Morning from our studio in Brussels. We would like to welcome you to this live stream event that will cover Elia Group's half year results. For this, familiar faces have joined us, the Elia Group's CFO, Catherine Vandenborre, and CEO, Chris Peeters. Welcome. What's on the agenda? First, we will look back at the most important achievements from the past six months. Chris Peeters will discuss the changing context in which we are working and the progress made on the energy transition. Catherine Vandenborre will then take us through the Elia Group financials and the outlook for the rest of the year. Before we can continue, please read through the disclaimer on screen now. You must take note of this information. Later today, the slide and the script will be made available online.
Let's start off with some images of the second edition of the North Sea Summit, held in Ostend in April. Belgium brought together heads of state and government and energy ministers from nine countries, along with the President of the European Commission, Ursula von der Leyen, and some 100 leaders from the offshore energy sector. The Belgian Prime Minister, Alexander De Croo, called the largest coalition ever around energy in the North Sea. Chris, we just saw you in one of the roundtable discussions. I'm sure that this impressive event was one of your personal highlights of the first year. Last year, you were in Esbjerg in Denmark, during the first North Sea Summit. What happened between both events?
Last year in Esbjerg, Marleen, the consequences of the war in Ukraine were beginning to be felt across the energy market. 4 countries came at that moment together. It was Belgium, Denmark, Germany, and the Netherlands. The aim was to form a coalition to coordinate actions to combat Europe's dependence on gas and fossil fuels. The 4 partners committed then to quadrupling their collective offshore capacity by 2050 to 150 gigawatt, and to making the North Sea the largest sustainable energy plant in Europe. In addition to the founding countries, the North Sea Summit in Ostend brought 5 new countries to the table: France, the United Kingdom, Ireland, Norway, and Luxembourg. Ostend advanced a collective ambition to harness the full renewable energy and industrial potential of the North Sea.
I'm proud to say that Elia took the lead for the industrial part of the summit in Ostend. During this, the CEOs of 100 top European companies working in the field of offshore renewable energy took part in a series of roundtable discussions, as we saw on the video. We also signed a joint industrial declaration to express our support for the political agreements being committed to, which also included some pain points. Scaling up the offshore renewable sector requires large-scale investment in ports, grid infrastructure, and in staff training. We should eliminate bottlenecks in the production of foundations, cables, transformers, switchgear, and secure the availability of installation and other vessels.
In a moment, we'll come back to this important European summit. First, Catherine, I would like to hear your personal highlights so far.
I would say, Marleen, the successful execution of a number of capital market transactions that will provide us with the cash we need during this year to finance our investment plans in Belgium and Germany. In January, Elia did its first green bonds, amounting to EUR 500 million. The proceeds will be used to finance eligible green projects. In March, Elia Group proactively managed its hybrid layer by refinancing part of its outstanding EUR 700 million hybrid. The group issued a new EUR 500 million hybrid, accompanied by a capped tender offer on the existing hybrid security. Eurogrid has also secured its further funding requirement through 2 market entries. Firstly, it obtained a EUR 600 million green loan to co-finance the offshore grid connection for the Gennaker Wind Farm project in the Baltic Sea.
Additionally, it issued a seven-year bond of EUR 650 million to refinance a bond due in November. I think those transactions demonstrate the ability of Elia Group and its subsidiaries to attract additional funding while diversifying our investor base, even in more challenging market circumstances. We have also firmly anchored the sustainability ambitions in our financing as well, which is essential for the future success of the group.
Yeah. This is a financial presentation, Catherine. We won't keep our analysts waiting any longer. What results can you present so far this year?
Yes. First, in terms of investment, Elia Group invested EUR 821 million in the first half of the year. Our primary focus was on reinforcing the internal backbone of both the Belgian and German grids. We continued the development of the necessary transmission offshore infrastructures, enabling the integration of growing quantities of renewable energy. Additionally, we have heavily focused on digitalization and on ensuring a timely, high quality, and cost-effective infrastructure delivery. In terms of financial performance, Elia Group achieved solid results across all three segments, leading to an increase in the net profits Elia share of 3.2% to EUR 162.5 million. Our non-financial KPIs were making progress. Elia Group internal carbon price increased from EUR 55 per ton of CO2 equivalent to EUR 200 at the beginning of this year.
By doing so, we aim to demonstrate the monetary value of the greenhouse gas emissions throughout the organization, incorporating it into our investment decision-making process. Lastly, given the war on talent, it's good to see that all people value Elia as an employer. Elia has been named once again, best employer in Belgium. Elia was noted as having made the biggest improvement in diversity and inclusion, where all score climbed up by 13.5%, and it reflects our ongoing efforts to integrate diversity and inclusion into our daily business practices. Furthermore, in Germany, our employer image remains strong, resulting in the successful recruitment of over 170 new employers during the first half of this year.
Okay, thank you, Catherine. Before we come back to you for a more comprehensive look at half year figures, let's return for a moment to the North Sea Summit in Ostend. We have selected some political statements to share with you from its press conference.
This summit marks an important milestone. A milestone to make of the North Sea, the biggest green power plants in the world. We aim for a capacity of 130 gigawatts by 2030, 300 gigawatts by 2050. By then, we will be able to provide electricity for 300 million households on the European continent. Our goal is to deliver a greener Europe, a Europe which is energy independent, and a Europe that can grow in a sustainable way, that can continue creating jobs, and especially that can keep heavy industry, chemistry, and all these activities here on the European continent.
The European Commission will help to deliver on these targets, this is why we have the Green Deal Industrial Plan. All our proposals to implement this industrial plan are on the table now. First, the Net Zero Industry Act, that will help to create a conducive environment for clean tech industry. It will support innovation and very important, the manufacturing at scale of clean tech. Second, our reform of the electricity market design will incentivize the use of renewable compared to fossil fuels. Third, our Critical Raw Materials Act aims at securing the supply of the materials that are so badly needed to build wind turbines and other clean tech.
For accompany strategy, you know, for pursue Commission lance une réforme market electric European in faudra développer plus avant les interconnection electric European élément clé for nous encore plus efficace.
