, the increase in training hours for our employees, or job creation either in the company or in our supply chains, always with fluent relation with trade unions. We have demonstrated that transforming Iberdrola into a greener and more sustainable company was also the best way to create shareholder value, multiplying our size by 6 times and our results almost by 5 times, delivering a total shareholder return of 650% since 2001. Becoming one of the three largest utilities worldwide, a global diversified group based on regulated and renewable business, with 80% are in A-rating countries.
As I said, Iberdrola 20-year journey has also placed us in unique position to accelerate growth in the current scenario. Today, the need for decarbonization is more pressing than ever. Only in the last month, we have suffered extreme weather event in fires like in California, massive floods in southeast of Spain, or heavy snow in Scotland. Policymakers all over the world are taking several action to face this challenge, also in response to the increasing social pressure. At present, countries that consume more than 50% of world energy have already set net zero emission goals for 2050. This increase in ambition is in line with the improvement in efficiency and competitiveness of clean technologies like wind, solar, or batteries that have reduced cost by 80% in the last 10 years.
With the demands of customers who are clearly expressing their preference for clean, sustainable, affordable, and a smart energy solution. These factors will drive a very relevant transformation of the energy landscape in the coming decades. According to all research bodies like the International Energy Agency, the only way to supply all the world's energy requirement and reach emission reduction targets is a very significant increase in the share of electricity as a percentage of the total energy. In fact, electricity demand is expected to double by 2050, contributing to close 40% on energy demand by this year. Higher energy efficiency resulting from the substitution of fossil fuels with renewables will make this huge increase in electricity use compatible with a 10% decrease in final energy consumption and with a 70% fall of CO2 emission by 2050.
In this new context, we require an unprecedented acceleration of investment reaching $2.7 trillion per annum in 2030. This means that in just eight years, we will need to multiply by three times the current annual investment in electricity generation, storage, transmission, and distribution if we want to supply the new demand for all the sectors. In transport, electric vehicles will continue increasing market share as battery costs keep declining and new charging infrastructure is built, multiplying power consumption in this sector by 15 times in 2050. In building, the electrification of cooling and heating will boost electricity demand, partly offset by new energy efficiency measures. All in all, demand in building is expected to increase by more than 50% by 2050. Finally, industrial consumption will also go through a deep transformation, mainly to electrify processes that currently use fossil fuels.
In addition, other processes will be decarbonized through new technical solutions like green hydrogen. Covering all this demand will require to multiply renewable capacity by 2.5 times in just 10 years to reach 7,000 GW. Out of the 4,000 new gigawatts needed, 2,000 GW will substitute thermal and nuclear plants that will close over the decade. This amount, to give you a number, is equivalent to the current total capacity of United States and the European Union combined. On top of this, 2,200 GW will be needed to cover the electrification of new uses. This trend will continue in following decades, with renewable capacity increasing by around 4,000 GW every 10 years, reaching 50,000 GW by 2050. By technologies, solar and wind will contribute 90% of the new capacity addition by 2030. offshore wind will show the strongest growth rates with installed capacity multiplied by seven times.
Solar PV will multiply by 4 times and offshore wind by 3 times. This acceleration of renewable investment will be common across all geographies and very especially in all these in which Iberdrola is present. For instance, offshore wind capacity is expected to rise by 50 GW in the next 10 years in U.K., continental Europe, and U.S. All in all, the potential growth opportunity for Iberdrola is enormous. Just if we aim to maintain our current share in each of these markets, which is today from 5%-15% approximately. Bringing all this renewable energy of consumption centers will increase very heavily the current investment levels in distribution and transmission networks as well. Average global investment will need to increase by 60% to $430 billion per annum in the next decade, and will multiply by 3 times to more than $800 billion per year from 2030-2040.
This will be experienced across all geographies due to a combination of new demand, the need to integrate renewable capacity, new interconnection, network reinforcement, smart grid, and storage. Finally, electrification together with new products and services linked to this process will increase the value of access to industrial and residential customers, creating also opportunities in energy uses for which direct electrification is not technically feasible, such as certain industrial processes and heavy-duty transport, which together represent 16% of final European energy demand. Over the last month, we have seen several administrations taking specific action to support the transition from gray to green hydrogen. Like in European Union, which published a new hydrogen strategy targeting 40 GW of electrolyzers by 2030, or in Spain, where the government approved hydrogen roadmap targeting 4 GW by 2030.
The production of green hydrogen will also be a very large source of new demand for renewable energy. Producing all the hydrogen currently required for industrial processes through electrolysis will mean an additional renewable energy demand of 3,000 terawatt-hours per annum, equivalent to today's total electricity consumption in Europe. Finally, decarbonization through renewables will multiply the requirement of efficient storage capacity, both hydro pumped storage and batteries, in order to increase system flexibility and security of supply. Only in Europe, more than 40,000 megawatts will be added in the next 10 to 15 years. The new context I have just described makes the Iberdrola business model even more suitable for the years to come. After having invested EUR 120 billion in two decades, today Iberdrola is in the best position to face this new stage of investment acceleration across the whole electricity value chain.
As we have seen, we are talking about multiplying renewable capacity towards electrification and decarbonization. Investing more in transmission and distribution networks to increase resiliency, connect new renewables, and integrate more complex system. Building more storage capacity to accommodate supply and demand and optimize energy resources. Providing more energy solutions to customers who will push this revolution looking for competitiveness, efficiency, and sustainability. Becoming a winner in this scenario will only be possible for companies focused on countries that combine a clear commitment to decarbonization with the credibility and the strong credit rating needed to attract investment in very competitive environment. Companies that have already made energy transition a key element of their purpose and values beyond opportunistic approaches, and have the capacity to make incremental investment and maintain efficiency in operation.
We are also talking about companies with experienced and well-prepared teams with a track record of execution and delivery on time and budget. Sufficient management flexibility to constantly review and optimize their portfolios, preserving a strategic focus and financial sustainability. That innovative every day with new solutions to anticipate customers' needs and improve competitiveness. Iberdrola has been getting ready for this opportunity over the last two decades. We are fully prepared to take part of this energy paradigm. That is not new for us. Accelerating investment and maintaining our financial strength to deliver growth and sustainable dividends to our shareholders and to act as an engine for recovery, promoting industrialization, creating economic activity, boosting productivity, generating new jobs, and delivering sustainable value for all our stakeholders. We have the team, the know-how, and proven expertise of execution.
All the geographies in which we are present are showing day after day a clear commitment to this energy transition, to give you just a few examples. The European Union has increased ambitions of the European Green Deal through the mobilization of 37% of the total EUR 750 billion from the Next Generation EU funds to put in place the most powerful decarbonization agenda ever seen, targeting a 55% reduction in emissions by 2030 and carbon neutrality by 2050. The U.K. has reaffirmed its net zero goal by 2050, taking steps to become the world leader in offshore wind. More and more the U.S. continues to upgrade their renewable energy target for the coming years. Energy policy is already there. Now it's time for execution. Only those who have been already working for years ahead of this moment will be ready to take this opportunity.
In our case, in just two years, we have increased by 75% our renewable pipeline to reach 70,000 MW worldwide. In particular, our offshore wind pipeline has multiplied by almost two, up to 20 GW in U.S., U.K., Germany, France, Japan, or Sweden. As well, diverse portfolio of projects that will be maturing over the next 10 years. Starting with our American, French, and German projects, and then adding other geographies. This will allow us to maximize investment opportunities and accommodate a rational use of technological, human, and financial resources. We also have more than 15,000 MW of onshore wind pipeline, and over 30,000 MW of solar photovoltaic located in most suitable geographies in terms of energy resources and policy support mechanism. We are talking about a specific project, not just dreams or pieces of paper.
7,000 MW of this capacity are already under construction, and we expect to continue maturing new projects in a similar pace in the future. Over the last year, our track record shows our ability to commission 5,000 MW per annum. Our plan considers that less than 50% of our current pipeline will start operation in 2025. A pipeline that for sure will also continue growing in the coming years. In networks, our footprint combines markets with a strong growth in demand, like Brazil, with others with significant investment requirement to enhance transmission capacity and reliability, like U.S. To reinforce and digitalize the grid, like U.S., like U.K., or Spain. All of them also present big opportunities linked to new electricity uses in cooling and heating or electric mobility.
In terms of customer base, several years ago, we anticipated the value of access to customers to sell new products and services, hedge energy position, and find new roads to market. On top of this, electrification is adding a new value source to Iberdrola's customer base of more than 40 million contracts at present. In our consolidated market of Spain and U.K., as well as the fast-growing areas such as Portugal, Italy, or France, where we have built a significant footprint in the recent years. In new markets like Germany, Brazil, or U.S. For each of them, we are building different channels, including powerful digital platforms and a wide competitive product portfolio, and meeting of our customer energy need from pure energy to value-added services like mobility or smart solar or residential customers.
Other energy solution for industrial and commercial customer like on-site solar energy efficiency, or more recently, green hydrogen in sectors for which solution based on electricity are not technically feasible, like steel, glass, ammonia-based fertilizers or heavy transport. Given the ambitious energy policy targets and the increased environmental awareness of industrial customers, we are working in different initiatives on top of the addition of new renewable capacity for electrolysis. We have contracts in advanced state to support the creation and development of new manufacturers of electrolysis to avoid bottlenecks in the supply chains with the same rationale as with Gamesa 2 decades ago. We expect to give you more details shortly. We are signing industrial alliance to accelerate the use of hydrogen in different manufacturing processes like we recently announced with Fertiberia.
Based on this energy landscape and building on the strength of our business model, today we are presenting you an ambitious but realistic outlook for the coming years. We have updated our financial projection with macro and energy assumption that take into account the economic impact of the COVID-19, especially in the short and medium term. In particular, our energy assumptions reflect lower demand and commodity prices with the exception of the carbon emissions. This impacts power prices mainly between 2020 and 2022, with a more stable evolution from 2023 to 2025. In terms of currencies, we are now projecting lower exchange rates of dollar, pound, and real against euro. We are also forecasting lower interest rate, which will remain at current levels to 2022 and then increase slightly. Again, in this scenario, we are implementing several management measures to avoid negative impact in our results.
As you already know, we have accelerated our investment, increasing them by around 10% in organic terms to 2022, or by 35% including corporate transaction, PNM Resources in the United States for EUR 7 billion, and the smaller deal announced in Australia, France, Japan, or Sweden. All in all, investment will reach EUR 50 billion from 2018 to 2022. In terms of operating efficiency, as we have reported over the last quarters, the company is making an extra effort in all activities. This is allowing us to increase our saving target by 33%, reaching 1.6 billion in just five years.
Looking at the impact of this scenario on group net profit for 2022, we are forecasting that exchange rate, new market conditions, and lower return to regulated networks driven by lower interest rates will have a combined negative impact of EUR 100 million. We will be more than offset by the positive effect of interest rate on our financial expenses, as well as the management measures implemented, high investment and cost control. For a total net positive impact for around EUR 150 million. Once we add the net profit from PNM Resources transaction, we are increasing our 2022 net profit guidance to between EUR 4 billion and EUR 4.2 billion from EUR 3.7 billion-EUR 3.9 billion, that was the previous one. Which allow us to maintain our shareholder remuneration policy with our dividend payout ratio between 65%-75% and floor of EUR 0.40 per share until 2022.
