Hello, and welcome to the Allstate Annual and Q4 Reports 2019. Throughout the call, all participants will be in listen only mode and afterwards there will be a question and answer session. Today, I am pleased to present Henrik Paulson, CEO and Marianne Windholt, CFO. Please begin your meeting.
Thank you and good afternoon everyone and welcome to this earnings call. 2019 was a strong year for Orsted with continued strategic progress, global expansion and strong financials. Our group EBITDA, excluding partnerships, came in at DKK17.5 billion, an increase of 17% on 2018. Earnings from offshore and onshore wind farms in operation increased by 30% to DKK14.8 billion, driven by ramp up of new offshore and onshore wind farms. 2019 was also positively impacted by higher earnings from our trading activities and the reversal of a provision related to the Elsom competition case.
These positive developments were partly offset by the increase in provisions related to our LNG activities, higher project development costs and a temporarily negative effect from our gas at storage. Our return on capital employed for 2019 was 10.6%, so well in line with our target of an average group rose of 10% in the period 2019 through 2025. On the back of our strong financials, we will propose a dividend of DKK10.5 per share to the Annual General Meeting corresponding to an increase in dividends of 7.7%. We still intend to increase the annual dividend by a high single digit percentage compared to the previous year's dividend up until 2025. In 2019, the AUSTED share yielded a total shareholder return of 61%.
Let me briefly take you through some of the key accomplishments in 2019. In our Offshore division, we successfully commissioned the world's largest offshore wind farm, Hornsea 1, and we took final investment decision on our 1st large scale Taiwanese project, Greater Changwa 1 and 2A. In addition, we won 2 major U. S. Auctions in New Jersey and New York during the summer, marking a breakthrough for our U.
S. Offshore wind business. In Japan and Poland, we progressed our market entry strategies and potential partnerships with leading local energy companies. In onshore, we commissioned the Locket Onshore Wind Farm, and we further strengthened our construction pipeline by taking final investment decision on 3 onshore wind farms and our first combined solar and storage project. In addition to these investments, we further strengthened our onshore business through the acquisition of Coronal Energy's development unit.
In markets and bioenergy, we reached 100% green heat and power generation at the newly bio converted Asners power station. We also signed the agreement to divest our Danish power distribution, residential customer and city light businesses to the Danish utility CSNVE, and we finally also entered into an agreement to divest our liquefied natural gas activities. So reflecting on 2019, we're very pleased with our strategic progress and results against the backdrop of unprecedented global public support for the green transformation. Maintains a leading position in the high growth market for green energy. We remain as committed as ever before to our vision of the world running entirely on green energy.
Turning to Slide 4 and a follow-up on our guidance. With the 2019 EBITDA of DKK17.5 billion, we exceeded our expectations at the beginning of the year as well as our most recent guidance of DKK 16,000,000,000 to DKK 17,000,000,000 Despite a net negative impact of DKK800 1,000,000 related to the divestment of our LNG activities, we outperformed our latest guidance. The outperformance can be attributed to better than expected performance from strong offshore generation in December, our trading activities, a less negative effect from our gas at storage than expected as well as lower realized costs across the company. Turning to Slide 5 and a look at our investments. In 2019, we saw a significant increase in the investments into our construction projects, which will support the continued growth of the company.
The total gross investments of the group amounted to DKK 23 point 3 billion, which was slightly above our guidance range. Compared to 2018, we increased our construction investments by $8,400,000,000 highlighting the significant build out in offshore and onshore. We continue to target investments of an estimated DKK 200,000,000,000 in the period from 2019 to 2025, with more than 95% earmarked for growth in offshore and onshore renewables. Going forward, our investments will be fully funded by Green Capital, Moving on to Slide 6 and an update on our key strategic and operational progress in quarter 4. Continued its strong progress in the last quarter of 2019 where EBITDA amounted to DKK4.6 billion, an increase of DKK500 million when adjusting for the Hornsea 1 farm down in Q4 2018.
The increase was primarily driven by higher generation from wind farms and a positive effect from accounting value of our gas at storage as previously mentioned, all of this due to increasing gas prices in the Q4. EBITDA from offshore and onshore wind farms in operation increased by 16% to $4,900,000,000 in Q4 2019. The continued build out of our renewable capacity brings our green share of heat and power generation to a record high 90% for the Q4 compared to 83% in Q4 2018. 2019 has been very eventful on a strategic level and the last quarter of the year was no exception. Let me just highlight a few of the most important events.
Late December, we commissioned the world's largest offshore wind farm, Hornsea 1. The wind farm is the first ever offshore wind farm to reach a capacity of more than 1 gigawatt and is the only wind farm in the world capable of powering well over 1,000,000 homes. We are extremely proud of this record breaking project and the more than 8,000 people who have worked offshore at the Hornsea 1 site. In December, we also signed a 100 Megawatt corporate PPA with Covestro. Covestro will, for a 10 year period, offtake green power produce from our planned 900 Megawatt Borkum Refriger Wind Farm, which is expected to be fully commissioned in 2025, subject to final investment decision.
In December, we signed a nonbinding term sheet on a transaction with the leading Polish energy company, PGE. We are now negotiating the long form documents for the purchase of a 50% stake in 2 offshore wind projects with a total capacity of up to 2.5 gigawatt. Over the past year, Lincoln Clean Energy has been systematically integrated to ensure an effective operating model, capitalizing on the capabilities from both companies. To mark the full integration of LCE into we decided to rebrand Lincoln Clean Energy to Onshore at the end of 2019. The founder of LCE, Declan Flanagan, will head Onshore and has been appointed Executive Vice President and a member of executive committee.
In November, we took final investment decision on Permian Energy Center, a combined solar PV and storage project. The Texan project will comprise 420 Megawatt of Solar PV and 40 Megawatt of battery storage. When Permian Energy Center comes online in mid-twenty 21, will have a U. S. Portfolio of operating assets that spans the full spectrum of offshore and onshore renewable energy technologies.
This will allow us to offer our competitors a competitive and diversified portfolio of clean energy solutions. From mid December, all heat and power from Asten's power station has been generated from the new unit, which runs on sustainable biomass. The bio conversion of Astner's power station marks an important step towards our complete phase out of coal, as the conversion is our 6th and final one. We have decided to close down our last remaining coal fired power plant in Esbjerg by the end of Q1 2023 as we have been unable to find a joint solution with the heat customers for a bio conversion project. All our biomass based on wood waste will from 2020 be certified compared to 96% certified in 2019.
In December, we signed an agreement to divest our LNG business to Glencore as a step to reduce our long term engagement within the gas supply chain and because further financial improvements would require additional long term commitments. We expect the transaction to close in the summer of 2020. In November, we secured a DKK 12,000,000,000 new Taiwan dollar or DKK 2,700,000,000 through the issuance of green senior bonds at attractive rates to finance the Changwa 1 and 2A project. The NTD bonds also help derisk our projects from a currency perspective. This transaction marks the first ever a green NTD bond issued by a foreign corporate in Taiwan and underlines our strong long term commitment to the development of offshore wind in Taiwan.