For him, we must schneller werden. By the identification von Flächen, by genehmigung, beim bau von anlagen und netzen durfen wir keine Zeit mehr verlieren. Gerade when we jetzt genau sehen, welche ungeheuren Möglichkeiten der Stromproduktion und der Wasserstoffproduktion, die Nordsee bietet und gleichzeitig wissen, das oft die industriellen Zentren, die diesen Strom benötigen, gar nicht direkt an der Küste liegen, sondern viele davon zum Beispiel in Deutschland, im Südwesten der Republik. Dann ist es wichtig, dass wir die Struktur des Netzausbaus immer mitdenken und auch im Blick haben, dass das genauso schnell vorangehen muss, wie die Stromproduktion anläuft. Das ist etwas, was wir zustande bringen müssen. Wir müssen auch größer denken. Es braucht mehr Anlagen, wir müssen dafür die nötigen Lieferketten stärken, und deshalb brauchen wir gerade hier in Europa eine starke Zulieferindustrie.
Yeah, many quotes. Let's recap, Chris. More offshore wind capacity, faster permitting, more interconnectors, a robust supply industry. It feels like it's the perfect moment to seize the opportunities.
Yes, Marleen, we can clearly see here that the energy transition is shifting into a higher gear. You see that as well, that the policymakers start to exhibit more ambition over here. It's not only that. In parallel, we see that renewable records continue to be shattered repeatedly, and on top of that, the rapid and early spread of electrification across the Belgian and German mobility, heating, and industrial sectors exceeds our initial forecasts, signaling a remarkable acceleration in the transition. In recent years, Elia Group has fully prepared itself to face these challenges. We have heavily focused on digitalization and on the timely, high quality, and cost-effective delivery of infrastructure.
If we want to follow the political ambition and secure the accelerated pace of the energy transition in the future, it is essential that as a regulated company, we receive a fair remuneration for our activities. As we all know, currently, there is a tension surrounding this matter, and it needs to be addressed. As we all know, the market environment has undergone significant changes, characterized by higher interest rates and inflation. As a result, we are presently engaged in discussions with the regulators in both countries to ensure that a fair return aligns appropriately with the current market conditions.
Yeah, we come back later on this. Imagine, Chris, that the energy sector does not succeed to accelerate and to scaling up. What would be the consequence?
Well, if you only look at the newspapers a week ago, one of the consequences was on the front page of the De Standaard, a Flemish newspaper. The article referred to the Netherlands, where more and more companies are facing the refusal of new grid connections due to delayed investments in the electricity grid. These companies encounter hurdles in their decarbonization process and also their overall expansion. This is posing a threat to the industrial anchoring in Europe. We have learned from the recent energy crisis that the energy transition is itself an important lever for strengthening resilience against the volatility of international commodity prices, particularly the gas price. A delayed energy transition will certainly come at a much higher cost. In June of this year, Elia published its biannual study, which focuses on Belgium's adequacy and flexibility needs for the coming decade.
There also, one of the main messages it carries is that any delay in realizing grid infrastructure will result in additional capacity needs and therefore additional cost. One of the graphs of the study that we see on the screen now, clearly shows that any delay in the expansion of network infrastructure, for example, projects like Boucle du Hainaut, Ventilus, or the Triton Link, will have a negative impact on the efficiency and cost of the energy transition.
With this in mind, both Elia and 50Hertz have published in the past months, Federal Development Plans, which describe the investment needs of the grid over the next 10 to 15 years. I have a copy of the Belgian plan with me, which was approved by the Belgian Federal Minister of Energy in April. The German plan is still work in progress and should be finalized by the end of the year. Chris, let's begin with the German plan. We see a substantial CAPEX program described in this draft document.
Yes, Marleen, although it's a draft document, it's a remarkable document. For the first time, the German Grid Development Plan describes an electricity grid that can achieve climate neutrality by 2045. To cover the electricity consumption that is expected to double, compared to today, the German Grid Development Plan assumes a fivefold increase in installed capacity from renewable energy source, up to 700 gigawatts by 2045. Integrating these renewables requires more grid development. This includes, for example, 5 new onshore DC connections compared to the previous plan, and 20 additional offshore grid connection systems. The German plan involves substantial investments, both onshore and offshore. As a consequence, this results in increased requirements towards additional staff, and it will put pressure on the level of product available in the supply chain as the energy transition is happening all over Europe.
We will closely monitor this in the upcoming period.
That's indeed remarkable. We have a statement from Stefan Kapferer, CEO of our German brand, 50Hertz, to share with you about the importance of the German Grid Development Plan and about the return on equity, an important topic, given the changing financial markets.
The Grid Development Plan 2037, for the first time ever in Germany, is calculating a climate neutrality grid for the country, that means a lot of additional investment opportunities for the TSOs. Because we have to integrate a lot of additional renewables, we have to combine in the system the flexibility and electrolyzers to produce green hydrogen. Of course, we have to connect 70 gigawatt of offshore wind capacities in the Baltic Sea and the North Sea in Germany. This Grid Development Plan makes it much more feasible for us to calculate the investment steps for the future. It's good news that BNetzA, like they always promised, now announce the proposal for a higher return on equity for new investments beginning in the year 2024.
That reflects the change of situation in the financial markets, but also for the current asset base, a higher return on equity will be needed in the future. That's something we have to discuss and negotiate with the BNetzA, and we expect a clear decision later in autumn this year.
Recently, the German regulator, BNetzA, has launched a public consultation to revise the return on equity for the next regulatory period. Catherine, can you explain a little bit the new proposal? What can be expected next?
Yeah, sure, Marie. As Chris already alluded to, the regulatory return was set during a period where interest rates were considerably lower than now. In addition, investment plans are particularly ambitious and require attracting more capital than in the past. In order for us to effectively execute our investment program, it is imperative that we receive a fair remuneration that simply allow us to attract the necessary funds. In that context, BNetzA submitted to consultation a proposal of adjustments of the remuneration specifically for new onshore investment under the capital cost adjustment model. This proposal would be applicable for the upcoming regulatory period, so from 2024 to 2028. Previously, the initial return on equity stood at 5.07% before tax, or 4.13% after tax, based on an historical 10-year average interest rates of 0.74%.
The new proposal suggests replacing this interest rate of 0.74% with an annual variable prime rate, along with a constant risk premium for onshore investment made as from January 2024. As a result, this adjustment would lead to an initial return on equity of 7.09% before tax, or 5.87% after tax for new investment under the capital cost adjustment model. As it stands, the current proposal only impacts a limited portion of 50Hertz regulated asset base, and its overall effect on the future net result is projected to be relatively minor, around 20 basis points of return on equity. The consultation period will continue until August 23, and by the end of the year, a binding regulation will be issued. Furthermore, a second consultation process is planned for offshore investments later this year.