Focusing now on the outlook for the period 2020 to 2025, we will continue accelerating our investment to reach EUR 75 billion over the next six years. Within our growth trend, they will lead us to almost double the average EUR 7 billion invested between 2017 and 2019 to reach EUR 13 billion per annum in the last three years of the plan. 75% of this investment will be allocated to growth activities, maximizing the opportunities from the investment cycle we are entering. These figures are based on projects already identified. Out of the EUR 68 billion that will be dedicated to organic investment, 70% is secure. With this percentage rising 90% in the case of networks, thanks to regulatory frameworks already in place, which reflect higher investment need to support the electrification of the economy. In renewable, 60% of investment are already secured too.
These are a specific project of the 30 GW of the plan out of which 7 are already under construction, as I mentioned before. The remaining 23 represent one-third of our total pipeline. As I mentioned, we expect to commission five GW per annum in line with the last year. By business, renewable will contribute 51% of the total organic investment, mostly in Europe and U.S., consolidating the position of this business as a group first investment destination. Network investment will also increase in the geographies, mainly U.S. and Brazil, reaching 40% of the total. By geography, let me highlight the very significant increase in the contribution of U.S. and Continental Europe led Iberdrola Energía Internacional. By 2025, we expect to allocate to this new growth platform as much investment as in U.K.
As a result of the total share of investment in A-rating countries will continue increase, reaching 83% over the period. The plan will lead us to double our renewable capacity in six years up to 60 GW by 2025. To show you that our sustainable growth will continue beyond this period, we have already identified project for 11,000 MW that will be under construction by 2025. On top of renewable, as you know, we have 20 gigawatts of another generation technologies for a total installed capacity of more than 80,000 megawatts. In the coming five years, we will split our renewable investment almost evenly among onshore wind, offshore wind and solar PV. As you know, offshore wind require higher investment per megawatt installed, but this technology also delivers five times EBITDA per megawatt of solar and three times EBITDA per megawatt of onshore wind.
Over the period, we will add new offshore wind facilities in France, Saint-Brieuc, which is in construction, United States, Vineyard Wind and Park City Wind, Germany, Baltic Eagle, and on top of East Anglia One in U.K., will begin operation already in 2020 for a total of three gigawatts of capacity. By geographies, the largest contributor to this growth will be Spain and United States. Iberdrola Energía Internacional will multiply its capacity by eight times, contributing to 7,000 new megawatt of 25% of the total group capacities additions. Become the third largest area by installed power in the group. Again, the group projection for this new growth platform are based on specific project. In solar, mostly in Portugal, Australia and Italy. In onshore wind, mainly Australia and France. In the case of offshore wind, France and Germany, which is now in construction.
Regarding networks, our regulated asset will increase by 50%, reaching EUR 47 billion by 2025, within three main growth drivers. Organic investment in all our markets, the regulated assets base of PNM Resources in the U.S., and additional transmission investment outside our franchise areas, which are growing quickly in countries like Brazil and the U.S., which will reach EUR 4 billion by 2025. Thanks to the integration of PNM Resources, the new interconnection line with Canada and other investment in transmission distribution, the U.S. will become the group larger geography with around 40% of total assets or regulated assets by 2025. Followed by Spain with 23% and 83% of the total regulated assets will be in A-rated countries by 2025. Our portfolio of contracts will also increase by 40% to 60 million, driven mainly by growth in European countries.
The addition of new product and energy solutions will double to 24 million. This will place Iberdrola in the best position in the context of increased electrification and more customer productivity. By geographies, Iberdrola Energía Internacional will reach a similar number of contracts to the U.K., where we also expect to increase our energy services. The rest of geographies will grow more moderately, losing relative weight due to the growth of Iberdrola Energía Internacional. I mentioned a few days ago, we announced an alliance with one of the largest producers of fertilizer in Europe, Fertiberia. We will be our first investment in green hydrogen, resulting 600 MW of electrolysis in production, with a production of 15,000 tons of green hydrogen by 2025.
This plan will require financial support scheme that, in our view, are more than justified at this project, because this project will accelerate the competitiveness of green hydrogen, develop new industrial activities across the hydrogen value chains, and create thousands of qualified jobs in Europe. Following our 20 years model, these ambitious growth plans are combined with an extra effort in efficiency and cost saving, as Paco Martínez Córcoles will explain in detail later on. We expect cumulating saving of EUR 1.5 billion from 2020 to 2025, as a result of the ongoing improvements in our net operating expenses. Gross margin ratio will fall below 25% by 2025. Out of this total, we expect EUR 1 billion to materialize between 2023 and 2025. Combining all these factors, EBITDA will increase by EUR 5 billion to reach around EUR 15 billion in 2025, which is 6%-7% annual growth rate from 2019.
80% of the operating result will continue to come from networks and renewables by 2025. Investment in green energy will increase the contribution of renewables by more than five points over the period to exceed 30%. Generation supply is expected to maintain a contribution of about 20%, mainly thanks to the new retail activities in Europe. By currency, the contribution of EUR and USD to total area will increase, with more than 80% of the EBITDA coming from A rating countries. Net profit will reach around EUR 5 billion in 2025, increasing by EUR 1.5 billion for a 6%-7% annual increase as well. Maintaining our commitment with financial solidity and strong rating levels as Pepe Sainz will detail later on. In terms of dividend, we reaffirm our target to increase shareholder remuneration in line with results.
Allow us to maintain our shareholder remuneration policy with a dividend payout ratio between 65% and 75%. According to our result estimate, this will lead to a dividend per share of approximately EUR 0.53-EUR 0.56 by 2025. In addition, we'll have an increasing floor of EUR 0.4 per share up to 2022, then EUR 0.44 per share afterwards. We will also preserve the optionality for our shareholders through the Iberdrola Retribución Flexible program, including share buyback. I started this presentation defining social market economy and the United Nations 2030 Agenda as the building block of our model. The expected impact of our outlook for 2025 in all our stakeholders show that our commitment to social dividend is not just limited to a nice word.
Far today, I have been describing what this plan will mean for our shareholders, but we always take our decision thinking in our famous triangle, looking for a balanced outcome that benefits employees and society as well. For this reason, we have developed an environmental, social, and governance plan with a specific identified target in a wide range of indicators. Today, we reaffirm our determination to become an active player in the transformation of the current social economic model and leave a better world to future generation. In environmental terms, apart from our emission reduction goal, we will explain later by 2025, we'll contribute for reforestation by planting 1 million trees with ambition to reach 20 million by 2030. We'll also maintain or increase our current training hours per employee, which today is four times above the European average.
Increase the number of jobs we support globally from 400,000 to 500,000 in just this year thank our investment and purchases. Contribute further to gender equality, increasing the share of women in leadership position and having no gender pay gap in achievement we already reached in 2019. Expand the number of beneficiaries of our Electricity for All program from 14 million people to 25. We also determine we have at least 75% of suppliers with sustainable policies. This plan also reinforce our leadership in terms of decarbonization. Our carbon emission per kilowatt hour, which are already two-thirds below European average, will continue decreasing to reach zero emission in Europe already by 2030, becoming a key actor for the success of Europe climate ambition from 2030 to 2050. Let me repeat it. This plan lead us to zero emission in Europe by 2030.
Globally, we expect to reach less than 50 grams per kilowatt hour from our current 110 grams. This is significant below the targets of our main competitor for 2030. Finally, after the measures taken in the last year, Iberdrola position at the forefront of corporate governance and compliance is recognized by prestigious bodies. This does not lead us to complacency. Instead, I increase our commitment to remain as remarkable in this field as well. Now I will pass the floor to Paco Martínez Córcoles, the Business CEO, to explain more in detail how we are going to make it. Thank you.
Thank you, Chairman. Good morning. During my presentation, I'm going to detail our view about the technological evolution impacting the electricity system, the competitive advantages of the company, and our key actions to benefit from the growth opportunities we have ahead. In terms of technology, the evolution will be driven by the decarbonization as the main challenge we have in the system. All renewable technologies will significantly increase their presence in the electricity sector, requiring a large amount of investments on networks to integrate their energy, and on storage to absorb their output variations. Thanks to this expansion of renewables, the electricity becomes the most cost-effective energy carrier to remove the emission from the majority of the demand, postponing the decarbonization of the most difficult sectors to the availability of other solutions different from electricity.
Renewables technologies are already competitive, but a further reduction of cost is expected during the decade, driven by the huge growth they will register. This massive growth will impact the electricity system, in which renewables will be the main source of energy, with an increasing need for demand-side response and storage for flexibility purposes. Regarding photovoltaic, the technology evolution will be driven by the improvement of efficiency in the modules, a further reduction of material needs, and a performance increase in the production lines. As a result, we expect an efficiency improvement of 25% and an increase of installed capacity of four times. In terms of onshore wind, we expect improvements derived from the larger size and the weight reduction of the turbines, as well as the progression on modular components and digitization.
This evolution will allow an efficiency improvement of 14% and an increase of installed capacity of three times. In offshore wind, the technology evolution will be driven by the economies of scale, together with an increase of standard and modular components, as well as innovation in construction and operation. As a result, we expect an efficiency improvement of 9% and an increase of installed capacity of seven times. The increase in renewables technologies and in the electrification of the economy will imply a strong increase in networks as well, given their unique role as integrators of the generation and supply sites. We also expect a more active role of the demand in the system, as its flexibility needs will increase a long time. More storage will also be needed to integrate the increasing amount of renewable energy.
In this regard, we expect a large technology evolution of the batteries, driven by the strong increase of electric vehicles that will imply a cost reduction above 50% by 2050. Given their size and modularity, the batteries will increase their role in the electricity system. However, the efficiency and capacity to store large amount of energy makes the pumped hydro the most cost-efficient solution for providing flexibility, and we expect this will be the preferred alternative where possible. The expected cost reduction of green hydrogen will enable its storage role in the electricity system. Our view is that this will be a negligible solution in most of the markets, as its small efficiency will hinder to be a competitive alternative. Given its ability to integrate renewables, the electricity is and will be the most cost-effective way of decarbonizing the economy.
As the European Commission has stated in its strategy, the principle of energy efficiency first should guide the decarbonization. In this regard, the electric appliances, as the electric vehicle and the electric heat pump, have a clear competitive advantage against other alternatives given their much larger performance. Therefore, we expect an increasing role of electricity for decarbonizing light transport and residential heat, which could also be spread to heavy-duty transport and some processes of the industry in the medium term. There are some niche areas in which electricity is not decarbonizing alternative or competitive. For this consumption, which only accounts for 16% of the demand, the green hydrogen is expected to be the main solution for reducing emissions. Based on three drivers, reduction of electricity costs, lower CapEX, and larger electrolyzer performance, we expect the cost of green hydrogen will be reduced by 2030.
As a way of improving technology and reducing costs, decarbonization of the hydrogen used as feedstock in the industry should be the priority. Moving on to Iberdrola's competitive advantages. I'm going to detail them around three main topics: diversification, experience and size, and customers. Regarding diversification, Iberdrola accounts on a diversified model in all scopes: business, geography, technology, and route to market. In terms of business, the company has always tried to adapt its progress to the new needs and trends of the industry, which have resulted in potential growth opportunities in several aspects of the three businesses, giving us a broader flexibility to select the most profitable ways of growth and a more diversified source of results. As of geography, Iberdrola counts on a diversified position across the three businesses at country level to increase the stability and to maximize flexibility and synergies.