In November, we also issued subordinated green hybrid capital securities of €600,000,000 with a fixed coupon until December 2027 at 1.75%. Simultaneously, we redeemed 524 €1,000,000 of the existing €600,000,000 3 percent hybrid capital securities issued back in 2015. Let's turn to Slide 7. The world is facing a climate emergency and scientists have demonstrated the need to limit global warming to 1.5 degree to confine the most severe negative effects from climate change. Going above that threshold will likely trigger serious irreversible consequences for global ecosystems.
To stay within 1.5 degree global warming, the world needs to half the global carbon emissions by 2,030 and reduce emissions to net 0 by 2,050. Our target has been to reduce emissions by 98% by 2025, but we now target to reach net zero emissions in our own operations by 2025 and to be carbon neutral in our entire total carbon footprint by 2,040. Will likely be the 1st major energy company to reach carbon neutrality within the so called Scope 1 and 2 emissions covering our own operations. Our key activities to reach carbon neutrality by 2025 include a 20 gigawatt buildout of onshore and offshore renewable capacity, phasing out of coal completely in 2023, driving out fossil fuels from our operations, including our commitment to 100% electric vehicles by 2025. Furthermore, we have launched a program to engage with our suppliers to decarbonize procurement of components and vessel services related to our offshore wind business.
And if needed, we will offset any minor residual emissions through certified carbon removal projects. Our ability to significantly grow our business while substantially reducing our carbon emissions has been acknowledged globally. And last week in Davos, we were the 1st energy company ever to top Corporate Knights Index of the Global 100 Most Sustainable Corporations in the world. We are proud of this recognition and it encourages us to sustain our efforts to deploy green energy at scale and contribute to the profound transformation of the energy system required to keep the planet livable for future generations. Turning to Slide 8, where I'll give an update on the key offshore construction projects.
As already mentioned, we commissioned Hornsea 1 in late December on time and below budget. The 12 18 Megawatt Offshore Wind Farm is our 26th offshore wind farm in operation, bringing our installed offshore wind capacity to 6.8 gigawatt. At our Dutch Borselli 1 and 2 wind farm, we have started the offshore construction work according to plan and have now installed 13 monopiles out of 90 4. Starting in April, the Siemens Gamesa 8 Megawatt wind turbines will commence installation. We now expect the 7 52 Megawatt Offshore Wind Farm to be completed by the end of Q4 2020, and by then it will be the largest offshore wind farm in the Netherlands being able to supply renewable power to around 1,000,000 households.
Our remaining offshore wind farms under construction, Hornsea 2, Greater Changwa 1 and 2A and the Virginia EPC demo project all remain well on track. Turning to Slide 9 and the onshore and bioenergy and power distribution construction projects. In our onshore business, we continue to see good progress on our projects and both Sage Draw, Willow Creek, Plum Creek and Permian Energy Center are well on track to be completed during 2020 2021. In bioenergy, the bio conversion of the Asness power station, as I mentioned, has been completed and the plant is now running on certified sustainable wood chips, supplying consumers with green heat and power. Due to recent upgrades to our Renaissance facility in the U.
K, we were not able to commission the plant in 2019 as we had hoped for. That said, it has been confirmed that the core enzymatic sorting process works as expected. So the main challenge remains the mechanical sorting process. While we remain optimistic about getting the plant fully up and running this year, we have taken an impairment charge on the asset reflecting a prudent view on the project. Moving on to Slides 10, 11 and 12 and a look at the latest market development across the different offshore wind regions.
In 2020, we are looking into 3 auctions at the U. S. East Coast. In the first half of the year, we expect Maryland to host their second auction with a capacity of a minimum of 400 megawatt. In the second half of the year, both New Jersey and New York are expectedly having their second auctions with capacities of 1200 Megawatt in New Jersey and at least 1,000 Megawatt in New York.
Back in June, Governor Ned Lamond in Connecticut signed legislation approving procurement of additional 2 gigawatt of offshore capacity. With the recent award of 800 Megawatt, Connecticut has a further 1200 Megawatt that still remain available for future solicitations. In November, New Jersey Governor Phil Murphy signed an executive order targeting 7.5 gigawatt of offshore wind by 2,035 and thereby more than doubling the state's previous 2,030 target of 3.5 gigawatt. Just a few days ago, Governor Murphy released an energy master plan for how to reach 100% clean energy in New Jersey by 2,050 with offshore wind being a central part of the plan. Earlier this year, Rhode Island Governor Gina Raimondo signed an executive order making Rhode Island the 1st U.
S. State to be 100% powered by renewable energy by the end of this decade. Offshore wind is set to play a key role in this decarbonization of Rhode Island's energy system. We applaud the ambitious targets set by a number of governors on the U. S.
East Coast. We need this type of bold commitment and leadership to stymie the threat of climate change. As part of our commitment to build an offshore wind industry supply chain in the U. S, we recently announced the opening of our innovation hub in Providence, Rhode Island. The purpose of the hub will be to identify, foster and where appropriate, finance enterprises related to offshore wind with a focus on next generation technology and innovation.
As a key part of this process, the Innovation Hub will leverage Rhode Island's existing innovation ecosystem. On December 20 last year, President Trump signed into law an extension of the federal tax credits. The law extends the investment tax credit by 1 calendar year and increases the value year over year from 12% to 18% for qualifying investments made in 2020. Similarly, the production tax credit was extended by 1 year with an increase in value from 40% to 60%. We have started exploring those options, but we will need a bit more time to determine the potential value of the tax credit extension.
As is evident, offshore wind has experienced rapidly growing support in the U. S. With 7 states on the U. S. East Coast now committing to installing a total of more than 25 gigawatt offshore wind capacity by 2,035.
The Bureau of Ocean Energy Management is currently conducting an analysis of the cumulative impacts from the build out of U. S. Offshore wind projects, And the data from this study will subsequently be included in the permitting template for offshore wind projects in the U. S. We fully support taking a thorough and holistic approach to how offshore wind impacts other stakeholders, including fishing communities and local residents.
We have already addressed stakeholder feedback and concerns in our construction and operation plan applications, amongst other by proposing a 1 by 1 nautical mile grid to accommodate shipping, coast guard and fishing interests. That said, the analysis was announced after we were awarded our projects and was therefore unknown when we calculated our project timelines. And it's clear that there has been some delay in the offshore wind permitting since the announcement of the cumulative analysis as part of the Vineyard wind permitting process. We'll not have a complete picture of the impact until BOEM concludes their analysis. We cannot rule out that delays might occur, but we'll have to await that BOEM outlines a roadmap for when projects can expect to receive construction and operations plan approvals.