As a reminder, we have communicated our long-term return on equity guidance for the period 2024-2028 of 7%-9%. Additionally, I would like to elaborate also on the other pending regulatory matters in Germany. Firstly, let's discuss the cost file. As a reminder for onshore activities, the costs are determined every five years based on a reference year in the middle of the regulatory period. In this case, 2021 serves as a reference year for the upcoming regulatory period. The corresponding cost file was submitted to the regulator in June 2022, and will be approved, likely with adjustments, by the end of 2023 at the latest. Although the process has commenced, it's too early to comment on the outcome. Secondly, we are awaiting updates on the individual efficiency and sector productivity factors, the so-called Xind and Xgen.
On the Xind, we have received indications that 50Hertz should maintain 100% efficiency. On the Xgen, we are still awaiting the outcome. Both of these factors are expected to be formally announced by the end of the year.
Thank you, Catherine. We covered the German Grid Development Plan, which is currently in the process of being finalized. The Belgian plan, as we mentioned earlier, received approval from the Federal Minister of Energy in April. Chris, could you guide us through some of the highlights of the report?
Yeah, sure, Marleen. Of course, if you look at those plans, they look a little bit less extensive than what we see in Germany, but they are actually equally important to help Belgium on its way to a net zero society. The further scaling up of renewable energy sources and the far-reaching electrification are creating urgencies that will soon require additional investments to be made. In the Belgian Federal Development Plan, for example, we included a number of concrete proposals, such as the building of additional high-voltage substations. We did without defining yet an exact location for them. This will give us the necessary flexibility to quickly respond to requests from our grid users, and to ensure that the energy transition is not blocked or slowed down by grid restrictions.
In comparison with the previous plan, we clearly see a strong focus on grid development in the North Sea and the realization of a first offshore energy hub. It is widely known by now that Belgium is going to build the world's first artificial island off its coast. During the North Sea Summit, there was indeed a lot of interest in the model of the island, as you can see in the video. The Princess Elisabeth Island will be the first artificial energy hub to combine both direct and alternating current. The island's high voltage infrastructure will bundle the wind farm export cables of the Princess Elisabeth zone together, while also serving as a hub for future interconnectors with Great Britain, the Nautilus Interconnector, and Denmark, the Triton Link.
It is important to note that this Federal Development Plan has been taken into account in the CAPEX plan for Belgium for the next 5 years.
You just mentioned Triton Link. The Danish government recently announced that they are moving away from their plans for an energy island to which the Triton Link would be connected, as you see here on the map. Chris, does this have any impact on the project?
Indeed, our colleagues of Energinet were asked by the government to revisit their plans and to see if a platform solution would make more sense. As you know, they had a much more extensive island concept than the one that we had, they have some problems to realize that plan. If we look at the last discussion that we had with them, the government as well wants them to keep the current timing, meaning that the timing for our Triton Link will not be changed.
Okay, thank you. The projects of the future in Belgium have been defined in the, in the plan, but how will they be remunerated? Last year in June, the CREG fixed the return on equity for the next regulatory period that starts in January 2024. Catherine, to what extent is CREG prepared for a review like in Germany?
First element is that the regulatory framework was also set in a low interest rate environment. I will first remind you what was set back in June of last year. Based on all the parameters, we expect average net return on equity for the next Belgian regulatory period of around 5.7%, which is a slight decrease compared to the average we have on the current regulatory period of 6%. This rate was based, at that time, on the forward-looking risk-free rate for the period 2024-2027. Elia Transmission Belgium has started discussions with the CREG to demonstrate the recent evolution of the financial market expectations, and to appreciate the needs of a revision of the regulated return.
However, it's not clear yet if, when, and how a potential revision could occur. Additionally, I would like also to comment on the current status of the tariff proposal process in Belgium, like I did for Germany. For now, we are in the process of defining the tariffs for the period 2024 to 2027. In May, Elia has introduced a tariff proposal. In September, Elia is expecting to receive a project decision from the CREG, in which the regulator will evaluate the tariff proposal. Following the project decision, Elia will make further adjustment, if needed, and subsequently resubmit the tariff proposal for further evaluation. The final tariff proposal is anticipated to be approved in November. Okay, thank you for this update.
The last topic I would like to discuss is the progress made on the current infrastructure projects. Let's first have a look at some of our achievements in Germany. During the first six months of this year, 50Hertz invested about EUR 500 million on grid infrastructure projects, both on land and at sea. One of the headlines was a groundbreaking ceremony at the Wolmirstedt substation near Magdeburg. The event marked the first day of construction of the SüdOstLink's first converter station, there are two in total, and the guests of honor included Robert Habeck, the German Vice Chancellor, and the Federal Minister for Economic Affairs and Climate Action. The SüdOstLink will not include two converter station, but four. Thank you for this update, Chris.
Construction has finally begun of what will become one of the most important electricity highways in Germany and also in Europe. What makes this project so special, Chris?
Well, it's a very important step for us, Marleen, because the SüdOstLink will become one of the most important north-south electricity highways in Germany. It will support the integration of increasing volumes of renewables into the system and transmit the green energy to consumption centers in the south of the country, mainly the province of Bayern. The project will cover a distance of 540 km and demonstrates that we are fully committed to the acceleration of the German Energiewende. The SüdOstLink is 50Hertz's first onshore HVDC connection. It is also the company's first project to involve 525 kV, a detail that probably only the engineers among us will be interested, but it's also with a total transmission capacity of 4 GW.
The project is a great example of how we at Elia Group are constantly applying the latest standards and using the latest technologies.
Yes, indeed, an important highlight. Remarkable advancements have also been accomplished at sea. The following images captures the sail out of the Baltic Eagle transmission platform from the port of Antwerp to its final destination in the Baltic Sea, the German Baltic Sea. Chris, what is the status of this project?