Regarding technology, the company has always bet for exploring the new needs of the industry, which has resulted in a healthy position in terms of renewables, with a balanced mix of the different technologies and customer services being able to offer a broad range of products. As a consequence, Iberdrola is able to propose an integrated and sustainable model. For instance, we benefit from the complementarity of wind and solar production, offering renewable PPAs to customers with base load needs. Lastly, the route to market approach, which is essential to sustain the growth. As shown in the graph, Iberdrola has multiple ways of developing projects and making them feasible. This allows us to find the most profitable way for growing in power plants, but also a flexible model to keep investing when a certain solution is no longer valid.
For instance, it is typical to see huge competition in renewable auctions, even from non-incumbent players, and a more reduced and selected playing field for PPAs contracts. In terms of experience, Iberdrola has developed a strong management and execution capacity, which is essential to control the delivery in periods of sustained growth. There are three levers we have developed in this regard. The identification of core activities in each business to preserve know-how and outsource low-value services, an effective combination of global model with local capabilities, a permanent focus on customer and ESG. Regarding renewables, we have identified the core activities we want to preserve in order to secure the delivery of the growth, especially in terms of development control, technical know-how, and construction supervision. As of networks, the technology know-how is a key element of the value chain, as well as the consistency and control of the operations.
We have implemented global processes, systems, and tools that are adapted to local characteristics and updated with any best practice the different teams find and share. In retail, Iberdrola takes care of the complete customer experience, focusing on the product design and sales. Let me highlight our commitment to ESG in this area, with particular measure for vulnerable customers and special effort on social collaborations. Another aspect in which the experience has a great impact on is the efficiency. Iberdrola's best in class in this regard has been developed along the years based on the early implementation of digital solution and the best practices exchange, which have a large effect on the central control dispatch, operation, and maintenance of the assets. The third competitive advantage is our customer base.
We believe that our customers are an essential element of the business, and we keep them at the center of our decisions. They provide a natural hedge for our generation, mitigating the risk from price variations. This is one of the reasons why Iberdrola continues growing in renewables, to balance our short positions. This fact is also beneficial for the customers, as many of them do not want to be exposed to electricity price changes and are willing to have fixed price contracts. For residential customers, Iberdrola's approach is to be the unique provider of their energy needs, offering customized products for heating and cooling, mobility, self-consumption, or efficiency. This gives us the opportunity of fostering our customers' loyalty and getting more value from them. For industrial customers, Iberdrola offers an integrated model which is composed of all the services needed.
We can be the interface of the customer with the market, provide a renewable base load PPA, thanks to our mix of renewable technologies, or help the customer to decarbonize their energy consumption and processes by electrifying heat or producing green hydrogen. This is the case of the Puertollano project, our pioneer bet for decarbonizing the use of hydrogen as feedstock in the industrial process to obtain ammonia. Moving on to our key actions for this strategic plan. We have identified four. Growth, as the world requires a massive increase in the electricity sector that will benefit our stakeholder, creating employment, local providers, training. Acceleration to increase momentum and grow in line with the decarbonization progress.
Investment efficiency and operating efficiency, both devoted to gain competitiveness to secure growth and results. Starting by growth in renewables, Iberdrola plans to invest EUR 34 billion in the period in all technologies and countries to increase our diversification and take advantage of the best opportunities. 90% of the investment is devoted to growth, and 60% of the total is already secured. Let me highlight the strong bet of the company for offshore wind and for Iberdrola Energía Internacional, where our position in Australia, France, Germany, Italy, Portugal, Ireland, and Greece has significantly increased with the integration of Aalto Power and Infigen, giving us two additional platforms of growth. These investments will enable the installation of almost 28 GW of renewable capacity, half of it solar photovoltaic. In terms of geographies, Spain and international will be the main destinies of the new assets, followed by the United Kingdom.
As a result, Iberdrola will almost account for 60 GW of renewables by 2025, almost doubling our capacity in only six years, with a healthy mix in terms of technology and origin. Onshore will be the leading source with a weight over 40%, followed by hydro and solar. Spain will have more than 24 GW installed thanks to our strong presence in hydro, followed by USA and international. In order to secure this growth, Iberdrola accounts with one of the largest pipelines in the industry, over 70 GW of projects in different stages. Let me remind its high quality, given the solid diversification in terms of technology and countries, as well as maturity.
The company has 7 GW s already under construction, as the chairman mentioned, 25% of the total new capacity, and over 15 GW of projects in different phases of permitting process, adding around 10 GW to the pipeline every year. You can see the complete detail by technology and country, where solar and offshore have the main contribution, as well as USA and international. Now, regarding Iberdrola Energía Internacional, our plan considers an increase of capacity of almost seven gigawatts focused on Australia and Europe. Regarding our growth in solar photovoltaic, Iberdrola will install almost 14 GW up to 2025. Close to six will be put into service in the first three years, having already 2.7 under construction. Spain will be the main destiny of the growth, followed by international.
The company will install almost seven gigawatts of onshore wind, having close to five already secured and more than two under construction. The mix by geography is well-balanced, being international the region with largest growth. In terms of offshore wind, Iberdrola will add 2.6 GW of new capacity up to 2025, reaching almost four gigawatts installed at the end of the plan. Two projects are already under construction, Saint-Brieuc and Baltic Eagle, and the other two are awarded and with secure PPA, Vineyard and Park City. Moving on to networks, Iberdrola will invest EUR 27 billion during the period. 60% of the investment will be devoted to grow our asset base, whereas 90% of the total investment is secure under current regulatory frameworks. U.S.A. will be the main destiny of the investments, having the other three countries a similar weight.
Most of the effort will be devoted to regulated transmission and distribution. We also plan to invest on competitive transmission to enlarge our opportunities of growth. This strong investment will allow a 55% increase of our asset base, which will exceed EUR 47 billion by 2025. The mix of the asset base is in line with the investment, being the U.S. the 40%. As shown in the graph, the evolution of the asset base will be mainly driven by the investments in regulated distribution and transmission, in competitive transmission, and in PNM, partially offset by the regulatory amortization of assets during the period. Let me highlight the stable regulatory frameworks that Iberdrola counts on, with almost 80% of them secure up to 2022, especially in Spain, Brazil, and U.K. In competitive transmission, we expect growth opportunities in different countries.
We are already developing NECEC in the U.S. and several projects from Brazilian auctions. We will analyze further options in these two countries and in new geographies where the company is present. Moving on to the generation and retail business, Iberdrola will invest EUR 6 billion during the plan, especially in the retail activities to increase our customer base. Spain will be the main destiny of the investments, followed by U.K., including the smart meters deployment, and international. 60% of the investment will be devoted to growth. During the period, the company will significantly increase the service to customers, reaching 40 million by 2025, 60% more than today. As I have already mentioned, Iberdrola is devoted to the growth of smart solution, as they increase the loyalty of the customer, fulfill their needs, and allow us to benefit from the rise of electricity consumption.
We expect an increase of smart solutions of 11 million up to 2025, with a balanced mix between Spain, U.K., and the rest of the countries. Iberdrola is building strategic alliances with manufacturers and customers to reinforce our positioning and ensure our growth. Mobility has had a more active role in this regard, given the more advanced stage of the industry. We have also developed relevant projects in areas like solar or green hydrogen. Let me move now into the second key action, acceleration. We have enlarged the speed of our growth to benefit from the early movement and to gain momentum for the decarbonization progress. That is why Iberdrola's investments are increasing during the years, going from an average amount of EUR 7 billion per year in 2017 to 2019 to around EUR 13 billion per year in 2023 to 2025.
In terms of renewables, therefore, has increased our installed capacity per year, growing over three times during the plan. Instead of an average installation of 1.6 GW per year up to 2019, Iberdrola will put into service over 5 GW per year from 2023 onwards. In terms of our regulated asset base and considering different effects, we expect a larger growth rhythm in line with the investment required for the decarbonization. Regarding services to customers, we also expect a steady increase of our sales in smart solutions, especially on the ones concerning mobility and heating and cooling. I will comment now on our key actions designed to increase our competitiveness. In investment efficiency, Iberdrola will continue improving the business process, especially the ones concerning development and construction.
The larger use of standard designs, equipment, and procedures will enable the capture of synergies along the life cycle, whereas economies of scale and technology evolution will also play a significant role to optimize investments. In terms of operating efficiency, we will maintain our effort on the early implementation of digital solutions to increase our remote activities and improve processes. We also expect gains derived from economies of scale and asset optimization, thanks to the improvements on logistics, availability, and standards. Let me conclude. Iberdrola is perfectly positioned to keep growing. Our pioneer bet for renewables, smart networks, and solutions for our customers allow us to be in the right place at the right time. In renewables, we have a high-quality pipeline of 70 GW and investments of EUR 34 billion to increase our installed capacity by almost 30 GW by 2025.
Of that, close to half is secure, and seven gigawatts are already under construction. In networks, we have a stable regulatory framework and investments of EUR 27 billion up to 2025, which will enable an increase of our regulatory asset base of EUR 17 billion. In retail, we will get 15 million services more in the period, together with 600 MW of green hydrogen. This growth will result in a strong benefit for the society, creating wealth, high-quality employment, and development of local industry and providers. Iberdrola counts on strong competitive advantages that will allow us to optimize the growth opportunities. We are well-diversified in all scopes, business, geography, technology, and route to market. This gives us more stable results and a broader pipeline of opportunities to grow in all the businesses.
Our experience and extended assets have developed compelling management, execution, and efficiency capacities that allow the company to be a reference in competitiveness and know-how, as our track record of delivery shows. Iberdrola's customer base is key to grow in the electricity system, as it is a natural price hedge for our increasing renewable production, which will balance our short position in generation. A source of results, given the rise of consumption and the perfect platform to sell more added-value products. Thank you very much for your attention.
Thank you, Paco, for providing us details how we will do this plan. Now, Pepe will provide the financial details of the plan. In other words, how we will finance it. Pepe.
Good morning to everybody. I hope everybody's doing fine and keeping healthy in this difficult situation. Following the chairman and the CEO presentations about the future prospects of Iberdrola in this era of energy transition and great opportunities for the group, I will now explain how we're going to finance this plan, maintaining a strong financial profile and creating value for our shareholders. Adding the F of financial performance to the concept of sustainability. So for the 2025 period, we will continue our sustainable financial strategy as we have proven in the last years, with a sustainable growth path, combined with the maintenance of a strong financial position along the plan, with credit ratios in the BBB+/Baa1 levels, and with the green and sustainable financing where we are leaders and will be at the core of our financing strategy. At the same time, enabling a sustainable growing dividend policy.
Growing in line with the earnings per share, with a 65%-75% payout ratio, with EUR 0.40 per share floor up to 2022, and EUR 0.4 to EUR 0.44 per share up to 2025. As the Chairman has explained, given our earnings estimate, hopefully reaching a DPS range of EUR 0.53- EUR 0.56 by 2025. Green financing is the way that suits best in our sustainable strategy. Our green financing framework is considered a best practice, aligned with the International Capital Market Association green bond principles, and only including assets and activities eligible under the European Union Taxonomy. Use of proceeds, strict reporting, external verification, and strict standards for the eligibility of activities together with a full alignment of the company strategy are highly valued by ESG investors. Investors find in the use of proceeds approach the best way to measure the sustainable impact of their investments.