We will, of course, explore all options to offset any potential delays by exercising the flexibility we have in our PPAs and in our OREG agreements to accommodate for changes in time lines. We remain very excited about our U. S. Project portfolio and the growth potential in U. S.
Offshore wind and look forward to providing a full update on our U. S. Build out at our Capital Markets Day in June. Turning to Slide 11 and the recent market developments in the U. K.
And Continental Europe. In December, the U. K. Government confirmed a target of 40 gigawatt offshore wind by 2,030. The new target is an amendment of the previous target of 30 gigawatt by 2,030 in an effort to reach net 0 emissions by 2,050.
The application for our Hornsea 3 project is currently being determined with a consent decision expected during Q2 this year. The Crown Estate launched the 4th leasing round, opening up the potential for at least 7 gigawatt of new seabed rights for offshore wind developments in England, Wales and Northern Ireland. The tender process commenced in October last year and will run until autumn this year. The new seabed rights could be awarded as early as 2021 with developers then progressing to seek planning consent for their own projects through the statutory planning process. Moving to the Netherlands, where the bid deadline for the upcoming tender of up to 760 Megawatt for Holland Coast North has been postponed by 2 weeks to April 30 this year.
Finally, Poland's Ministry of State Assets has published a draft legislation to promote offshore wind power aiming to award 9.6 gigawatts of capacity in the Baltic Sea by 2027 based on 25 year CFDs. Poland plans to award contracts for the first 4.6 gigawatt from predeveloped projects by the end of 2022 under a CFD system with a fixed price set by the government. The remainder of the capacity is planned to be tendered in at least 2 competitive CFD auctions by 2027. We're very excited about the long term build out of offshore wind in Poland and its potential to support local decarbonization and economic activity. Turning to Slide 12 and Asia Pacific.
During the inauguration of the 2nd phase of our partly owned 128 Megawatt Formosa-one offshore wind farm in Taiwan, President Tsai revealed Taiwan's ambition to add an additional 10 gigawatt of offshore wind capacity between 2026 and 2,035. The framework for Taiwan's 3rd auction round is expected to be announced during Q2 this year. The capacity and exact timing for the auction is still unknown. In Japan, we continue to progress our partnership discussions with TEPCO. The preliminary selection for the 2nd round of promotional zones has commenced.
In the first round, 11 areas with a capacity of approximately 7 gigawatt were designated as potentially suitable for development of offshore wind. 4 of these 11 areas, including the Choshi area, have been selected as prospective areas and will work towards qualification during Q1 this year. The Japanese Ministry of Economy, Trade and Industry is targeting a first auction to take place in the second half of this year. Turning to Slide 13. This slide provides an overview of the many expected offshore wind auctions and tenders in 2020 2021, highlighting the accelerating global demand for offshore wind.
We have during 2019 seen many governments raise their build out targets, and we will during the 2020s see a significant increase in annual awarded capacity. After more than 10 gigawatt being awarded for the first time ever in 2019, we will likely see a step down in 2020 before 2021 potentially and expectedly reaching a new all time high in terms of total global awards. And as we progress further into the 2020s, we would expect to continue towards being in a range of 10 to 15 gigawatt and later on as we move into the back half of the 20s, we would expect the market to continue and move beyond 15 gigawatt in annual global awards. This concludes the offshore market development. Let's turn to Slide 14 and the progress of our U.
S. Onshore business. We have made significant progress over the past year, building our position as a multistate developer with a strong portfolio of projects in operation, under construction and under development. In November, we took final investment decision on Permian Energy Center, our 1st large scale solar wind farm, which will be a combined solar PV and storage project. With the FID, our total installed and decided onshore capacity now stands at 2.1 gigawatt.
Our strategic ambition is to build a leadership position in the North American onshore renewables market. Since entering the U. S. Onshore market, we have doubled our operating portfolio and it will more than double again by 2021. We continue to see solid risk return investment opportunities in the market.
This encouraging development allows us to set a target of 5 gigawatts of installed onshore capacity by 2025. While our portfolio will remain largely onshore wind dominated, we will also look to grow our solar PV capacity, enabling us to broaden our growth platform and capture the benefits of diversification and integrated customer offerings. And with this, I will now hand over the word to Marianne.
Thank you, Henrik, and good afternoon from me too. Let's start on Slide 15, where I will go through the group's financials for Q4 'nineteen. In Q4 'nineteen, we realized an EBITDA of DKK4.6 billion adjusted for the earnings from new partnerships in Q4 'eighteen of €15,100,000,000 EBITDA was €500,000,000 or 11% higher than Q4 'eighteen. In offshore, we realized higher earnings from our operating wind farms, which increased by 13% due to the ramp up of generation from Hornsea 1 and Borkum Rifgren 2. Earnings from existing partnerships were lower.
Earnings in onshore was €100,000,000 above Q4 'eighteen, driven by higher generation from new wind farms in operation. And EBITDA from LNG was €600,000,000 lower than Q4 'eighteen and included the negative impact of $800,000,000 related to the divestment of these activities. The remaining markets and bioenergy was SEK800,000,000 above Q4 'eighteen. The increase was driven by a positive effect from the accounting value of our gas at storages due to increasing gas prices in Q4 'nineteen compared to decreasing gas prices in Q4 'eighteen. The implementation of IFRS 16 contributed with EUR171,000,000 in Q4 'nineteen, with roughly half of it in offshore.
Net profit totaled NOK 900,000,000, a NOK14.3 billion decrease compared to Q4 'eighteen. Adjusted for the Hornsea 1 farm down gain, net profit was €400,000,000 lower due to impairment losses of €600,000,000 related to our Renaissance plant in the U. K. And our 20 megawatt battery storage at Carnegie Road in the U. K.
Free cash flow from continuing operations was negative SEK 3,600,000,000. In Q4 2019, cash flow from operating activities came in at SEK4.8 billion, mainly driven by EBITDA, which was partly offset by funds tied up in working capital, mainly from higher receivables at year end. Our gross investments for the quarter totaled SEK8,800,000,000 primarily related to construction of our offshore wind farms Hornsea 2, Greater Chambois 1 and 2A and Borsello 1 and 2 as well as onshore projects Sage Draw, Plum Creek and Permian Energy Center. Divestment cash flow totaled NOK 400,000,000. If we then turn to Slide 16 and our net interest bearing debt and financial ratios.
Our net debt at the end of Q4 'nineteen amounted to SEK 17,200,000,000. The SEK 5,100,000,000 increase in the quarter primarily related to the negative cash flow, as I just described, as well as a negative SEK1.1 billion impact from exchange rate adjustments, mainly related to the strengthened sterling rate. Our key credit metric FFO to adjusted net debt stood at 31%, in line with our target level. Our return on capital employed came in at 10.6 percent, and the decrease compared to 'eighteen was mainly due to the farm down gain from Hornsea 1. The return level was around our target of an average return on capital employed of approximately 10% for the group in the period 'nineteen to 'twenty five.