Well, one month after this leaving of the construction site in Hoppegarten, the Baltic Eagle transformer platform was installed on its foundation in the German Baltic Sea. In the meantime, two subsea cables have been successfully pulled onto the platform, 220 kV each, and each 90 kilometers long. In late 2024, the platform will supply the German electricity grid with electricity from the Baltic Eagle Wind Farm, which comprises 50 wind turbines that are currently being constructed by Iberdrola. We also made progress on another offshore wind project nearby in the Baltic Sea. Electricity has begun flowing into the 50Hertz grid from the Arcadis Ost 1 offshore wind farm. Most of the 27 wind turbines have been successfully connected. The wind farm, a project of the Belgian wind developer Parkwind, 247...
no, 74 megawatts, is due to the commissioned, to be commissioned later this year. Finally, 50Hertz has committed to ordering two offshore substations for the Gennaker wind farm. This offshore wind farm at the other side of the Rügen Island of 927 megawatt, will be the largest in the German Baltic Sea.
It shows that the Baltic Sea holds significant potential for expanding offshore wind energy. In May, 50Hertz participated in the Baltic Offshore Wind Forum in Berlin, organized by the German Federal Foreign Office. During the conference, 50Hertz and its counterparts from Estonia, Latvia, and Lithuania signed a letter of intent to intensify their cooperation. In June, Germany and Denmark announced the signing of an intergovernmental agreement relating to the Bornholm Energy Island project. This creates the conditions for 50Hertz and its Danish counterpart, Energinet, to work on this innovative electricity hub in the Baltic Sea. This involves hundreds of kilometers of DC cables on and offshore, and via the Bornholm Energy Island, at least 3 GW of offshore wind power capacity will be made available to both countries' energy markets.
Let's take a moment to hear a brief statement on this from Stefan Kapferer.
Energy transition is a European project, and after the Ukraine war has started, we have seen some countries in the European Union renationalizing their perspective on the energy transition. We are very happy that Germany, Denmark, and Belgium are still convinced that the European energy transition can only realize together. The intergovernmental agreement between Denmark and Germany about the Bornholm Energy Island is a big step forward, and also the letter of intent between the Baltic TSOs and 50Hertz about a potential Baltic wind connector could become a relevant step for a green Europe.
We move from Germany to Belgium. Let's take a look at the progress and grid investments in Belgium in the past 6 months. EUR 300 million have been invested in the first half. Chris, which of these investments would you like to highlight in particular?
Well, I first would like to focus on the important progress that we are making as part of the reinforcement program of the so-called Belgian Backbone, the existing 380 kV high-voltage grid. That reinforcement program started already several years ago. Last year, we commissioned the Horta-Avelin line. That marked the launch of a first important axis that links the Mercator substation via Horta and Arlon to the Avelin substation in France. We are now focusing on the central eastern backbone. The reinforcement works for the Massenhoven, Meerhout, Wanneig, and Mercator axis are currently ongoing, with works expected to be fully completed in 2026. The upgrade of the 380 kV axis between Gramme and Wanneig began in February of this year, with those works expected to be fully completed in 2030.
In March this year, Elia signed the contract relating to the design and the construction of the Princess Elisabeth Energy Island for the foundations. The consortium, consisting of DEME and Jan De Nul, won the contract. Chris, what further steps have been taken for this project?
Well, we are in the final phase of the design. DEME and Jan De Nul are preparing the construction yard in Vlissingen, where the caissons will be constructed. We hope to start there in December of this year. We have launched most of the tender packages for the high-voltage infrastructure and cables. We accelerated the procurement process due to increasing pressures that we see on the suppliers' market, ensuring timely reservation of the necessary capacity. We are working on the final details for the nature-inclusive design. Along with a group of nature and conservation experts, we have been working on designing the island in such a way that it will have positive effects on flora and fauna. We have defined the feasibility of proposals and will share more information about it later this year.
Thank you, Chris, for this comprehensive presentation of the highlights in the first half year. It's time now for a deep dive into the midyear numbers, and we'll start with the figures of the group. I would say, go ahead, Catherine.
Thanks, Marleen. As you probably read in the press release, Elia Group posted solid result across all segments over the first six months of this year. Let's start with the revenue. At group level, our revenues amount to EUR 1.9 billion, a 3.2% decrease compared to prior year. In Belgium, all revenue was positively impacted by a higher regulated net profit and higher depreciations linked to the growing asset base, but it was more than offset by lower net financial cost due to interest income on cash deposits and lower cost for ancillary services due to the drop in gas and electricity prices. In Germany, the revenues decreased, mainly driven by the lower energy revenue due to the drop in energy prices. Our EBIT increased compared to previous year, totaling at EUR 336 million.
This represent an increase of 13.5% and is driven by different elements. For Belgium, it was the result of a higher regulated net profit and lower depreciations of assets not covered by the tariffs. In Germany, the higher EBIT is mainly a result of higher investment remuneration, while the operational cost remained well under control. Finally, associates contributed to the group's EBIT for EUR 15 million. The contribution from the Nemo Link interconnector decreased despite its high availability rate, as its revenues reached the cumulative cap. The group's net profit increased by 7%, reaching close to EUR 200 million. This result was driven by the strong performance of all regulated assets, with Germany contributing around 56%, ETB around 42%, and Nemo Link 7% to the net result.
The non-regulated activities contributed negatively to the result, as we continue to incur higher costs for the expansion of international offshore activities. The net profit, Elia share, increased less pronounced, reaching EUR 162.5 million, as it includes the higher interest expenses related to the hybrid securities. Let's now discuss the net debt of Elia Group. At the end of June, we carried a net debt of around EUR 5.4 billion, reflecting a 21% increase compared to the end of last year. This rise is primarily attributed to Germany, where the EEG cash position decreased as a result from a drop in energy market prices. Excluding the EEG and similar mechanism, our net debt increased by approximately 5%.
As I mentioned at the start of the presentation, Elia Group invested EUR 821 million over the first half of the year. Those investments were mainly financed by the cash flow from our operating activities. Additionally, the net debt position was also impacted by the higher funding cost following the increase in interest rates. As a result of various debt capital market transaction discussed earlier, the average cost of debt has risen by 20 basis points to 1.9%. Currently, Elia Group's outstanding debt consists only of fixed rate debt, or credit rating, as assessed by S&P, remains triple B plus, with a negative outlook.
That were the figures for the group. You have mentioned earlier that we had solid results in the three segments. Let's have a zoom in on the key drivers in Belgium, Catherine.