Comprehensive reporting, second-party opinion and external reporting guarantee assurance and transparency. Our current asset base and investment plan focused in the energy transition allow the group to continue taking advantage of the green bond market. This allow us to increase the investor base, and as a consequence, to reduce the cost of our debt. We estimate that green sustainable financing can save up to 15 basis points according to Citi reports, et cetera, and other investment banking reports. We estimate that 75% of our total investment plan will be considered as sustainable, green under the EU Taxonomy criteria. This percentage could potentially increase up to 81% considering two more U.S. states which will be in the trajectory to decarbonization by 2025.
As of today, sustainable and green financing already in Iberdrola is up to EUR 22 billion, EUR 40 billion of green financing, mainly through bonds, and another EUR 8 billion of sustainable credit lines. Our proven financial track record supports the credibility of our commitment to our sustainable financial strength. Our FFO/net debt ratio has been maintained above the credit rating agencies' 18% threshold, guaranteeing a BBB+ rating since the end of the financial crisis. Our asset rotation plan of EUR 3.5 billion for the period 2018-2022 has been exceeded, reaching EUR 4.6 billion. Regarding green financing, as I have explained, we are the world leading private group in green bonds issued. In 2014, Iberdrola issued its first green bond, where funds proceeds were used to finance green projects. We were the first Spanish issuer of a green bond, as well the first Spanish issuer of a green hybrid bond.
Since then, Iberdrola has consolidated green financing following the group investment strategy. Our commitment with green financing goes beyond the holding level, and thus our subsidiaries in the U.S. and Brazil have already been tapping this market. This has led the Iberdrola group to become the world's biggest corporate issuer of green bonds. Our FX risk management strategy, both structurally and on a yearly coverage, has been proven effective, protecting our solvency ratios and the group's yearly net income. A highly diversified source of funds allow us to continue reducing spreads and increase our average debt maturity. In 2020, we have signed new financing for more than EUR 5 billion through the lockdown, and recently we have added another EUR 3 billion through an additional hybrid issue.
Finally, we have maintained through the past years excellent liquidity levels, more than fulfilling rating agencies' requirements of 18 months coverage of financial needs in stress scenarios. During the 2025 period, we will have EUR 94 billion as sources of funds to apply to CapEX and dividends. 67% of the plan needs will be covered by funds from operations. 19% will be additional debt, 8% hybrids, and 1% tax equity structures. The remaining 5% will be covered through asset rotation. 80% of our sources will be dedicated to investments, including 6% capitalized cost and 10% of assets under construction at the end of the plan that will deliver further growth and cash flows post 2025. The remaining 20% will be dedicated to dividends. Working capital will have a slight positive impact.
This growing investment cycle will be funded while maintaining financial discipline with strong solvency ratios throughout the plan. Our net debt to EBITDA will be around 3.6,3.7 times. Our FFO over net debt will be between 21.5 and 22.4, and our retained cash flow over net debt will move around 20%. Although our ratio calculations differ from those of the rating agencies, these ratios, in our opinion, are consistent with the 18% threshold that rating agencies require to maintain a BBB+, Baa1 ratio. As you can see in the slide, during the 2019/2025 period, net debt increases 47% to EUR 6 billion, an average of 6.6% per year, driven by the significant investment effort that have been already explained. In the same period, FFO increases more than the debt, 51%, reaching an average increase of 7.1% or 0.5 percentage points more than debt, guaranteeing an adequate debt coverage.
You will see that in 2021, we have a big growth, a peak in our investments plan. This is due to the consolidation of PNM. Our asset rotation plan has a flexible approach, depending on investment opportunities and financial ratios. We have already completed, as I mentioned, EUR 4.6 billion divestments exceeding our EUR 3.5 billion target for the period 2018 to 2022. For the 2021/2025 period, we have introduced a new target of EUR 3.2 billion, equivalent to just 4% of the EUR 75 billion total investment of the plan. We have, in principle, set the new asset rotation program in EUR 3.2 billion. It will also depend on our investment opportunities to increase or decrease it. Divestments will, as always, comply with the requirements that we are asking, either low strategic fit, low contribution, or minority stakes.
We will maintain moderate financial needs throughout the plan, thanks to a diversified debt maturity profile without concentration of maturities in a particular period and our strong cash flow generation that helps. In 2020, despite the COVID-19 lockdown, as I mentioned, Iberdrola Group has raised close to EUR 9 billion of funding in different markets, more than the needs, as you can see, for 2021, 2022, 2023, and 2024. Life of the regulatory cycles is around five years. An average life of debt of over 6.5 years guarantees the repricing of the company's debt, taking into account the regulatory changes and adapting our cost of debt to the new interest rate environment, while taking advantage of the yield curve. Our financial needs will be financed mainly from the holding, although USA and Brazil will also raise financing in their local markets.
Our strong diversification of financial sources allows Iberdrola plenty of access to different lenders and markets. Currently, the bond market is 62% of our total sources, including 22% of green bonds that will continue to grow. Current weight of the bank market is 12%, including 1% of green loans, giving us the opportunity to increase this kind of financing if required with our strong and diversified group of relationship banks. We keep a stable commercial paper exposure of around 8%. Supranational lenders have another 12% share, and structured finance represents 6%. Eurobond will still be our main source of financing, maintaining the target to have a complete secondary curve with two benchmark references each year. Local bond markets in the U.S. and Brazil will also be important.
Supranational lenders will continue supporting our investment plans, with Iberdrola being one of their most important partners, especially with the European Investment Bank and several development banks, including those of Spain and Brazil. The good news is that more and more development banks in different countries will be active in funding sustainable investments, and we will collaborate with them to get the funding. The hybrid market will have an important role given that our low outstanding balance allow us to increase its share along the plan. Let me stress that in our recent EUR 3 billion hybrid issues, investor demand was more than EUR 7 billion, proving again the strong interest from fixed income investors in Iberdrola paper. We use green financing for investments in renewables and network investments for clean energy.
As you can see in the slide, currently 26% of our sources of financing is green, and this percentage will increase to 45% in 2025, as most of our expected financing during this period will be green or sustainable. Our average cost of net debt will continue to decrease during the plan, around 3% in 2025, despite the increasing weight of debt in Brazilian reals and US dollars. We're improving the financial cost close to 80 basis points versus our previous plan due to lower average forecasted interest rates. Analyzing the gross cost of debt by currencies, our Euro cost will fall to 1.5% by 2025. Our US dollar will maintain more or less its cost in the range of 3.5%-3.6% compared to the 4.3% area in previous plan.
In GBP, our cost, which is currently around 2.9%, will fall to levels of around 2.3% in 2022 and 1.8% in 2025. In BRL, our cost was 6.9% in 2019. Cost expected for this year is around 4.7%. It will increase to levels of around 6.8% in 2025 due to higher interest rate and inflation rates in Brazil that we are expecting. We expect also to continue actively managing our liquidity requirements, keeping more than EUR 50 billion of liquidity, maintaining 18 months coverage of financial needs under stressed scenarios, complying with the demanding requirements from rating agencies. We will optimize our liquidity position, trying to reduce our cash balances, which are very expensive nowadays, as you know, and extending the maturity of our credit lines with a target of minimizing the overall liquidity cost.
Our undrawn liquidity, that benefits from being part of the Iberdrola Group, has a coverage of 15 months. Neoenergia, that has its own liquidity policy, covers 12 months of financing needs according to the rating agencies requirements during the period. All new credit lines will be based on KPIs, achieving 100% of our sustainable lines at the end of the plan. Our financial model is based on financing the group needs from the holding company when this is possible. This model is designed to optimize the funding of our needs and monitor structural subordination guidance. Currently, debt is mainly at the holding level.
Our external debt, other than the holding, will be mainly raised at the regulated operating companies in the U.S., as cost of debt is a pass-through, and where we have minority shareholders like Neo, that it has its own financing policy, as the group does not provide support. The holding has direct access to cash flows from fully owned subsidiaries that account for 70% of group's EBITDA. The high visibility of centralized cash flows and the centralized treasury reduces the impact of structural subordination. Over the plan, the ratio will steadily decrease after the PNM transactions to levels close to 30% threshold, in line with our financing policy. Our expansion plan requires a conservative while active management of interest rate risk aligned with our earnings structure. As mentioned earlier, currently, we have a 65% fixed debt.
I would like to state that we have a low refinancing risk in fixed debt, as we have more than EUR 2 billion in interest rate forward swaps. We will progressively adapt our debt structure to the income structure in the different currencies and using forward start swaps to anticipate changes in interest rates or monetary policy. Regarding our analysis of fixed and floating debt structure, we take a bottom-up approach by currencies, looking to match it with our own revenue structure and regulatory requirements. We have all mostly fixed debt in our U.S. business. That is a perfect pass-through on our regulated business, and most of our renewable business is based on long-term PPAs. Less in dollars, less in euros, only due to the weight of the liberalized business.
In GBP, our income is fairly balanced at fixed, floating, and inflation index, and the BRL is heavily inflation index, as most of our revenues are linked to Brazilian inflation. Expected debt interest rate structure by currencies is very close to our income structure along the plan. Our FX strategy hedges our most important solvency ratio to immunize the solvency and protect the rating of the group from FX fluctuations. On average, more than 60% of our operating cash flow will be generated in currencies different from the EUR in the period. Structurally, we minimize the FFO/Net Debt ratio, volatility, adjusting the amount of debt in the different currencies to the funds generated in each currency. In addition, this policy protects partially the income statement from currency depreciation.
As you can see in this slide, we have around 30% of our FFO in dollars, and we have a similar proportion of debt in dollars. The same happens with the pound and the real. On a yearly basis, the target of our policy is to reduce as much as possible the volatility of our net profit. We mitigate the FX P&L risk through derivatives. Our net income risk is managed on a yearly basis, as long-term FX management is not possible, as it would generate huge P&L volatility and will not protect the P&L in subsequent years. Our FX risk management protected the budget net income, creating value for the company over the last 10 years for around EUR 235 million, or an average of EUR 24 million per annum. As you can see in the slide, this plan creates value for our shareholders.
As you can see, our return on capital employed will improve to over 6% from 5.9% in 2019, thus allowing return on equity to grow from 9.2% to over 11% in 2025. As you can see, our average return on capital investment on the investment that we're going to be doing in the period will be clearly above the cost of capital of Iberdrola that we estimate in around 4.5%. Let me conclude remarking that Iberdrola is able to finance this ambitious plan, maintaining a financial strength through the period, improving shareholder return, and with flexibility through asset rotation. As I was mentioning, only 4% of our total investment, and much less than our asset base, which is over EUR 120 billion, that can grow if needed. With margin also to replace debt with hybrids at a very attractive cost.
In the annex that we are providing you will see the financial hypothesis on which the plan is based. Thank you very much.
Okay. Thank you, Pepe, for the clarity. You have already provided us how to finance this plan. To conclude, let me highlight the key features of the ambitious plan we are presenting today. The first one is the increasing ambitious climatic agenda and the unstoppable electrification of the economy are leading the power sector toward an investment phase never seen before. Achieving a net zero global carbon economy by 2050 is possible, we need concrete action today. Iberdrola commitment to this vision places in the best position to accelerate our growth, reaching all-time high levels. Gross investment will exceed EUR 75 billion up to 2025, almost doubling the annual amounts of our previous plan. For a 6%-7% increase in result with EBITDA reaching around EUR 15 billion and net profit around EUR 5 billion.