Then let's move to Slide 17 and the results of the business units. In June, we decided to consolidate the business units, Customer Solutions and Bioenergy into a new business unit named markets and bioenergy. As we run the business based on an end to end value chain thinking, we also decided that all activities and earnings that relate to offshore and onshore will be reported in these segments, even if the daily activities are performed on behalf of the group in markets and bioenergy. Therefore, earnings from trading related to hedging of our power exposures and power portfolio optimization activities in relation to offshore and onshore are now presented in these business units. For the full year 'nineteen, EBITDA of $725,000,000 were transferred to offshore and an EBITDA of minus 18,000,000 was transferred to onshore.
In 2018, NOK 237,000,000 was transferred to offshore. In offshore, power generation amounted to 3.9 terawatt hours, an increase of 20% compared to Q4 'eighteen, primarily due to ramp up of generation from Hornsea 1 and Borkum Rifcon 2, which together added 0.6 terawatt hours in the quarter. Wind speeds for Q4 amounted to an average of 10 meter per second, slightly below Q4 'eighteen and the normal wind speed for the quarter. For the full year 'nineteen, the wind speeds were 9.2 meter per second, which were in line with the normal wind speeds for our current portfolio. Availability for the quarter amounted to 93%, which was in line with Q4 last year.
The full year availability, which also came in at 93%, was negatively impacted by the unusually high level of EBITDA for the quarter amounted to SEK 4,000,000,000, which was SEK 14,800,000,000 lower than Q4 'eighteen, including new partnerships and SEK0.3 billion higher when excluded. Earnings from sites O and M and PPA increased 13% due to ramp up again Hornsea 1 and Borkum Rivkorn 2, while good performance from trading activities related to hedging of our U. K. Energy exposures also contributed to the higher earnings. The reason for the higher growth in power generation compared to site EBITDA is that currently only a third of the Hornsea 1 production is covered by the CFD, while the rest of the production is sold at market prices.
As previously communicated, the remaining 2 thirds will be covered by CFD as per 31st March, 2020 and 31st March, 2021 respectively. Finally, the project development costs amounted to 600,000,000, in line with Q4 'eighteen and mainly related to our development activities in the U. S. Cash flow came in at negative SEK1.7 billion in Q4 'nineteen. EBITDA was partly offset by funds tied up in work in progress due to the construction of the transmission asset at Hornsea 2, and we invested SEK 5,400,000,000 in the construction of Hornsea 2, Greater Changwa 1 and 2a, Borsella 1 and 2 during Q4 'nineteen.
If we then turn to Slide 18 and onshore. In onshore, power generation amounted to 1 terawatt hours in Q4 'nineteen, an increase of 0.4 terawatt hours on Q4 'eighteen. The increase was driven by the ramp up of generation from Tahoka and Locket and higher availability. The availability was very high at 98%. EBITDA came in at €200,000,000 for the quarter, an increase of €100,000,000 Earnings from sites increased due to the higher generation, while production tax credits added an additional NOK 200,000,000.
This was partly offset by project development costs. Free cash flow amounted to negative NOK 2,800,000,000 in the quarter. The EBITDA was offset by gross investments of 900,000,000 related to Sage Draw, Plum Creek and Permian Energy Center. If we then turn to slide 19, I will present the results in markets and bioenergy. EBITDA came in at NOK500 1,000,000,000 up NOK200 1,000,000 compared to Q4 'eighteen.
Earnings in gas markets and infrastructure increased due to a positive effect from accounting value of our gas and storages due to the increase in gas prices compared to an opposite development in Q4 'eighteen. In addition, good performance from optimization of our gas assets contributed positively to the results. EBITDA from the CHP plants and distribution B2C and City Lights was in line with Q4 'eighteen. The divestment of our LNG activities had a negative impact of €800,000,000 in 2019, as the agreement entails a larger payment than what we had provided for. This was partly offset by good performance related to optimization of LNG deliveries and reversal of negative timing effects from previous periods.
In total, the contribution from LNG was EUR 552,000,000 more negative in Q4 'nineteen than Q4 'eighteen. Free cash flow in Q4 'nineteen amounted to a negative of NOK 700,000,000. Dollars EBITDA was offset by higher receivables and lower payables and investments of 500,000,000, which primarily were related to ESNIS bioconversion and the power distribution network. Turning to Slide 20. During 2019, we have seen better than expected results from our trading activities related to the hedging of our U.
K. Energy exposures. And I would like to do a deep dive into this development. As mentioned earlier, offshore had an extraordinary high positive impact from power trading related to power hedging and optimization of 725,000,000 in 2019. In 2018, power trading contributed with 237,000,000.
Our market trading function actively manages the market risk for our total energy portfolio through commodity trading and other risk management activities. Specifically, market trading hedges group power exposures into the traded markets to increase cash flow stability. As some of our market exposures are not very liquid, market trading has the possibility to make so called proxy hedging, which within strict mandates allow our traders to reduce our market risk by exploiting correlations between our underlying less liquid exposures and more liquid trading instruments. Our U. K.
Power hedging strategies includes a time spread strategy, where part of our longer dated power exposure is hedged by rolling shorter dated hedge instrument as well as spark spread strategy, where we likewise hedge part of our longer dated U. K. Power exposure by selling gas. Exploiting that the UK power prices to a large extent is driven by gas prices. Both of these trading strategies are commonly used to hedge our exposures due to the higher liquidity and lower costs.
Results from our market trading activity has, as I said, been extraordinary high in 'nineteen, and that's primarily because both these hedging strategies for the U. K. Power exposures turned out to be very favorable for us. During 'nineteen, the U. K.
Power forward prices decreased in the front and increased in the far end of the forward curve, resulting in gains on the time spread hedges for U. K. Wind farms. At the same time, the U. K.
Power forward prices also increased relative to the corresponding gas prices, resulting in a gain on our spark spread strategy. It is important to emphasize that 2019 was special because we experienced an unusually long period where the price development in the short and long end of the power curve and the development between the gas and power curves both developed in our favor, resulting in higher than expected profits. Our market trading activities are continuously monitored by our risk management department, where the risk governance setup includes limits for value at risk stress scenarios at net open positions. So this concludes the group's financials for Q4 'nineteen. And then let's turn to Slide 21 and the outlook for 2020.