I already explained earlier why the revenues decreased. Let us move straight to the net profit of EUR 83 million, up by 12% year-over-year. The key drivers were the following: firstly, the fair remuneration increased by EUR 3.9 million. This growth can be attributed to both the expansion of our asset base and a higher equity. Secondly, the contribution from incentives has risen by EUR 6.2 million, indicating a robust operational performance. This was especially valid for the incentives for interconnection capacity and a timely completion of projects and for the influencible cost . Thirdly, the activation of issuance cost linked to ETB's green bonds, but covered by the tariffs under the embedded cost debt principle, resulted in a positive impact of EUR 2.2 million.
Moreover, we incurred higher capitalized borrowing cost due to our increased level of assets under construction, and a slight rise in average debt cost, amounting to EUR 1 million. Lastly, last year's results benefited from a one-off tariff compensation for financial costs associated with a capital increase.
You mentioned, Catherine, the growth of the ETB's asset base. You also mentioned, the green bonds, earlier this year, issued earlier this year. Could you provide us some insights on the overall financial position of ETB?
Starting in 2023, Elia entered the debt capital market and issued its first ever EUR 500 million green bonds to finance its eligible green project. In anticipation of the increasing interest rates environment, Elia entered into interest rate swaps in 2022, ensuring that the benefits are passed on to consumers. This issuance had a marginal impact on the average cost of debt, which increased with 10 basis points to 2%. It's worth noting that Elia maintains a well-balanced maturity profile with all outstanding debts carrying a fixed coupon. The company's liquidity position remains robust, and both the sustainable revolving credit facility and commercial paper were fully undrawn at the end of June. ETB's credit rating was reconfirmed by S&P. It stood at BBB+ with a stable outlook.
Okay, that was for Belgium. Let's now turn to Germany. What were the drivers behind 50Hertz performance over the last year, Catherine?
First, I will remind the net profit, which came in at EUR 113 million. It's an increase of 14% compared to last year, there were several key drivers behind this result. Firstly, the ongoing investment program led to increased asset remuneration, which was up by EUR 35 million. At the same time, depreciation cost increased by EUR 11 million. Both were impacted by the partial commissioning of Ostwind 2 in the late 2022, the good progress on the onshore investment. Secondly, onshore OpEx and other costs decreased by almost EUR 6 million, despite the growth of the activities, the onshore OpEx cost remains well under control. Finally, the financial results decreased by almost EUR 16 million. Let us now look at 50Hertz financial position. The total equity of 50Hertz decreased by EUR 183 million to around EUR 2 billion.
This drop was entirely due to the hedge reserves. 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. The fair value of this contract dropped, leading to a negative hedge reserve of EUR 74 million, due to a strong decrease in energy prices. Let me remind you that costs for grid losses are almost fully passed through to the tariffs, therefore, the fair value of further contract has no relevance for the current and future profitability of the companies and is excluded from all return on equity guidance. In terms of liquidity, the liquidity position remains strong at EUR 4.3 billion. As per half year, the EEG and similar mechanism cash position amounts to EUR 2.4 billion. Since the beginning of the year, the EEG cash position is decreasing, driven by the lower energy prices.
Based on current estimates, we anticipate to end the year with an EEG position of around EUR 1.2 billion. As I mentioned earlier, in view of the upcoming investments and aligned with our ambitions regarding sustainable financing, the liquidity of Eurogrid was further strengthened by securing a EUR 600 million green bond. The funds for this first green loan are provided by several banks and refinanced under KfW Climate Protection Programme for companies. As of June, EUR 120 million was drawn, while the other overdraft and revolving facility remain unused. Following the issuance of a EUR 650 million bond in April, the average cost of debt increased to 1.8%. The maturity profile remains balanced, with a weighted debt duration of 6.7 years. The rating of Eurogrid remains unchanged at BBB+, with a negative outlook.
In addition, to its regulated activities in Belgium and Germany, the Elia Group is also involved in operating Nemo Link and engaging in various non-regulated activities. Catherine, can you provide some insights how those, this third segment has contributed to the results?
Yes. Our third segment had a positive contribution of EUR 4 million on the group's net result. However, this contribution was lower compared to previous periods, due to, first, Nemo Link reaching the cap, and second, increased expenses incurred in expanding our international offshore activities through WindGrid. If we look at the details of the year-over-year changes, we see the following. Firstly, the group's results received a EUR 13.3 million contribution from Nemo Link. It's EUR 9.6 million less than last year. This decline can be entirely attributed to Nemo Link reaching the cumulative cap for the five-year assessment, while the prior year's result partially benefited from lower performance during the years '19 to '21. Additionally, the operational availability of the interconnector remained remarkably high at 98% throughout the first half of the year.
Apart from Nemo Link, our non-regulated activities results were influenced by increased costs due to the expansion of our offshore activities through WindGrid. The holding cost were lower, thanks to higher interest income from cash deposits.
Finally, we have to cover the outlook for this year.
Yeah, indeed.
That's your last slide of the day, Catherine.
Yeah, I can say that we are confident in our ability to achieve our goal for this year, aiming for an adjusted return on equity ranging from 6%-7%. Like in the past, this guidance is including the costs linked to our hybrid securities. When we look at the different segments, for Belgium, we continue to upload our objective of achieving a return on equity within the range of 5%-6%. In terms of CAPEX, we plan to invest around EUR 700 million for the full year. In Germany, we remain committed to a goal of achieving a return on equity between 8%-10%. We have revised our investment upwards from EUR 1.5 billion-EUR 1.7 billion. This increase is primarily driven by the need to secure future capacities in the supplier market.
Regarding the non-regulated segment, Nemo Link, we reconfirm our outlook as well, which anticipates a loss of up to EUR 5 million. Considering the availability of the interconnector and revenues exceeding the cumulative cap, we expect that Nemo Link will contribute around EUR 25 million. I want to add that this guidance does not consider any potential M&A transactions as usual. On another note, Marleen, I am delighted to extend an invitation to our second Capital Market Day, taking place on the 8th of December. This event will be conducted virtually, providing, I think, an excellent opportunity to update you on all strategic growth pillars and share insights on the latest regulatory developments. We look forward to your participation. Now, I will hand it back to you, Marleen and Chris, to conclude today's presentation, with, I suppose, some closing remarks.
Indeed, Catherine. Chris, I would like to share you some final thoughts. What will be the focus points for Elia Group after the summer break?
Well, it's obvious, of course, that the most important focus point for the next six months will be on fair return.
Mm-hmm.