We will achieve this growth maintaining our commitment to a strong credit rating and to shareholder remuneration, which will continue increasing in line with earnings per share. The deep transformation of the energy landscape that we are going through has led us to analyze the prospect of our company in the longer term, looking beyond 2025. Up to 2030, the massive investment needs in renewables and networks confirm that our business model is the most appropriate way to continue delivering healthy growth. According to the energy plans announced all around the world and analysis forecast, global onshore wind and solar capacity will multiply by 2.5 times in the next 10 years, and offshore wind will multiply close to five times.
We are fully confident of our ability to capture a reasonable share of this growth that will range from 5% to 10% for solar and onshore wind in the geographies where we are present. In the case of offshore wind, our current leading position in the largest market will allow us to estimate share between 15% and 25%. As I commented earlier, these figures are in general even lower than our current market shares. Based on this assumption, our ambition to reach renewable capacity of 95 MW in 2030, almost tripling our current installed power. To double our current regulated asset base up to EUR 60 billion. To reach EUR 70 billion contract by 2030, up EUR 30 million up from today's figures. To increase our green hydrogen production up to 85,000 tons.
The plans I presented today connect 20 years of growth with the prospect of an unprecedented transformation of the energy industry. We have proven that we have the skills, the team, the track record of delivery, the technology, and the access to financial resources to continue leading this industry in the next decade. With attractive growth in results to 2025 and with ambition to multiply our key operating metrics between two and three times by 2030, maintaining our commitment to efficiency and financial strength. You all remember that in 2001, we forecasted to double the size of the company, and we have done much more than that, as you can see. It's up to each of you to fill now the empty boxes on the bottom of this slide and estimate the value generated by this plan.
You can be sure that Iberdrola, starting from myself and all the senior managers, will continue to deliver in our commitment to reach those figures. That the younger team behind us has even more knowledge and ambition, the ones we have taken the company where we are today. We have all the ingredients to succeed. A business model that made us pioneers in the energy transition. A track record of 20 years delivering increasing results and dividends. A genuine commitment to environmental, social, and governance standards. Of course, the best team made up of 40,000 women and men that day after day demonstrate their full dedication and professionalism and their readiness to continue advancing along the path of the last 20 years to achieve our, even to improve, the vision of 2030 we have just presented.
Thank you very much. Now we'll answer your question you may have. Thank you. Okay, as I mentioned before, we are going to have now a break, five minutes only, in order to satisfy human needs. Thank you very much.
Thank you. We are going to start telling you that we have organized and structured the Q&A session by blocks, so thematic blocks. We are going to answer all your questions you may have. Up to now, we have 36 questions, probably more to come, but it's just to let you know more or less which is the time that we are going to have regarding this Q&A session. We are on time according with the expected program. The first block is regarding renewables, and first question comes from Harry Wyburd, Bank of America, and James Brand from Deutsche Bank. What proportion of your planned renewables addition in gigawatts do you plan to sell fixed subsidy or PPA versus floating wholesale market price or selling to regular supply customer or floating price contracts?
As I already mentioned before, we have already around 60% of our renewables investment already secure, with more than 7 GW are already under construction. As I mentioned as well, we have a pipeline of 70 GW. That means that the plan we have already in this moment is to transform half of this into new productive power plant. I think the first thing I would like to say is considering the renewable action we have taken part in 2019 and 2020, our hit rate was already 70%. Every 10 auctions, we got already 7 in all sectors. I think not only renewables, in everything. In any case, we are not taking part in all auctions. We take only part in some, and depending, because we have already different route alternatives. I think we have already the route of PPAs.
We have already signed with many of the largest corporations of the world, which is the case U.S., companies like Google, Amazon, another one. Another one is, we sell directly to our customers. I think we have already customer base very large, and I think we are selling to them. I think is another point as well is part of those renewables is for replacing our conventional generation, and for fulfilling the new demands during the electrification process.
Yeah. Second question comes from Harry Wyburd as well, Bank of America. For your market share targets on page 142, what assumption have you made regarding competition? Do you think these are achievable even with competition from big oil?
Our position has always welcome in the competition. I think welcome the new entrants. You have already seen the figures. I think we need a much higher electrification. I think there is room for everybody. In any case, we are very sure about our skill and resources. I think as Paco and Pepe have already mentioned and very well explained. I think we are ready in the sense to compete with same way we've been already competing during our 120 years history. In any case, I think maybe in the next year, so with the new entrants, we learn in electricity as much we have already learned during the last 120 years. I imagine that they are already faster in learning.
We took 120 years to learn what we have already learned. I think I wish they will be able to learn as much as we have already learned during these 120 years. I think competition is welcome and there are room for everybody.
Harry makes another question, Harry from Bank of America. Is there a risk that new renewables lead to a structurally lower power price in Europe in 5-10 years, which would impair profitability on your nuclear and hydro assets? Is this a scenario governments would probably respond to boosting subsidies to support new renewables project, but nuclear, hydro, and old renewables rolling off subsidies could be stranded or low power price? How do you manage this risk?
Well, I think nuclear, we have the plan of closing. I think the nuclear is, we are in a loss. I think everybody knows that we are losing money with nuclear. I think the only could happen is that, I think we agreed to close this one with the government from 2028 to 2033 or 2034. I thought if I not already said anything correct, please correct to me, but I'm trying to do that one. In the case of hydro, I think hydro mostly is an historic energy, is going to have even more value. I think it's going to, when the wind blows, it will be a lot of wind. When the sun is shining, it will be a lot of energy. When there are no wind and there are no sun, I think is needed already something which is called storage.
The storage is massive, is pumping what we are using. I think we have already reconverted many of almost half of all our installed hydroelectric in storage. That one which is not stored is massive energy what we have already for weeks or for months. I think just the opposite. I think our hydroelectric we have much more value, that's why the pumping is already needed. In the case of nuclear, the only thing can happen is that we will force more rapid closing of that one. I think the fact in nuclear, in most countries, is just precisely the opposite. I think it's needed for maintaining the service in the case of U.S., they are already paying. We are paying, I think, our distribution companies we are paying an extra for maintaining open the nuclear power plant of our energy vendors.
I think nuclear, we are in a loss. The only thing could happen is if it's needed, they have to pay for maintaining those one open. That is what we have already negotiated. In the case of hydroelectric, my vision is that storage of energy is going to be crucial, and having already our electric with large dams and with large storage. I think that is going to provide much more value than what is have today, which when it was already for those, we have only the running waters model.
Next question comes from Jorge Guimarães, JB Capital Markets. What are the average CapEX cost considering plan of offshore wind, onshore wind and solar PV?
Pepe, can you reply to this one?
Sorry.
You can reply the question.
It's regarding the cost of construction, that probably Paco.
Is it the construction or the financial cost?
No, it's average cost, CapEX cost.
CapEX. Okay, Paco, sorry.
Well, Jorge, you will understand that we do not feel comfortable telling the exact figures we invest in each technology or the cost we have in each production. Cost and CapEX is, let's say, a strategic value for the company. What I can say is that more than the CapEX invested, what is important is the levelized cost of energy in each of these technology, which is what really matters when you compare with the utility that the different customer have and for the needs. Within this levelized cost of energy, we are pretty sure, and we are sure, and if we are not, we do not do the project, that we are going to be competitive, that we are going to be very high in the merit order, in the classical merit order of cost. That's for sure.
Everybody knows that more or less, onshore and photovoltaic are in a proportion of one to 0.5, and offshore is probably three, four times this. The specific values, on one hand, I don't have here, and on the other hand, if I would have it, I will not be willing to tell in public because it's part of our strategic knowledge.
Nevertheless, I think I would like to add with this thing that Paco's mentioned, that we are already working in a manner to make already more competitive design. We are already working to have already more operation and maintenance lower cost, and we are already just with our critical mass of our purchase reducing heavily the cost of our vendors and suppliers. Altogether make us in a very, very competitive position. In some cases, I think we are already hybridizing our existing fleet of power plants, which I think that already minimize our operation cost. In another cases, I think we are already making larger installation, which as well minimizing our CapEX, et cetera. As Pepe, as Paco says, I think we are working very hard in order to minimize the CapEX and to minimize the OpEx in order to be ready to become much more competitive.
We are very much more competitive. We are not in doubt. After our 120 years experience in making those things make us already a clear competitive advantage. That's why we are gaining seven every 10 auction we are coming.
Okay. Next question comes from Andrew Moulder, CreditSights, and is regarding the U.S. offshore business. He wrote, "Ørsted has reported permitting and authorization delays in the U.S. offshore wind industry. Is there a risk you cannot meet your timetable on Vineyard Wind and Park City?
I think we are already in a process. We were already the first mover in the country. I think we won the first auction from Vineyard, which I think we are already just opening the road to the rest of the investors. I think the information we got up to now is that the marine permits will be in December. There are not any reason why that is going to be postponed and delayed. I think the plan continues the same one. I think we are already in this moment, we have already awarded the Vineyard substation, which we make already last year. The winter supply, we are already selected. The bureau, as I mentioned, the marine energy, is already expecting the process in December. I think we have not already seen anything for Vineyard.
In the Park City, we are still in the early stages, commenced, and the project, I think we present the project to the plan, to the BOEM as well, to the marine authorities. I think we present, correct to me, Dennis, if I am not correct on that one. I see yourself somewhere else. I think it was presented in June. We have already signed the PPA with Connecticut and the federal permit already progressing according with schedule. I think we have not seen anything. In the case of Kitty Hawk, which we have already in North Carolina, I think the technical survey campaign is concluded. I think we are already geophysical working on it. I think we completed that well in October. We still need the grid connections, which I think we expecting for identifying what is the best place for the substation. I think that one.
In the case of New York, I think the new auction we have already presented. I think we make already different offers for 1.2-1.3 gigawatts. We already expect that the result will be already beginning of next year. I think we are already all in line. Dennis, you have anything to add, please don't hesitate to say anything you would like to say to add on this point.
The only thing that I would say regarding Vineyard is that we did adjust our schedule previously, and it reflects what's currently on the BOEM website. We won't comment obviously on Ørsted. At this point in time, we have no reason to believe that the schedule that we put forward for Vineyard is the right one.
Thank you.
Next question come from Alejandro Vigil, Cygnus Capital. Opinion on new auction in Spain.
Well, I think I used to say that we are not making the energy policy. The energy policy is already made by governments. I think that the government decide to make auctions. I think it's their duty to, their responsibility to make. Our point is, if we will go, we will not go to this one. I think that is something that we will decide depending on the terms of the auction. I think, we feel that there are enough people ready to make the investment. I don't know why the government is going to have to take already commitment, but I think it's their policy. I think I have nothing to argue against the government policy. The government policy is that they take the energy policy, they take the decision, and it's in our hands to decide to go or not to go.
Question number seven.
Probably we will go. I think I would like to say.
Number seven comes from Jorge Guimarães, JB Capital Markets. What is the EBITDA contribution of hydro in Spain in 2025 EBITDA objective?
Oh, God. I don't know.
Very small.
I don't know.
It's very small. It's not even EUR 100 million.
Okay.
The contribution is very slow. Small.
Yeah.
Okay. Eight. This is coming from Alberto Gandolfi, Goldman Sachs. Of your 2025 EBITDA, how much would come from renewables, and when do you believe the step up of renewables in the mix will begin to negatively impact the power prices?
In, do you-
Number eight. The question is regarding when do you think renewables will account for the prices? When will they impact prices and will account for a big base load of energy?