We expect 2020 EBITDA excluding earnings from new partnership agreements to be between €15,000,000,000 and €16,000,000,000 against €17,500,000,000 in 2019. On this slide, I will highlight the main developments compared to 'nineteen before I go into further details on the business units guidance on the next slide. As in previous years, our guidance only includes existing offshore partnership agreements. We had no new partnership agreements in 2019, but EBITDA from existing partnerships amounted to 3,800,000,000 in 'nineteen. In 2020, the EBITDA from existing partnerships is expected to be very limited.
In 2019, we signed the agreement to divest our Danish power distribution residential customer and City Light businesses, and we expect the transaction to close in the first half of twenty twenty. And our EBITDA guidance includes earnings for the first half of twenty twenty. I19 results furthermore included a positive effect from the provision reversal related to the LSAM competition case, while we incurred a loss in our LNG business of SEK1 1,000,000,000 in 2019 altogether. Our LNG activities will breakeven in 2020. These effects bring the comparable 2019 group EBITDA to approximately 13,700,000,000, meaning our 2020 guidance corresponds to an expected underlying growth between SEK1.3 billion to SEK2.3 billion on 2019 EBITDA or 9% to 17%.
Offshore, we'll expectedly see an increase in earnings from wind farms in operation, driven by the ramp up of generation in 2020 from Hornsea 1 and Borsello 1 and 2. Furthermore, as I mentioned before, an additional 400 megawatt of capacity at Hornsea 1 will receive the CFD price from 31st March. Lastly, we expect lower expense project development costs. In onshore, we expect to see a positive impact compared to 'nineteen from ramp up generation from our wind farms. Finally, the earnings in markets and bioenergy, adjusted for the effects I just described before, are expected to decrease due to the temporary shutdown of the Tura gas field, which will lower earnings from both the gas portfolio and our offshore gas pipelines.
Gross investments for 2020 are expected to amount to 30,000,000,000 to 32,000,000,000. The outlook reflects a high level of activity in offshore with continued investments in Borsello 1 and 2, Hornsea 2, Greater Shanghua I and IIA and our U. S. Activities as well as onshore investments in the construction of Plum Creek, Willow Creek, Sage Draw and Permian Energy Center. If we then turn to page 22, covering a more detailed outlook for our business units.
The 2020 EBITDA for our Offshore division is expected to be lower than 'nineteen. The earnings from offshore wind farms in operation is expected to increase from ramp up of generation at Hornsea 1, which was commissioned in December 'nineteen and Borsello 1 and 2, which we expect to commission at the end of Q4 2020. We will also see a positive effect from the additional 400 megawatt of Hornsea 1 capacity covered by CFT from the end of March. In contrast, we expect lower earnings from trading as we do not expect to repeat the very positive results from 3.8 €1,000,000,000 in 'nineteen to very limited in 2020. The expensed project development costs are expected to be lower in 2020 than in 2019.
Moving to onshore, where EBITDA for 2020 is expected to increase. The increase in earnings comes from a full year of production from Locket, which was commissioned in July 'nineteen, as well as ramp up of generation from new wind farms coming online in 2020, including Sage Draw expected in Q1 2020, as well as Plum Creek and Willow Creek, both expected in Q4 2020. Finally, markets and bioenergy, where we have EBITDA for 2020 expected to decrease. The underlying earnings from our CHP plants are expected to be in line with 'nineteen when excluding the Elsan provision reversal. Earnings in gas markets and infrastructure are expected to decrease due to this temporary shutdown of Tura, which will be in effect from late 'nineteen until 2022, which lowers our earnings in the gas business.
However, we do not expect a repetition in 20 20 of the negative effects from revaluation of our gas at storages. Earnings from LNG activities are, as I said, expected to breakeven in 2020. As we in 'nineteen has provided for expected loss from the divestments and the expected operating loss in the period until closing. So the loss from our LNG activities will thus go from EUR 1,000,000,000 in 2019 to 0 in 2020. Earnings from Power Distribution and Residential Customers and City Light Businesses are expected to be approximately half of the SEK1.3 billion earnings in 'nineteen as we have included only earnings for the first half year.
Slide 23 recaps 2020 guidance, as I just described, and our long term financial estimates and policies, which are in line with the updates we presented in October 2019. With that, we now open for Q and A. Operator, please.
Thank Our first question comes from the line of Christian Johansen of Danske Bank.
Two questions for me. First one, Henrik, you talked about this environmental impact assessment, which BOEM is doing. Can you just elaborate a bit more on what the potential impact on the expected return on your U. S. Projects could be and how much visibility you have on that at the current stage?
Frankly, it's impossible for me to comment on it today, Christian. We still need Boeing to come out with an announcement that will give us more to basically accommodate changes to the timelines without running into any financial penalties of any kind. At the same time, we obviously have a number of other moving parts in our U. S. Development portfolio at the moment, including clarifying the potential of the extended tax credits.
So we have a number of moving parts, and therefore, I would not be able to give you sort of an update today on the U. S. Portfolio other than saying that we remain quite happy about the development portfolio, and we also remain quite confident that we will be able to extract the value from the portfolio that we hope for. But we need a few more months probably to work through the entire portfolio and the implications of the cumulative impact assessment and the tax credit extension. That's also why I said that we look forward to giving you a full update at the Capital Markets Day in June.
Frankly speaking, that is probably the right time line in terms of giving us the time needed to further mature the portfolio and come back to you at that point and give you more visibility. But let me just be clear in saying that we have absolutely no reason to believe that we are looking into any significant value deterioration of any kind.
Then my other question is in terms of your onshore business and this target of 5 gigawatts by 2025. So that additional 3 gigawatts you will add in the first half of twenty twenty's, How do you expect the return for that portfolio will compare to the 2 gigawatt you expect to build up until 2021? And I'm obviously especially interested in the considerations given that declining production tax credit.
Clearly, the decline in PTC, we will have to mitigate that through cost of electricity reductions and over time also a realignment of PPA pricing. And we have some confidence that both of those mitigants will be able to contribute. And therefore, we still continue to see meaningful value spreads in the projects that we are currently looking at in our development pipeline. So overall, I'd say we have been, if anything, positively surprised by the performance of the onshore division in 2019. We continue to see very significant potential in the years to come.
So I'd say we are looking at, in our view, a very meaningful and healthy growth opportunity towards 2025. I'm not going to sort of start saying we had this kind of spread on the first 2 gigawatt and we expect that kind of spread on the next 3 gigawatt. Frankly speaking, we wouldn't have the exact visibility to even start running those numbers, but I can only say what we see today looks quite attractive.
Thank you. And our next question comes from the line of Casper Blom of ABG. Please go ahead. Your line is open.
Thanks a lot. I'm going to start off with where Mariana almost ended with the trading, which is now part of, among others, the offshore business and part of sites. I understand that you think you've done well here in 'nineteen. Could you give any kind of guidance? What would be sort of a normalized assumption to have for this kind of trading business going forward?
Basically, so we can back out what used to be sort of the predictable part of that division, I. E, the earnings production from sites?