In the last 18 months, the financial markets have completely changed, and this current environment is characterized by increasing interest rates that needs a prompt consideration of adjustment of the fair return, both in Belgium and Germany. If Elia would fail to raise sufficient capital, we as society may face a deficiency in essential infrastructure. Such a scenario would impact the speed of the progress of the energy transition, and probably even more important, it would reduce the resilience of our industry and also have a negative impact on our welfare. Second point of focus is the capacity of our supply chain that is under pressure due to the extensive investments by European TSOs and other industries. We see today already that delivery times are increasing and there is limited room for negotiation. Suppliers selectively choose tenders, projects, and customers to de-risk their offers.
Elia Group is taking measures to mitigate these circumstances, including building long-term strategic partnerships, reserving production capacity, and implementing simplified tender processes. This is all to avoid that the execution of investment plans could be delayed. Finally, something that you know, that I'm personally looking forward for, is the publication of our annual foresight study. This year it is on Putting Flexibility to Work. This time we have been collaborating with students from different universities in Belgium and Germany. We recently organized a student challenge, both in Brussels and Berlin. The students were asked to identify the current barriers for flexible consumption and to set up a startup company that comes with ideas to put flexibility at work.
On top of the student challenge, several use cases are being developed that will also be included in our paper that will be published 3rd week of November.
Okay, you're clearly enthusiastic about this challenge. While we prepare the Q&A session, we have a few interviews with some of the students involved to share with you.
The other presentations were really intimidating. Like, I can see everybody having absolute perfect winning chances.
Every idea was unique. All presentations were great. If I was the judge, it would be very difficult for me to decide who won.
We need to work more with this new generation, and we need to embark them in the energy transition, because it is a huge challenge in front of us, and we need the talent.
It was a very big honor, to get this prize today, and we're having discussions.
Mm-hmm
... with Elia now about how we can further progress this idea. That's very exciting as well. An Elia Group study on flexibility, Putting Flexibility to Work, that will be the title, will be presented on Tuesday, the 21st of November, in the late afternoon during a live-streamed event. You're most welcome to attend this live in the studio. Voila! We have shared a lot of information with you today. I suggest we now move on to the Q&A session. Yannick De Koning, our Investor Relations Manager, will guide us through this. Yannick, would you share the first question with us, please?
Thank you, Marleen. I propose to start the Q&A, and I think maybe Juan Rodriguez from Kepler can kick off. Juan, the floor is yours.
Thank you, Yannick. Thank you, everyone. Good morning. I have a couple questions on my side. The first one is on the regulatory review that you're currently engaged. As you signaled today, a 5.85%, 5.87% proposal in Germany. In Germany, I want to double-check with you, if this will imply, all things equal, that means that your incentive are maintained and the cost efficiencies as well, will put the total return on equity on the German side within the 8.5%-10.5% range. Is this correct? Would this be, in your view, a fair remuneration for your German activities? Similarly for Belgium, is currently at 5.7%. What will be, in your view, a fair remuneration for these activities under the current risk co- discussion? The first one.
The second one is, I want to double-check with you because you just signaled that the RAB target for the end of the year has been maintained at EUR 12.3 billion, but you slightly revised upwards your CapEx for the year. Can you please provide more color on the moving parts on this adjustment? The third one that I have is on end of the year guidance. You already posted a 3.58% adjusted return on equity at the first half results. All things equal, will put the group towards the upper range of the 6%-7% guidance, if we translate into the full year results. Should we expect some additional adjustments or a weaker performance in H2, in that sense?
Thank you.
I will take all your questions. On the first question, Juan, regarding the adjustment of the regulatory return in Germany, the figures that you came with are too optimistic. Like I mentioned during the presentation, until now, what we have announced as a guidance for the period 2024-2028 in Germany was between 7%-9%. Indeed, before that, we knew possible modifications in the regulatory return in Germany. Those modifications have still to be confirmed, but what we have on the table today is an increase of the fair return for new assets. The assets that will be qualified as new as from 2024, the new asset as from 2024, for the onshore activities and those assets which are qualified under the capital cost adjustment model.
Like I mentioned in the presentation, it's a very small part of the total assets of the company, today. If we apply the increased return on the portion of those assets, it would lead to an increase of 20 basis points, not more than the 20 basis point. There is maybe more to come in term of offshore. There might be more to come or not after the consultation. That's something that we will have to follow up. Based on the information we have today, and assuming that all other elements would remain equal, it would lead to 20 basis point increase in the guidance that we have announced. Nothing to change, basically, the range between 7%-9%. That's one. Second, in terms of RAB, that's something on which we need to come back.
Indeed, there is a slight increase of the CAPEX in Germany. We will come back to you with the half figures. You have a point there. On the last question that you mentioned, whether we expect to end in the upper range of the guidance, we don't expect that. No. The reality is that some of the elements contributing positively to the results are front-loaded. Small example, interest rates in the third segment at the holding level. You have seen in the first half, a positive impact of interest on cash.
This cash, we need to pay back the hybrid securities in September, the EUR 700 million hybrid security that we have in September. We have a nice contribution coming from interest in the first half, but we will not see any more the same type of contribution in the second half of the year. Second example, in Germany, you saw probably that the OpEx are well under control in the first half of the year. If you look historically at the trends in Germany, you will see that usually in the second half of the year, there are higher OpEx than in the first half of the year, and that's also something that we expect in 2023 for Germany.
In total, no, we don't expect, based on the information we have today, to end in the upper range of the guidance, because of the fact that some results and positive results are front-loaded in our 2023 first half year result.
Quite clear. Thank you.
Thank you, Juan, for those interesting questions. I now propose to give the floor to Piotr Dzieciolowski from Citi. Piotr, do you have any additional questions that are not yet covered by Juan?
Yes. Hi, good morning, everybody, and thank you for the opportunity to ask questions. I just wanted to question this 20 basis points uplift you expect in Germany following the review. How much of the assets by the end of the regulatory period will be based on the new regulatory framework versus the old regulatory framework? Because I understand the uplift is roughly 200 basis points, and you're going to spend more over this period than your entire RAB at the moment or similar to. Based on my calculation, the uplift would be more in the range of, I don't know, 100 basis points rather than 20. Can you please elaborate on this impact of this increased returns? Second question I would have, just I will stick to 2 questions, is what is your expectations towards the remuneration in Belgium?
I know you are very early in the discussion process, but I would be keen to understand how much of an uplift you expect there.