It's not going to be a cliff edge effect. It's going to be progressive. We are seeing now that the prices, and you have seen in our presentations that the prices we are forecasting or foreseen for the future are about, I don't know, five to EUR 10 per megawatt hour less than they were in the previous emissions or additions of our information. This is going to happen progressively and the level of around 45 to 50, or if you want, 40 to 50, is going to be the trend. It's what we are assuming, and we are managing this. The negative affection is already here, if you want, and is not going to be worse in the future. Well, I mean, in a stable way.
In a conjunctural way, it can happen what happened in March or April, that we have half of this on prices. But in a stable, in a steady state regime, we don't think that it will be so different of around this EUR 40, EUR 40 something.
Alberto is asking as well, you now have 20 GW of shore pipeline. There are likely to be 25-30 gigawatts auctions until the end of 2021. In how many will you be able to bid?
Perhaps, Javier, you can already reply. You have more in detail that one. Please. Yes, sir. We are going to, as you know, we have just recently presented our bid in New York. Next year, there is Massachusetts, third possibility, Rhode Island, second possibility. We are going to take part in both of them. What is the important one, that is the Round 4 in the U.K. All right? We're actually going to present. It doesn't mean that we are not obviously searching for other opportunities, maybe a little bit outside what is our current, let's say, areas of interest.
We are now passing to the block corresponding to generation and supply, and it's Jose Javier Ruiz from Barclays asks, "Why do you expect the growing power prices in Spain while the Spanish curve is in backwardation up to 2025?" Number 11.
I think Paco was already explaining that one. Sorry, it's okay. In the long term, I think we expect already a stable wholesale price in nominal terms, which we put in our plan of EUR 45 to EUR 50 megawatt hour. I think that already the cost of certain technologies will be offset by the increase in demand and inflation. I think they are ready as well, and Paco mentioned as well, there are periods of instability. I think it's moments which are already deriving for the excess of gas or the excess of wind or so on. I think those are punctual moment. I think we have to look the trend. I think the trend we are seeing is that those prices are already, we see now, that can already be maintained in the long term.
I think that is our expectation, and because there is not any reason why that is going to change very much on that one. Punctually it could happen, but the average will be already maintained in this level. That is our expectation.
We are going to start with the financial block. First one comes from Javier Suárez, Mediobanca. "Why the company has decided to remove the minimum and growing annual dividend commitment included in the previous plan?" We don't understand it.
Sorry? I don't-
Probably it's a misunderstanding of Javier, because we have not removed anything.
What? Repeat.
The dividend.
Why the company has decided to remove the minimum and growing annual dividend commitment included-
No, not at all. Not at all. I think we are maintaining our dividend policy. We are maintaining the same payout. We are already the opposite. We are increasing the flow in the period 2023 to 2025 from EUR 0.4, that was the previous plan, to EUR 0.44. I think we are not already reducing, but I think we are increasing the flow and maintaining the policy.
Next question comes as well from Javier Suarez. "Why FFO is now at 22% by 2022, while previous business plan was at 24%? Why the company feels comfortable with net debt to EBITDA at 3.7 times versus 3.0 times under the previous business plan?
You reply, Pepe?
In the previous plan, we always said that we would never reach those levels. Basically we got to these levels because we don't have a specific investment plans, but that as investment plans would come, we would go to levels in which we are right now, which are consistent with a BBB+ rating in a world where there are lots of opportunities of investment. We are trying to maintain the solid grade rating while taking the opportunity to increase the investment. We are comfortable with these levels of net debt, EBITDA, and FFO over net debt.
Harry Sherborne, Bank of America, is asking for the EUR 68 billion gross organic CapEX, what is the net figure? Is the split of the net figure for renewables network liberalized the same as the split of gross on the slide 44?
You reply, Pepe.
I could answer.
Yeah.
We will provide through investor relations.
No, but I think he can reply.
I think it's the organic CapEX, we have around 6% of capitalized cost. This means that net CapEX would be EUR 64 billion, of which around 52% will go to renewables and around 35% will go to networks.
Next question comes from Jorge Guimarães, JB Capital Markets. "What type of assets are you considering for the asset rotation, build and sell of renewable assets?
We receive the same question every plan, and so far we always have delivered, even sometime in advance, or even much more than was already expected. Today, we have announced a new target of EUR 3 billion from the period 2021 to 2025. As Pepe mentioned, that represents less than 4% of our investment and less than 3% of our total assets. I think we have plenty of things that can be sold on that one. As Pepe was mentioning, either in the non-strategic asset, either minority stakes, either things that we can already discover, then they are not contributing enough to the company result. The same thing we have already done, doing during the past.
I think the amount is so low compared with the size of our investment, with the size of our asset, then we feel they're more than achievable, those numbers, as, always, we have already done.
Next question are really three inside one from Lawson Steele, Berenberg. Do you intend to raise 5% of your EUR 94 billion funds from assets rotation, and at the same time to increase your renewables capacity by three to 95 GW by 2030? Is that 95 gigawatts a gross number or net holdings? Excluding minority, please. Second, can you please talk about the current investor appetite for sell downs and how do you see that developing? If you could also give us more color around how do you see gigawatts ownership per se versus sell down opportunities, that would also be very helpful. Thank you, Lawson.
I think the first number, the 95, I think is our own. I think those ones we are making for our own and those ones, what we are already consolidating. To sell or not to sell asset, I think I used to say always the same thing. I think we are not already a company with our fundamentals is built to sell. Saying that, if somebody is ready to pay a huge amount of money, we are always open to sell a minority stake or to sell the whole business. I think is we are not already in love with any particular piece of our balance sheet or our particular piece of our asset. I think our ambition is not to build for sale, is to build for operating and building for already making business with it.
I think we have already sold last year a stake of Neoenergia because somebody was ready to pay a lot of money and we were ready to sell minority stake. I think our ambition is already to make the things for our own, to operate and to make already for our own. If somebody is ready to offer a huge amount of money, I think we are always ready to listen.
Next question comes from Miguel Medina, KC Capital. Can you comment on your views on Mexico?
I think I said already in our last presentation on results, we were very clear on that one. I think we are not in Mexico, as most countries I repeat, we are not making the energy policy. We adapt in every country our investment to the energy policy which every country is defining. I think in the case of Mexico, I think if they promote a foreign investment, we are ready to analyze those investment. If they don't promote foreign investment, we are going not to fight against the energy policy of the country. Saying that, I think with the Mexican government, we are already with very open dialogue, and I think we will continue in the advance. I think it's nothing new. I don't know, Enrique, you would like to add anything to this point?
We don't make the energy policy, and we have to adapt our investment plan to the decisions of the Mexican government.
Okay. Thank you.
Next question comes from Fernando Garcia, Royal Bank of Canada. What would be the 2025 net income, assuming high rate interest cost is included in P&L?
Si, Pepe.
Well, actually, it will be more or less the same amount because as a matter of fact, in our projections, we have a slightly higher than EUR 5 billion of net profit. We were saying, to give you a number more or less, would be around, for 2025, the impact of the hybrids will be around EUR 170 million. As I was saying, the number will be the EUR 5 billion because in our projections, we have slightly higher than EUR 5 billion.
Next question comes as well from Fernando Garcia. What would be the sensitivity if we assume 2025 forwards of EUR 42 per megawatt hour instead of the EUR 50 that we have already included?
Well, you can already add, Pepe. I think in prices, I think some numbers I got here is, for each EUR per megawatt hour variation, will represent already a 0.3% of the operating rates of the EBITDA.
That is correct.
That is more or less.
Around 0.5% in the net profit.
Next is from Stefano Vecchi, Credit Suisse. Can you Sorry.
Just, if you allow me, Chairman, to add something. This is the pure value of EUR 1 per megawatt hour in repercussion on the EBITDA. Now the key question is not whether the forward changed from EUR 50 to EUR 42, but the key question is whether we are able to keep our margin. I mean, whether we are able to sell at the convenient price or not. If we really are not able to sell to that price and we keep this EUR down in the margin, this will be the effect. But if we are able to keep that sales at the right prices, probably lower, but with the same margins, this will not be a problem and the repercussion will not be eight times what the chairman and Pepe has said.
That's very important because sometimes we think that the forward markets, the spot price or the wholesale spot price is the price. No, it's a reference. We used to sell at quite a completely different price than the reference we are seeing. That's very important.
I think that is very important. I think our 10 or 12 million customers in which we are selling electricity or more, I think. I think the price is not already referred in most cases what is the spot prices or forward prices. It's already a price we agreed bilaterally, independent of that one. That is going to happen even more with the PPAs we are signing. I think not only with those ones, the PPAs is relevant, what is the price. I think the price we agreed with Heineken the other day, what we have already signed as a PPA for making all their factories and their production in Spain absolutely using green sources. It's independent what is the price of the market. I think we have already agreed on terms for the long period.
Same thing with the U.S., with the PPAs we have already signed for the next 10 or 50 years, same thing in Mexico and another countries. I think it's important, this point, Paco, because I think sometimes we are too obsessed with the spot price and forward prices. That is a reference that Paco was mentioning, but that is not what is already affecting directly to our results.
Next come from Stefano Vecchi, Credit Suisse, is regarding again about hybrid. Can you explain how the hybrid accounting affects your new targets compared to the previous targets?
Pepe, you plan?
It's a little bit the same answer. As I was saying, it can affect around EUR 170 million for 2025 and slightly less than EUR 150 for 2022.
James Brand from Deutsche Bank is asking about the dividend, and said on the dividend, the EUR 0.53-EUR 0.56 DPS guidance in 2025 seems to imply a tighter payout than 65%, around the 70% midpoint.
Well.
Should we view this as an indication that you might move closer to the 70% midpoint that is staying as current at the top of the end of the range?
Policy is our policy, and the policy is to increase the dividend in line with the increase of EPS. That makes that our range will be between 65 and 75 payout. The another one is an example how that can be to give some numbers. I think if we don't provide numbers, the question will be, "Why you not provide numbers?" If we provide numbers, we would like to provide the number, but that is an indicative number. The different numbers should be based in the policy, 65-75 and growing in line with the EPS in every moment.
Javier Garrido is introducing a set of three questions. First one is, what is the impact to your targets to 2025 if the Spanish power price do not grow to EUR 50 megawatts hour as you project, and instead the current levels of EUR 44?
I insist again on the same point. I think as we are already quite a lot of PPAs in this moment signed with a certain price fixed or adjusted with something, and we have already a customer base with the prices, most of them are not related with the wholesale price or with the spot prices. I think we are confident that the price we are selling, of course, to the market is much higher than this number, and we feel then we can really protect this margin. I think as Paco was mentioning before, we are looking for margin more than for prices. I think the price is already, we are comfortable with that one, and we are not foreseeing then that is going to happen.
It happened, and we said, Pepe was saying already what can be the effect, which is already minimum in terms of the global plan.
Second question from Javier is, can you explain how a 6%-7% EBITDA compound on a CAGR to 2025 can result in a 6%-7% net income CAGR in the same period, particularly when you expect a decline in cost of financing?
[Foreign language]
Well, there are two impacts. We have a decline in cost of financing, but the absolute number of financial expenses grow because the debt grows. You have to have another element, which is that due to a very large investment plan, our depreciation grows also a lot. That explains that the EBITDA, the 6%-7% growth in EBITDA, drives a 6%-7% growth in net profit, the increase in financial expenses and the increase in depreciation.
Javier is asking about, I understand that your 2025 guidance includes the dilution from the Planet disposal and does not include in net income targets the cost of hybrids. Is that correct?
Si, Pepe.
Yeah, that is correct.