I cannot give you a number, but I would say that over the last 5 years, we have seen big swings, but we have never seen results lower than approximately €200,000,000 per year in that area. But it will fluctuate, and we will have some really good years, and we'll probably have some years where which will not be as good. But what we will do, we will give you visibility on the numbers so that you can separate what is the site earnings and what is the earnings coming from trading.
Very appreciated if you can do that going forward also. Then secondly, regarding a potential farm down in Taiwan, you previously mentioned it could happen both in 2020 or 2021. Any kind of news on when we might see that happen?
The process is progressing exactly as planned. So everything is looking absolutely fine. It's difficult to predict the exact timing. We would remain optimistic that we could get to a signing sometime later this year, but it's difficult to predict the time line between signing and closing, which obviously is where it impacts our books simply because of the regulatory approvals being a relatively unpredictable timeline. So what I'm trying to say, Casper, in short, is that it could happen late 2020, but it's also with some likelihood, it could also be 2021.
Okay. That sounds like a flipper coin for that one. Then just finally from my side. Now you've sold a lot of things the last couple of years, and you are left with now a very, very green business. Are there any sort of obvious ones you would say could go within the next couple of years?
Could it be the power plants, for example, that you would look to divest that and focus more on the sort of real green energy production?
Well, right now, I'd say we're just focused on closing the divestment of Radius B2C and City Lights and now also the LNG business that's keeping us quite busy at the moment. We are also in the process of divesting parts of our B2B sales business. So I'd say we have our plate full. We have no plans at the moment to divest the Power Plant division. It's producing solid results.
It has been fully converted to sustainable biomass, so we don't see any urgent need there. So that's not in our plans.
Thank you. Our next question comes from the line of Deepa Venkateshwana of Bernstein. Please go ahead. Your line is open.
Thank you. I have a few questions. So let me start with the financial one for Mayank. So Mayank, could you talk a little bit about tax? So saw that this year the effective rate was 31%.
What does that board for future years? Is it still around 20%, 22%? And then the cash outflow on taxes was €4,800,000,000 versus the charge of €2,800,000,000 So again, if you could just clarify how much was one off or should we be modeling anything similar for the next few years? Then I have a few questions just on the other markets and growth. So for Poland, is it will the first auctions that
will just
be administratively determined? And would there be competing projects? Or is this sort of almost a done deal that TGE would get a project? And hopefully, you would share. So any kind of insights on how the pricing might work or at least the mechanics?
And I guess I had a follow-up question also on Virginia, which is
now signed which now has a target. And it seems
like Dominion has been talking about given it appears that Dominion is probably going to put
this in their
own rate base.
So I was just wondering it appears that Dominion is probably going to put this in their own rate base. So I was just wondering how you might participate in this opportunity. So those are the questions from me. Thank you.
First, the tax questions, Fost. On the tax rate, yes, you are right. It is higher than the around 22,000,000, which we have guided on previously. One of the things impacting the tax rate is this impairment where we are not taking tax deductibility for that. And there's also some other factors that increases the tax rate this year.
That's not what we expect going forward. It is more in a way timing for 'nineteen. So we expect to have this around 22% going forward. On the higher current tax compared to the P and L tax, it is driven by Hornsea 1, the gain from Hornsea 1. We are taxable of the CA part of the gain when we commission the plant.
So therefore, the gain that we realized in 'eighteen goes into the 'nineteen taxable income. So that's the difference.
On Poland, Dieter, it is our understanding that the initial 4.6 gigawatt will be allocated in a government administered process to some of the projects that have already undergone significant development in order to get the offshore wind build out off the ramp relatively fast And of course, the Bolsica portfolio that we are discussing with PGE would be candidates for such an initial allocation, but there are also other projects under development in Poland at the moment that would be eligible for such an initial allocation. So it would be taking it too far to say that there's any done deal. That's certainly not the case, but we would consider the Baltica portfolio to be one of more strong contenders in such a government controlled allocation. In terms of the pricing, we have no visibility on the pricing just yet. It is our impression that it will be a strike price determined by the Polish government.
We've seen some early drafts on what the broader regulatory framework will look like, and that looks quite standard and in line with what we would have seen in other developed markets. In Virginia, Dominion has made a decision to move the 2.5 gigawatt project forward. And as you rightfully mentioned, they will move it into the rate base, which obviously sets some limitations on the type of collaboration that they can establish with 3rd parties. We still have a good strategic dialogue with Dominion. We remain good partners on the current pilot being constructed this year, and we maintain a dialogue with Dominion on also other partnership opportunities.
But specifically on the 2.5 gigawatt, it would be too early for me to conclude on whether there's any role for us or not. We'll have to wait and see.
Our next question comes from the line of Peter Bisztyga of Bank of America.
So two tell us what you expect the terms of the auction to be? Is it going to be purely a price based auction? Or would it be something like we saw in New Jersey, for example, where the quality of a bid and the bidder forms part of that decision? And also, do you have any visibility at the moment on how many competitors you will have? And then on guidance, your IR team very kindly sent around a consensus ahead of results.
And your EBITDA guidance, I think, on a like for like basis for 2020, euros 15,000,000,000 to €16,000,000,000 compared to the consensus of €16,400,000,000 looks a little bit light, presumably no where the differences are. And I was just wondering, is that in offshore, onshore or any markets? And also on CapEx, similarly, you're guiding €30,000,000,000 to €32,000,000,000 of gross investments next year, Street's €26,000,000,000 I think. I'm just wondering what the delta is there. Is that some of those cost pressures, for example, that you flagged on new U.
S. Projects? Or is it just that you're accelerating various things like onshore wind? So those are my questions.
Sorry, Pete. Could you repeat the last question? I'm not sure I understood exactly what the question was.
So the last question
is on your CapEx or gross investments guidance for 2020. You're looking at €30,000,000,000 to €32,000,000,000 consensus is at around €26,000,000,000 and that to 32 is a big increase on 2019. And I'm just wondering how much of that sort of delta versus where the Street is due to cost pressures, for example, in the U. S. Business that you flagged a few months ago?
Or how much is just the fact that you're building more stuff more quickly?
Let me start out with Japan and the CapEx question and Mariano will come back to EBITDA and where we saw a deviation against consensus on the guidance. For Japan, we have not yet seen the final framework for the auction and we do not yet know the volume of the auction. However, the Japanese government had previously issued some preliminary frameworks for allocation where price will be a key parameter, but there will be a number of other qualitative criteria applied as well in terms of your experience and your track record in offshore wind. So there will be a broader set of both quantitative and qualitative criteria applied in Japan. We do not have any full visibility on exactly how competition is going to shape up in Japan.