In terms of impact, maybe, it's helpful to remind you that there are four categories of investment in Germany. They are the investment falling into the base year regime. They are the onshore. They are the investment falling into the Investment Measure regime, also onshore. You have the CCA onshore, and finally, you have the offshore investment. The consultation that has been published by the German regulator only addressed the category of the onshore CCA investment, and more specifically, the new onshore CCA investment. That's probably the reason why you might have had a higher computation after the first element of publication, because you were considering the entirety of the new investment and not necessarily and specifically the ones linked to the CCA.
Second element, you are right to say that the figures that we are giving, so the 20 basis point, is an average over the five years period. We will have years after years, more new investments, more investment qualification, being new. And it means that what we can expect is, in the beginning of the period, a lower contribution, but at the end of the period, a higher contribution. There will be indeed a timing, a timing impact, based on the publication of the increased return, like done today by Germany. Lastly, for Belgium, it's very difficult to say anything relevant at this moment. Like Chris mentioned, we are engaged into talks and discussions with the Belgian regulator, but it's premature to mention anything.
We don't know yet if something will be allocated or will be given by the CREG. If something would be given, what would be the exact mechanism? That's something we are currently discussing. We expect to have more visibility during Q3, and more specifically, at the end of Q3. Of course, we will continue to keep you updated, as soon as we can say something on the possible outcome on those discussions.
Thank you very much.
Thank you. Thank you, Piotr. I propose now to move on to KBC, where we have Wim Lewi. Wim, please go ahead.
Yes. Hi. Thanks for taking my question. I hope you can hear me okay.
Yes. Very good.
Oh, fine. Right. I have a follow-on on this German regulator question, and thanks for explaining that split. I was a bit surprised to see that the offshore consultation will be completed or at a start only in October. My questions on this is really, first, why do you think that's been separated? Do you think that can be finished, these consultations and this new calculation before the year end? Also because you're ending your capital market day at the beginning of December. What's your view on this? Why is it separated, or do you expect this to be a similar formula as is done with the onshore, and then just fill in different variables, or maybe just exactly the same formula? What are your thoughts on that?
In terms of timing, the consultation is indeed announced in October by BNetzA. I know that the four TSOs in Germany are trying to have some information published by BNetzA a little bit earlier. We expect, indeed, that this consultation will be finished by the end of the year. We expect, indeed, that for the tariff settings of 2024, all the new elements onshore, offshore will be included. In terms of what could it be as mechanism or even as, let's say, % of possible increase, sorry, but once again, it's too early to say.
We really need to wait until the moment that regulators come with something official to be in a position to make any comments on those ones. I will ask you a little bit more patience until October, at least for offshore.
Okay. If I made an, a follow-up on, WindGrid, and there, you also mentioned that there were additional costs, about EUR 2.8 million. Can you give a little bit of qualification what these costs are about? Is it investing in new people? Is it start-up costs? Really, what's the nature of those costs? Are they one-off or more recurrent kinds? Then lastly on that, when do you think you can kind of give more, yeah, on the revenue side from the pipeline, when we can expect some news on that front?
Yeah. In WindGrid, it's a combination of 2 things. On the one hand, it's of course, that we are in the phase of the build-up of the team. To give an example, we recruited 2 people specifically focused in the U.S., on the U.S. market. As you know, WindGrid is focusing, in a 1st instance, both on European markets outside of the Belgian and German regulated space, and also at the U.S. side. We thought it was a good moment as well to reinforce the team in the U.S., to make sure that we can participate to a number of upcoming tenders that we have in the northeast side of the U.S., which is the focus point that we have today.
As you know, we have already made 2 partnerships, 1 with PPL and 1 with NextEra, in the U.S. As well, we are looking at a couple of specific opportunities today in, mainly in the Irish Sea and in the Baltic Sea, that we're looking for. The other ones are, let's say, early stage DevEx cost that we have in a number of projects that we are assessing. It's early stage, so it's at the moment that we try to assess if we can have a valid origination of those projects. That's mainly focused on the projects that we have seen in the Irish Sea and in the Baltic Sea.
Secondly, we have responded to a consultation round, a pre-consultation round in the state of New England, where we expect that there will be then the real consultation on a transmission-only tender later this year. We expect the same. We have not yet spent a lot of time on that, but we expect the same also for the state of New York somewhere in the early part of next year, that they will also have a consultation on a transmission only tender. That's more or less where you see that the costs are going today.
If you look at what is the expectation, if we look at the pipeline that is currently there, and the maturity of that pipeline compared to FID and the real moment of investment, you should further look at the end of the decade before we start to have really, let's say, commissioned assets that could be part of that. We think that investment tool will be starting, let's say, likely not in the coming two to three years, and then we will have a, let's say, a development phase, and then you will have a phase that we can then either sell those assets, either monetize them for a while. That is a little bit what you see in that pipeline. It looks like a.
... Let's say, a very positive and healthy pipeline. We remain very, let's say, optimistic about what WindGrid is doing. We see as well that we have a lot of traction both in the U.S. and in Europe, in the specific places that I mentioned, because there's a lot of need of capabilities. Elia has developed those capabilities over the years. There's a little bit, of course, like, development time is there as it should be there, so we de-risk those projects in substantial steps in the stage gate process, as we've always done that. That leads then to the timelines that we just proposed to you.
Okay, thanks. Very clear. Thanks.
Thank you, Wim. I propose to move on to Mafalda Pombeiro. She's representing Goldman Sachs. The floor is yours, Mafalda.
Thank you, Yannick, and morning, everyone. I have two questions on my end, 'cause I believe most of them were already answered. The first one is still on the Belgian review, potential review. I know you probably can't comment, or it's a bit too early to comment on what you could get from that potential negotiation, but if you could comment very high level, what would be your potential demands, or what do you think could be improved versus the status quo? That would be great. The second one would be on the investments for this year. As far as I understood, we invested so far a bit more than EUR 800 million, and there is a target of EUR 2.4 billion for the whole year, so I think there will be a heavy CAPEX second half.
Is this normal seasonality, season, related to the seasonality of the projects, or is this driven by the constraints you, Chris, were mentioning during the presentation, namely in terms of the supply chain? Any comment that you could provide in terms of the net debt evolution, excluding EEG, towards the end of the year, would be great as well. Thank you.