Well, we are moving towards the hydrogen block, and the first question comes from Jorge Guimarães, JB Capital Markets. What is the cost per megawatt hour of hydrogen electrolyzer considered? The price per kilograms of hydrogen in presentation includes any subsidy?
I think I was already saying, I think today the cost of production of hydrogen with electrolysis is around EUR 2 higher than the cost of production of hydrogen already made with fossil fuels. That's why I think that will require some subsidy. I think we are talking about amounts which are not very large. I think we are talking of a few hundreds of million EUR if we compare with the subsidies already applied when we have started already making in this country solar or wind. I think that's been, we compare with that one. I think that is going to reduce on time. I think the size of electrolyzers now are very small. I think that makes the cost higher.
I think the fact our first electrolyzers, which we already order with a Norwegian company, Nel, which is one of the largest never been built, I think it's 20 MW electrolyzer. I think the size of the existing electrolyzers on the size of kilowatts, not megawatts. We are sure in the moment that when we make the next ones, I think that is going to be much bigger, and that is going to be reduced. That's why we will be ready to participate in the development of the largest electrolyzers, and that's why I announced that we are already in talks to try to make something in R&D for improving that one in the near future.
I think this investment is the only investment we have in our plan, with this condition to receive the subsidy for making it happen. I think we are not already receiving the amount the European authorities are already promoting. If we are not receiving this subsidy, that investment will be not made. I think we will need already to have some support for making already that competitive to work with this today production with fossil fuel. We are already quite convinced, and that is going to be already included in the European plan of electrification of the industrial processes, and is going to be included in the Green Deal subsidies that has been done precisely for that one, and the European Hydrogen Plan, and the Spanish Hydrogen Plan as well.
Javier Suárez is asking two questions regarding hydrogen. First one is: can you clarify your positioning in the hydrogen value chain? The second one: are you going to focus on renewable energy that will feed the electrolyzer, or do you intend to invest in the electrolysis as well?
I think I said. I think we are already energy producers, we see that is vectors for increasing the energy demand, the electricity demand. At the same time, we are already helping to the carbonization of the economy, which is one of our goals as well in terms of our commitment with the climate change. I think our position in the value chain is very clear. We would like to make with renewables, as much electrolyzers as needed for generating hydrogen, green hydrogen, in a manner which can already provide already a competitive environment. Saying that, I think we insist on that one. Today, the size of electrolyzers is very small. The numbers of producers are very small.
I think we would like to contribute, as we did 20 years ago with wind, when we already transformed Gamesa from Gamesa Aeronáutica and Gamesa Eólica, to contribute already to push the industry to make already much largest electrolyzers and more efficient electrolyzers. I think our ambition is not to be already electrolyzer manufacturers, but our ambition is that the electrolyzers will be as much competitive as possible to help already on the decarbonization of certain industrial processes using already hydrogen instead of fossil fuel or gas.
Stefano Vecchi, Credit Suisse, is asking, the increased penetration of renewables is likely to lead to increased volatility in power prices. In light of this, do you expect governments to address this issue and adopt new power price model?
I don't know. I don't know what is going to be the policy. I think it's the volatility. We are suffering the volatility. I don't know how that can be organized. I've not any idea. I think we are working with the existing situation. I think it's moving to different situation. We will analyze those ones. In any case, I think whatever should be the model, if they minimize the volatility, is welcome. Which I think saying that any system we can reinforce the system reliability using already capacity payment or similar, that is positive for the system. What is clear is nobody's going to produce anything at a loss, and nobody's going to keep already the power plant open, and they are already losing money.
I think that's why the European authorities are already promoting this mechanism of capacity mechanism similar, and that is already something which is absolutely compatible with option, et cetera. We have to play two things, how we keep the lights on, and how we can already make that one in a manner that we will already enough attractive for the investment which is required. That is already what the political leaders are already defining in all countries. We will play already the game in this environment. Which I think they have to define if it's needed to define more.
Stefano is asking as well, what is the contribution of green hydrogen of EBITDA and net income by 2025? How significant can this contribution become by the end of the decade?
Well, I think it's irrelevant. I think that the amount of that one is very small. I don't know, Aitor, you can already say something, but I think in our total plan, the investment is very limited and the returns is already very small. I think you can add anything, Aitor?
Yes. I think that in 2025, the contribution to the EBITDA is around EUR 40 million-EUR 50 million, no more than this. At the end of the decade, if we invest what we have considered, that is going to depend on the subvention that can be attracted.
Could be several hundred million EUR. In 2030, God knows what is going to happen finally.
Next question.
I think it's a good opportunity, but in the short term, it's more already just a commitment to help in this direction than a business opportunity. Business opportunity will arrive afterwards, as Aitor is mentioning. We are first mover. I think the opportunities of capturing already value on that one can already measure in hundreds of million EUR. I think for the period, it's already talking in dozens of million EUR, the contribution which can already be provided for this investment.
We have a question regarding hydrogen manufacturers from Martin Young, Investec, that basically is: Please, can you comment on the recent deal for a 20 MW PEM electrolyzer with Nel? I understand Nel is a leader in alkaline electrolyzer technology, but not in PEM, and wondered why you choose Nel versus those who lead in the PEM space.
My feeling is just the opposite. I think the electrolyzer we are buying is PEM, I think, correct me, which is the top technology. I think it's probably in the future, we are going to use as well alkaline, because we would like to test both ones. I think Nel, in our opinion, I think what we make already the choice is to use that one, which is the PEM technology, not the alkaline technology.
Once we have finished with the hydrogen, we are passing to the strategy question. The first one comes from Javier Garrido, JP Morgan. You assume zero carbon emission in Europe by 2030. What is your vision for your Spanish CCGTs then?
They're going to be used only as backup very few hours. We are using a few hours, that's why we are already just trying to compensate that one with the plantation of millions of trees, which I think that compensate that one. I think nevertheless, I think for 2030, most of those one, I think our initial combined cycle were built in the beginning of the year 2001, 2002. They will have already almost at end of the life. Our feeling is then they're going to be used just few hours, and for these few hours, I think they will be already working few hours if they are already being paid with certain capacity payments, because if not, they cannot be already in operation.
The way how they've been operating initially as almost base load, and the way they are operating now, which are still working a certain number of operating hours, will be just already just used for peaks, for a peaker in most cases. For that one, I think those have to be already pay, in one manner or other one, to keep those one open. If not, they will be already been closed by this time, which I think, by the way, most of them, they will already complete their operational life for this period.
Next question comes from Martin Young, Investec. Do you see a need for new nuclear in the global energy transition? Do the levelized cost of energy reductions you set out for renewables mean that nuclear is expensive and yesterday's technology?
I've been in already in quite a number of forums. I think we have the discussion the other day with MIT, and precisely on this particular point. My point is that my answer is very clear, is no, and no for two reasons. First, because the cost of renewables is declining very heavily, and they will continue in a certain manner. The nuclear, I think because of the security reasons, that is not so easy to decline. In any case, there are two things. One, nuclear require fuel. Requires some materials, some uranium for that one, which is a costly material. Second, there's not still a clear solution what to do with nuclear waste. I think both things has already caused a variable cost toward the renewable, who have no variable cost. I think CapEX is higher than renewables.
One has already a variable cost, another one has no variable cost. The OPEX as well in nuclear is much higher than the OPEX in renewables. I'm not seeing what is the competitive advantage of nuclear to another one.
Next question, we have two from Alberto Gandolfi, Goldman Sachs. First is, would you consider equity to fund the PNM acquisition or more in general to keep balance sheet flexibility?
I think Pepe has already presented very clear way how we going to finance. I've not seen in the Pepe presentation any needs for further increase in equity. I think he was telling that with the cash flow generated plus with the hybrid, plus with the debt, plus with the divestment, I think it's enough for funding and financing this plan. I think we are not already seeing the need of making any injection of equity on that one. I think, Pepe, you were very clear on this, so I think I cannot add more than the financial director was already explaining very clearly.
Question from Alberto: What do you think is a sustainable net debt to EBITDA for the business over the medium term?
Pepe?
The EBITDA ratio.
Well, I think that this is a reasonable number for a BBB+ rating, Baa1. I think that this is sustainable. I suppose rating agencies also think that this is a sustainable number.
This is more or less where we think we have the sweet spot in terms of financial leverage. We are comfortable here.
We have finished with the first block of 36, if I'm not wrong, question. We have another one of 18, due to that, we are spending 2 hours and 20 minutes up to now. If you don't mind, I'm going to choose just question for those analysts and investors that has not already make questions. I will drive you speakers from Iberdrola, I will drive you through the papers, which question in which block. The first one comes from Rob Pulleyn, Morgan Stanley, and Meike Becker, Bernstein. May we ask the hurdle rate you require for renewables investment, either in IRR range or value creation over WACC?
I think Pepe was already mentioning that the new investment, we are foresee a group average return of capital employed on the range of 6% and return equity in the range of 11%. I think that makes roughly, and the numbers of Pepe, correct me, roughly WACC plus 200 basis points. I think those are the numbers that we are really contemplating. It's correct? Yep.
I'm going to introduce a question from Andrew Moulder, Credit Suisse, that I think could be quite interesting to explain that. He's asking about if you think, number 4 question in renewables, if you think hydro and pump storage is so valuable, why did you sell your pump storage in the U.K.? Has your view changed since 2018? Could you sell further pump storage as a part of your asset rotation?
Well, I think what we did in Britain was a great thing. I think we prepared already as a nice package to make it attractive. I think it's to sell already a power plant, which are in a loss and has no future. For the amount of money we have already sold, looks impossible. I think we have to put some nice cake beside. I think we put the cake together with the rest, and I think we sold all together, and we make already a very good deal. I think saying that, I think our ambition is that, I insist on that one, if anybody else, we are making a huge pumping storage, a new pumping storage system in Portugal in the Támega River.
We are in this moment making a couple more existing reversible power plant in Spain, in the Tajo River, close to the Douro River. Valparaíso. Sí, Valparaíso. In the Douro River. I think we would like to keep those one, but I think if somebody is ready to pay a huge amount of money for this one, always we are open to listen, and I think as you are, Pedro, you will be more than delighted to already negotiate with them. I insist on that one. We are not built for sale. We are building for us. I think we believe that the storage, if we saw that in long time, I think we have already reconverted many of our existing hydroelectric power plant in reversible for many years.
I think we are the largest pumped hydro in Spain and probably one of the largest in Europe because we transform our hydroelectric and reversible, we continue feeling that that's a value. Why? Because the cost of pumped hydro is much cheaper than any other alternatives for storing energy. As much renewable is built, as much need of storage is needed. I think when you compare the cost of an existing dam making reversible or a new dam already for storage compared with a battery for long period batteries, I think it's less than half. I think that has a competitive advantage. I not compare with other ways of storing, like hydrogen. Storing energy with hydrogen is nice, I think it's too expensive. I think that's why we feel has a value.
If somebody see that this is already valuable for us and is ready to pay more than we consider that is going to generate to us across the life, always we are open. Pedro is delighted to talk with whatever people is already making nice proposals.
Next question is number seven in the liberalized block from Meike Becker, Bernstein. What are your view on carbon prices in Europe by 2023, 2024?
My feeling, and I said that when it was at five, and it's going to reach 20, everybody was already laughing at me saying that I'm already absolutely wrong. When it was at 20, I was saying that it's going to reach 30. Everybody was saying to me that I'm crazy, that it will reach 30. I would like to continue being crazy again. Probably it's going to overpass 30. I don't like to say the number, but probably it's going to be above 30.