It's a market still in development, and there is a lot of activity right now, but it's a market where we have relatively limited visibility on exactly who's going to be ready for an expected auction during second half and who will have projects ready, allowing them to bid. Our focus right now is working with TEPCO to make sure that we get our Toshi project qualified and ready for a potential auction later this year. On the CapEx guidance for this year and the deviation to consensus, that is purely driven by increased activity. It is not related to cost pressure. I think this is simply a deviation where we have seen more progress on a broader front of construction projects, reminding you that we are building offshore wind projects in 3 different regions now.
And at the same time, we are currently constructing 3 onshore wind farms and a solar project. So it's a massive construction program. And coming back to the overall target of €200,000,000,000 between 'nineteen and 'twenty five, the €30,000,000,000 is pretty much the type of run rate we should expect going forward.
Yes. And then back to your guidance and where we see a deviation compared to consensus, it is in offshore. There is also a deviation in onshore and markets and bioenergy, but those actually net out. So the deviation is in offshore.
Okay.
If I may, as a sort of follow-up, I mean, anything particularly in sort of offshore that isn't perhaps quite as good as we might have hoped?
Not as we see it, no. So actually it's hard for us to see what the deviation relates to.
I think what you have to bear in mind is that, I mean, we obviously we had a very strong year in 'nineteen in terms of growth from the sites, and everything is on track with the construction portfolio and the site EBITDA growth in 2020 will be driven by the ramp up or the full year production from Hornsea 1 and some late ramp up from Borsella 1 and 2 and then of course from the onshore division. And when you look at the 20% average growth target we've set for 2017 through 2023, you will inevitably have years where we are slightly above 20% and you will have years where we're slightly below 20%. It all comes back to the construction and ramp up profile in our build out portfolio, and that portfolio is progressing absolutely unplanned. So I think this is simply just a matter of aligning the timelines of the different construction efforts and converting that into a growth target for 2020.
Okay. So it's sort of phasing effects rather than anything to be concerned about?
They can be difficult to get them absolutely right year over year. You will see fluctuations around the 20% growth rate, that's clear. But that average long term growth rate of 20%, we remain very comfortable about that.
Great. Thank you.
Thank you. Our next question comes from the line of Elchin Mamadov of Bloomberg Intelligence. Please go ahead. Your line is open.
Hi, there. My first question is on transmission. We've seen some issues with the Western Link here in Britain that some wind generators have seen their output curtailed. Do you see the transmission being an issue for the broader wind sector in general? Or is this specific to this particular project?
My second question is on the trading business. I mean, you've had a good year, but so did many other utilities, oil majors and commodity trading houses. So in the news, they often say it's mostly because of volatility. I mean, it's early days, but we've seen quite a low volatility already at the start of this year. So if that persists, should we expect another strong year for your trading profit or not?
And the final question is on the your bonds. Are you seeing any meaningful spread between green finance and non green bonds? Yes, that's all for me. Thank you.
On the transmission part, the curtailment that we have experienced in the U. K. Is a very particular issue following an outage, which was a very rare event. So that's not something that in any way would extrapolate. That said, transmission obviously is a key thing in all markets at the moment.
We have many markets where investments are needed in transmission, in interconnection, and it is one of the key things to develop in all of our projects, so both in the U. K, in other European markets and at the moment also in the U. S, getting the right interconnection, getting the right transmission capacity will always remain a critical component in any project. But the issue in the U. K.
In particular was what we consider an anomaly.
Yes. And then to your question around trading, I think it is important to emphasize that we in a way, we are not a mini trading house. We do the trading to reduce the risk and we do it within very limited VAR mandates. So if you compare to some of these other players, of course, we benefit from volatility. But what we have benefited from in 2019 is not as much the volatility, it is the hedging strategies that has turned out to be positive.
So just to point out that. Then the next question on the bond. Yes, we have earlier, we did not actually see any difference between green or non green bonds. Now we are starting to see a marginal difference, but not big.
Thank you.
Thank you. Our next question comes from the line of Alberto Gandolfi of Goldman Sachs. Please go ahead. Your line is open.
Thank you and good afternoon. I have 3 on my side. The first 2 are a bit bigger picture and the third is a bit more specific to results. So the first one is, could you please I've seen some of the interviews you sent out about reaching net zero carbon emissions. The European Commission been talking about the Green Deal, Green New Deal.
The EU Energy Strategy, which was published last year, was already talking about an upper end of offshore wind in Europe of 4 100,450 gigawatts by 2,050. And that was not a net zero paper. So the question I have for you is with a specific module due to come out this year in Europe, how much do you think could be just the European market by then? And maybe can you share some light of the basically 100% clean target you mentioned earlier today that we are likely to see for instance, I don't know in Rhode Island or New Jersey. How much could of the total power generation mix be offshore from a percentage perspective?
The second question is, can you maybe elaborate a little bit more on your ability to keep up with a rising number of auctions in the global market. If we are moving to 20, 25 gig, can we see you participate into all of those, maybe ex China? So what is your ability to ramp up your business? And what is a sort of an ideal market share you're thinking about in the medium run? I mean, I don't know, is it 10%, is it 5%, is it 20% do you think you can lose 9 megawatts to win 1?
Or do you need to lose 3 or 4 to win 1? I don't know if you had any thoughts about that. And the last question is a bit on your offshore deviation, shall we say, for your guidance. Do you have a feel going a little bit maybe deeper, do you have a feel how much of that could be the normalization of trading visavisome estimates not including an escalator for the CFP in Hornsea 1. That's quite relevant.
And I think that what I'm trying to understand how much of this deviation, let's say, is a timing issue for 2020 2021? And when Horsea have these full in place, suddenly, actually you don't see really much of an offshore deviation in consensus? Thank you.
Thank you, Alberto. On the European Green, the new Green deal, it is obviously very difficult to predict. It's the right ambition. It's a bold ambition and it is a major opportunity for Europe to lead the world in this area. It is one of the industrial sectors where Europe in fact is a global leader in terms of technology, and I do believe the Commission is getting it right when setting a very bold ambition to reach net 0 by 2,050.
Ultimately, that €1,000,000,000,000 deal needs to trickle into action down through the countries, and each country needs to find a path towards net 0 and towards complying with the Paris agreement. And many countries in Europe are still not on a track where the build out of green capacity and the phase out of coal will get them on that track towards meeting the Paris targets. So ultimately, you're going to have to see all of that driving higher national build out targets. We see it happening step by step, but I do believe there is more to come over the next couple of years. Whether that's going to reach a 4 50 gigawatt potential by 2,050 or even more, Again, it's impossible to predict today, so I'm not even going to attempt it.
But there is no doubt that the potential for offshore wind in Europe is huge. And I think today, people have come to recognize that what just 2 or 3 years ago was a niche renewable technology has turned into a major component in the future European energy mix as also alluded to by IEA just a couple of months ago. So we do expect the European offshore wind build out to accelerate during the 2020s. I said earlier that as we move through the 2020s, we will be going in a range from 10 to 15 gigawatt globally per year, but we will quickly start moving into a range of 15 to 20 gigawatt per year. And if we further accelerate, we may even have to revise those targets up as we move further into the 2020.
So they're potentially significant. In terms of the type of share that offshore wind can command in the future, energy mix, again, very difficult to predict, but in countries like Denmark and the U. K, offshore wind is already now on track to become a very significant component in the future electricity mix already by 2,030. This will, of course, over time also drive more auctions and more tenders, and we are seeing that. You saw the slide in our deck for today where we reached more than 11 gigawatt awarded in 2019, and we see the number of auction and tenders still increasing around the world in the years to come.
Our ability to match that opportunity is obviously something we are constantly working on. And right now, we are building a regional capability in Asia, in North America, in the U. K. And in Continental Europe, and we are further strengthening all of these regions in order to make sure that we can follow the growth opportunity for the long term. So far, we stick to our target of 30 plus gigawatt total renewable capacity by 2,030, and we'll obviously constantly monitor whether the market should lead us to a bigger ambition, but for now we still feel that's the right ambition.
If you translate that into how much offshore wind we would need to build in the years to come, you can start backing that into how much we would need to take out of the market that is now approaching 15 gigawatt per year. And it goes without saying that we will no longer need to maintain the 30% market share that we've seen over the past 6, 7 years that will not be required in a market once it starts moving to 10, 15, 20 gigawatt per year. So of course, over time, our win rate can come down while still supporting a very ambitious long term growth strategy of the company.
Yes. And then to the deviation between our guidance and consensus, You are right, both of these two could be explanations for the deviation. I, however, believe that it is more the timing. The reason being that we have continuously over the last year pointed out this point about the CFD for Hornsea 1. Of course, it might be someone's missed it, but we have said it again and again.
And then I also feel that most of you have included the trading results in Markets and Bioenergy because you don't have had you haven't had very much visibility before we actually come with this annual report. But you're right, it might be part of the reason.
Thank you. Our next question comes from the line of Alex Lang at UBS. Please go ahead. Your line is open.
Hi, Alex Lang. As always, thank you for the presentation. We had a question on market development. There's clearly a risk that the offshore wind market will go through a period of intense competition and pressure on returns and perhaps even more so if the oil majors continue to grow their presence, as you highlighted in this slide today. So the question is, how would you handle that scenario if this came about?
Would you cut returns and compromise on value, if necessary, to ensure you still win projects? Would you be happy, say, to go a period of years without winning any new projects if auction returns fall below your current hurdle levels? Thank you.
Thanks, Alex. It's a complex question that goes without saying. But if you look back over the past 3 years, we've seen very intense competition in offshore wind with a number of players, both infrastructure, energy and oil majors being in the mix. And over those 3 years, we've been able to still win projects every year and still maintain decent value creation on our project portfolio. So, so far, we have no reason to believe that we cannot continue to win projects, grow the company and create value.
There is, of course, a competitive intensity, no doubt. On the other hand, as we just talked about in response to the questions from Alberto, we are also seeing a market that keeps expanding. So you have this dynamic at the moment where you see increasing demand for offshore wind around the world, but you also see more competition coming in, more capital being available in the market. And in that dynamic, it's our job to basically keep reducing the cost of electricity, keep reducing the cost at which we can produce offshore wind electricity and then maintain our cost competitiveness. And from there on, you need financial discipline.
I don't think it would serve anyone if we lost our financial discipline, and that means we need to keep insisting on having value creation in our projects. If we can't create meaningful value, we shouldn't take the projects. That's a road to nowhere for this company. We need to keep it strategically and financially healthy, and we remain committed to that. Can we do that?
I remain convinced that the company is in such a strong position that it can continue to grow and create value at the same time.
Thank you. And as we are running out of time, our last question will come from the line of John Musk at RBC. Please go ahead. Your line is open.
Two questions from me, one sort of short term and one longer term. On the markup that you took on the gas storage and infrastructure, I think it's about €500,000,000 which I think you talked about being related to higher gas prices in Q4. We've obviously seen a significant weakness in gas prices in the past few weeks, maybe even a month or so. Is there a risk that we see some reversal of that given where gas prices have moved? And then secondly, partly linked, but the longer term question is around the sort of cannibalization effect from Renewables over the longer term.
A number of market consultants are putting out longer term power price forecasts, which can come with some very low power prices related to an increased buildout of renewables. I mean, do you think that there is a self correcting mechanism in some of these growth ambitions in that if we do start to see much, much lower power prices in future, there'll be a moderation of the growth? And how do you balance that dynamic?
I'll start with your gas question. If you look at this gas price impact for the full year, we have seen these very low gas prices throughout 2019. And for the full year, as we have said, we had a negative impact. If you look at Q4 in isolation, we had this very, very big positive impact due to the prices went up in the winter quarter Q4. But if you look at how the forward curves look, in a way, we don't expect, at least if the forward curve materializes, we will not see a negative impact from gas storages in 2020.
But it's very important to emphasize that all of this is fully hedged. We hedge the gas margin. So it is just a timing impact these effects. So don't forget that.
On the question of long term power price development, again, John, I mean, it is, of course, a complex question, as you know. No doubt, when you look at the build out of renewables and potentially even an accelerating build out of renewables, that will long term impact pricing. On the other hand, you will see very significant retirement of coal capacity and in some countries also nuclear capacity and that is to a wide extent going to offset some of this impact in terms of balancing out capacity and supply in the market. At the same time, you will, in our estimates, see quite a significant growth in electricity in OECD markets over the next 10, 20 years, which is unusual because for many, many years you've seen essentially no growth in electricity demand. But the only way to decarbonize modern societies will be to essentially go through a massive green electrification of society where you electrify heat supplies, you electrify industry, you electrify transportation, and that will drive significant increases in demand for green electricity, for instance, coming from electrification of vehicles, both for private transportation and for heavy transportation.
When you balance out all of those different impacts, it becomes a complex question what the future price will be. We monitor and model this out on an ongoing basis. We feel we have a pretty prudent picture of this and for many, many, many years to come, you will continue to see gas as the ultimate transition fuel and also thereby as a price setter in many hours of the day in most markets around the world. And this will continue to be something that supports power pricing for the longer term. So we are not concerned that we are working our way towards a huge self correction mechanism.
On the contrary, we're actually quite convinced that this is going to be a fairly healthy long term development when we look a couple of decades into the future.
And I'll now hand back to our speakers for the closing comments.
Thank you all very much for joining. I appreciate all of the great questions. And as always, should you have more questions, please don't hesitate. Our IR team will be here to answer them. And looking forward to seeing hopefully many of you on the roadshow the coming days.
Thank you for joining. Have a great day.