Next question, number eight in networks from Sam Arie, UBS. Can you comment on the U.K. markets as you currently see it? I think you have suggested in the past that you were not interested in the PPL assets that are currently in a sale process. Can you speak a bit more about why and what you expect from Ofgem's final price control in December?
I think, Keith, I see you in a shadow. I think you are there. Can you already make comment about that one? You already talk with Ofgem. I think you have better information than myself because now I cannot go there because of the travel restriction. I think you can still, you are able to move inside of the country for the time being, eh?
Yeah, absolutely. Sorry, Chairman, the sun has decided to shine in Glasgow as always. I'm a little bit in the shadow, but yeah.
Scotland is becoming a sunny country now.
We're obviously in the middle of a process of renegotiating the price settlement with Ofgem for T2. We've seen the CMA's intervention with regards price settlement for water in terms of cost of equity. We think that gives us a very strong case for arguing a better rate of return than was originally suggested by Ofgem in the market. There's still a lot of negotiation, a lot of discussions to have going forward. We see a great opportunity for investment in the network in the U.K. We have a prime minister and a government who are talking about having every house powered by offshore wind by 2030, by hitting their commitment and accelerating their commitment for net zero carbon by 2050.
To deliver all of that will require a massive investment in the transmission system and the distribution system, which opens up a huge prospect for us for a lot of investment, driving connections for offshore wind, onshore wind, driving the investment needed for the future of the electrification of transport, and starting to create the electric network to decarbonize the heat system. Lots of opportunity, we think, in the future for investment. Right now we'll push to get a sensible, realistic settlement from Ofgem for the final determination by the end of the year.
Next question is number 12 in the block of finance in this page. It's coming from Antonella Bianchessi, Citi. You mentioned that the transition CapEX in the world will keep growing over time. Do you think that Iberdrola balance sheet in 2025 is fit to take the challenge? If power price were to decline or customer base margin comes under pressure, which could be the favorite option to restore the financial ratios? Cutting dividend, rights issue, disposal?
I would like to be a bit more optimistic. I think we have already demonstrated, we have already, during these 20 years, I think we have already passed through three crises. I think, yes. Three crises. One, we were already, yes, in the 2006, 2007, we were forced to stop our investment and to divest something. Afterwards, we have already the crisis of 2012, 2013. Now we have another crisis. I think in all crisis, we have already take different solutions. The solution in some cases was already divesting something, in other cases, to diminish the investment, in other cases, to look for some expansion in some countries we can compensate those ones. We have already demonstrated, we are already some team, which we are more prepared for already delivering what we committed, even in the middle of whatever situation.
I think we are in the middle of a crisis. José already announcing that far from diminishing our goals and target for 2022, we are already increasing our target for 2022. I think we are ready. When we present the plan in 2019, we are saying for 2022 to have already a range between EUR 3.7 and EUR 3.9 net profit. We were announcing today between EUR 4 and EUR 4.2. We were already announcing a flow of €4 by 2022, and we are paying that one since 2019. I think we will analyze the situation, what could happen, and we take the necessary decision in all means. I think we have already used all kind of ways for making already fulfilling the commitment we are taking with the market. We are no newcomers on that one.
We are 20 years behind ourselves. We systematically are delivering what we promise. That is going to be the way. If anything already changed and happened, we will adapt the necessary measures in all means we have in hand for making already, then we deliver what we are already, committing.
Next question comes from number 16, 1, 6, Elchin Mammadov from Bloomberg. Can you please talk about your M&A strategy? Are privatization in Brazil of interest to Iberdrola? How about PPL's U.K. grid? Are you considering acquiring more smaller developers with a large pipeline in Europe or outside of it?
Well, I think the plan is not contemplated any M&A transaction. I think the first thing. I think one of the reason I asked Pedro to accelerate the negotiation with PNM is precisely because I was sure then this question is going to happen. Because this question, I think now is replied. We have already done M&A, is already done with PNM, and in the plan is no one contemplated in this moment.
Next question, number 17, from Rob Pulleyn, Morgan Stanley. What risk we see windfall taxes of hydro and nuclear earnings if hydro cover prices push power upwards in near to medium term?
I think we are already in a sector in which I think anything can happen. I don't know what is the more taxes or hydro and nuclear when we are in a loss in nuclear. I think it's.
No.
No, I think it's fine. I think it's we give the key. For you, the key. That's it. In hydro, I think they are taking almost 50% of the total revenue. Which I think is more than that one. I think that was already, in my opinion, and I would like to say, I said several times, it was a mistake made by the previous government with taxing precisely those things which were the cleanest. I think trying to promote coal when everybody was moving in the opposite direction.
That was a mistake of the previous government, which fortunately, this government has already corrected and is trying to go in the right direction, trying to promote the future with clean energies, with incentivizing that one and maintaining already as much as is possible, the legal security to avoid what has already happened, hundreds of already legal actions and arbitrage for all the investors worldwide. My opinion and my feeling, and that is going not to happen again, and that is already trying to define already very clear and defined and sustainable framework for that one.
Next question is number 18 from Sam Arie, UBS, and sorry for that, but this has a slightly long introduction and sorry for my English. Your outlook suggests something in the order of 15 terawatts of renewables globally by 2050. In one way, that's a very big number, and it shows that very good growth potential for your renewable business. In another way, that number is so way too low for a net zero scenario, especially for a scenario including hydrogen. Your slides imply that the world will miss net zero by a wide margin, and this in turn implies that warming will rise to more than 1.5 degrees, perhaps more than two or 2.5 degrees. My question is, what could a two or 2.5 degrees warming mean for your business?
Have you studied this already internally, and how much can you say today about how your business could be affected?
My God, I think this question, I need already to sit down with Agustín Delgado and the group of expert in climatic change and all those one to make all this analysis. I think my commitment is very simple. I don't know what is going to happen in the world. I think there are too many people talking, there are many people saying nice words, and there are not very many people already making things already happen. We are taking commitment very clear. First, we are the company in Europe with our emission is one-third of the emission of our peers. One-third. Two-third, they are already two-third more than ourselves. Second, we are taking a commitment in Europe to make zero emission by 2030. I think that is our contribution.
If everybody follows our track, which I'm very glad in this moment that many of our strategy for 20 years is being copied by our colleagues, fellows, and competitors. I'm very glad that that is happening. I think if everybody made that one, if all the European industry take the commitment to make zero emission by 2030, I'm sure that that is going to help to the diminishing the increase of temperature in the planet. If everybody continues saying nice words about 2050, but nobody doing nothing in 2020, in that case, the target will be not achieved. I think it's time, I used to say in my intervention in United Nations this year and previous year, the time of word is over. It's time of fast. We need already people will do things, not to say nice words.
Now it's time for doing things, doing things means what is today's not %, grams of CO2 emitted, not we are going to reduce 50% of what? 1,000. That means 500. If we continue polluting with 500 per kWh, in that case, all the world will be absolutely destroyed. I think now it's time that everybody measure in same numbers, not % of reduction. What is your number? What is your contribution in terms, not in %, in numbers. Zero for 50/50, everybody has agreed with 50/50, what about 2021? What about 2022? What about 2025? What about 2030? Numbers, not %. Numbers. If everybody moves in this direction, in that case, your question will not already There were very easy answer.
If everybody continues using that words, percentage, depending on the year, I take a year of the 1995, 1997, 2000, whatever, it's 70%, 50%, 80%, whatever of a number, that doesn't work. Numbers. Grams per kilowatt hour. In all sectors, in all industries, in all energy producers. If not, we will be in trouble.
Jorge Alonso, Societe Generale, number 15, one five. Which are your main concern regarding the plan, economically and politically? Main risks or concern.
I think we were already trying to explain, Paco, Pepe, and myself, what is our ambition. That is what we were already planning to do. I think Paco was very clear saying what is our competitive advantage, what were already our capabilities, what is our track record, and how we've been delivering those things, how realistic is what we are already foreseen. Pepe was explaining what is our financial resources, which are our financial capabilities, how we are raising money, what is the cost of this money. I think we present a plan which is realistic. What is the risk? I think it's all the risk which we are already in all those things. What can already happen politically, we can affect to our effects. What can really happen in terms of technological changes, we can already happen on that one.
There are already things which are already given opportunities. I think how fast we can go in the electrification, what can be the measures which can be taken. I heard this morning that the mayor of Madrid is announcing by 2025, all the buses will be electric. By 2027, all the boilers with fossil fuel will have to be closed. That is good news, and perhaps that is going to accelerate that one. What is going to happen with our initiative of the hydrogen with fertilizers? I am sure that is going to mobilize the fertilizers industry in Europe as well, to make something light. All those things are negative things, but positive effect, we can already accelerate this plan. Altogether, I think we feel more than comfortable to achieve what we are already presenting today. There are risks, but there are opportunities.
I think the world is moving so fast, the direction has been of our ambition for 20 years, that we are much more comfortable than I was in 2021, when we presented our plan to double the size of the company. I think you see we multiply by six times. I'm more comfortable now than I was in 2021 when we announced those things.
Last question, after two hours and 40 minutes, and it's in Spanish. Sorry, I don't know who is the writer. Basically, macroeconomic data that we're getting shows that the health emergency also leads to a major economic crisis in your countries. What is your solution to this crisis to come out of this crisis?
Well, unfortunately, we are facing an unprecedented crisis in the world, and we've gone through other crisis, but this is a completely different story. My experience, as I said before, after having seen lots of crises during my professional life and as different economic cycles, is that you can always overcome a crisis by investing more, and by creating more jobs, and by being more efficient. Also by investing more in R&D, in new technologies, and by increasing the training for the staff so that they can adapt to the new times. In short, by doing whatever is required so that we can leave a much better world to future generations. We're going to leave an unprecedented debt, and we have the moral obligation of leaving them with a much better world.
Having said that, we must also think that in crisis, there are people and situations, and I've had some very harsh situations, for instance, in the Basque Country, when they reconverted the industrial sector and the shipbuilding sector. There are sectors that have to be helped so that nobody is thrown out of the system, and measures had to be taken for that. We need more investments, more jobs and more investments in R&D, more efficiency and more productivity, too. All of this is what we intend to do through our plan, because our plan is the most ambitious plan that this company has had in its 120 years of existence. It's possibly the biggest investment plan that a Spanish company has ever made in such a short period of time.
We're doing so because we are thinking about the EUR 75 billion, and we do not only want to contribute towards the sustainability of the planet, but we also want to leave behind this crisis we are being hit by. With these investments, we can help our 18,000 or 20,000 suppliers to maintain their workforces, and it's nearly 400,000 or 500,000 people working for us all over the world. We also want to hire another 10,000 or 20,000 people over the next few years. This is our contribution, and this is why we want to do things, because you can emerge from a crisis by investing, by working hard, by creating jobs, and by assisting those people that in a difficult situation, so that they can receive enough support from the rest of society to overcome the situation.
At Iberdrola, we are making our balance sheet available to the societies where we are operating so that we can help overcome this crisis through our investments and through the jobs that our investments are going to create in our environment. When you're ready, Chairman, you can close the event.
For your attendance of this Capital Market Day, you know always the question has not properly reply or not enough clarify, don't hesitate to call our investor relations team, where they are already always ready to make ready further information that you may require. Take care. Stay safe. Thank you very much, and I hope next session we have the opportunity to meet ourselves personally instead through any screen. Thank you very much to everybody. Thank you