Okay. Maybe on the first one, so about return on equity in Belgium. Look, what we see in Belgium is that we can expect higher investments in the next years, the next five years, which are absolutely necessary to maintain the high level of security that we have on the grid, the high reliability, on the one hand, and second, for delivering on the energy transition. It's not only that interest rates have been set at a moment where the environment was different than what we have today. It's also that the magnitude of funding that we will need, both debt and equity in the future, will be higher than what we have seen in the past.
That's the context in which we are, and those are the elements we are currently discussing with the regulator. To give any indication on a possible outcome, I'm sorry to say once again, is really premature. That's something that we can't do at this stage. We really need to wait until the moment that CREG would come with any kind of signal and information towards the market. On the second element, in terms of investment, if you would look at historical trends, you will see year after year, the same kind of trends, namely, that investments are more backloaded than front-loaded. I commented earlier on our results, OPEX and interest impact on the net result.
For the CapEx, the trends goes in the opposite direction, usually we have much less in the beginning of the year, and then we have more at the end of the year. It's linked to a number of factors, operational factors, winter conditions in the beginning of the period, especially in Germany. It's also linked, you are right, to a number of capacity slots that we want to reserve at suppliers, and so a number of prepayments that we will do, and more at the end of the year than at the beginning of the year. We are really confident in our ability to deliver on the total guidance for the CapEx.
The trends that you are currently seeing is something that you will see in the past as well.
Thank you.
Thank you, Mafalda. I'm also very happy to have Exane in the call, Harry Wyburd. Please, Harry, go ahead.
Hello, everyone. Thanks very much for taking a question from a new face, though, appreciate we've had a lot of good questions already, I'll just keep it to 2 relatively short ones. Sorry to come back to regulation again. On Germany, you mentioned in the prepared remarks that you thought it was important that you got higher remuneration on the existing asset base as well as new investments. I just wanted to check whether you see any chance of getting an update or a change to the remuneration on the existing asset base in this regulatory cycle, by the end of this year, or is that something that would have to wait until the next regulatory cycle in Germany? 2nd one's sort of bigger picture, I guess.
Looking internationally at some of the opportunities you mentioned just now on WindGrid, I guess, you know, we're looking quite, you know, sort of focused here on Germany and Belgium, and there's a massive CAPEX opportunity, and if you extrapolate that globally, You know, it's even bigger. I wondered, do you have in mind an amount of capital that you'd be willing to allocate to international activities over time? Or maybe a sort of what you see as the addressable market, just give us a sense as to how material that could be towards the end of the decade for you internationally. How would you look at returns in international investments when you are deploying your own capital? Would you look for something that was just better than what you're getting domestically in Germany or Belgium?
Would you look for a kind of IRR WACC spread, something like the offshore wind developers target? I'm just interested in how you think about returns and value creation there. Thank you.
Okay. Would you like to take on regulation? I answered them maybe a number of times. I'm happy to continue to do.
Yeah, I mean, you take maybe regulation, I will then comment on the, let's say, the WindGrid side, if you are okay with that.
Okay, okay. On regulation, our view is, of course, that in order to fund properly, the assets that we have, the return level needs to address both existing and new assets, but at the end, we will look at the return, let's say, in total, apply to the hub. We believe it would be logical to have an increase on the existing assets and the new asset, and not only on the new asset, and that's indeed one of the point we are putting on the table in our discussion with the regulator. Whether we will be successful in this discussion is something that we'll know later and by the end of the year.
Then I will comment on the WindGrid situation. What we see is the market is really speeding up, so we see that both in Europe, in other parts of the Baltic Sea. We see that in the Irish Sea, we see that also in the North Sea. Unfortunately, in the North Sea, we see that there are a little bit less opportunities because we have already very capable existing other TSO that are operating in the offshore space. There's little space left than for somebody that is, let's say, not coming from the regulated side directly. That's the same case for WindGrid, so we're more focused on that side.
In the U.S. side, we see as well that after of course, the hit that we saw in that market by the inflation, that everybody was a little bit taken by surprise. We saw that wind farms are paying the price for that. We see now a correction. We see that IRRs on projects are again going into the direction of the double digit plus kind of return. Both what we see, and that's, of course, also the intention of WindGrid, that we can benefit from places where we have a return which is higher than the current average return that we have as a group. Otherwise, it would not make a lot of sense to go for that expansion. Now, the other thing, how much can we expose to that in terms of CAPEX?
I think that's a real question that we are working on today, because we had made some, let's say, soft statements about that before, but that was, of course, before that we saw the huge increase in the organic side of the business. I think that we have now to take into consideration what is the kind of capacity that we can have on the balance sheet to find those different CAPEX streams. We have, of course, made a commitment in the regulated space, and we will fulfill that commitment if they give us the fair return that we need for that. That's a commitment that we've made, and now we can see what the headroom is that we have for further investments outside of that space.
That is with those, let's say, acceleration that we see, Of course, the opportunity becomes bigger at the outside, but also the stretch on the balance sheet by the existing business has become greater, and so that's something that we will have to rebalance, and probably we will have some more comments on that later in the year when we have the Capital Markets Day.
Got it. That's very clear. Thank you. Just maybe a very small follow-up. You mentioned the double-digit IRRs. Is that an equity IRR or an asset IRR?
That's an asset IRR. If we look at the equity IRR that we would have, they are still, let's say, substantially higher than what we see in Europe today.
Got it. Thank you very much.
Good.
I see that, Piotr still has a follow-up question, I believe. I would say, Piotr, please go ahead.
Yes, I have two or three follow-up questions. Thank you for the opportunity to ask them. Firstly, I wanted to ask you about your capital position. How much, based on your calculation, you need equity to finance your current investment program? How much can you wait until you have to do another right issue? Essentially, is it, based on your calculation, is it going to come in 2024, 2025, 2026, or can you please elaborate on this financing front? The other question I had was, can you please say if you see any influence or read across from the TenneT negotiation with the German government into your position on 50Hertz, would an idea of disposing the asset come to you, or how would you assess this situation in your context?
Finally, I mean, we talk a lot about the offshore cost inflation. Can you say roughly how much of a cost inflation for the offshore asset connections you've seen over the last 2, 3 years? Thank you.
I will take the first, maybe on the capital and the capital increase that might be expected or not. First element, you will remember that we said at the beginning of the year, and we can confirm, that we don't see any need of additional equity for funding the investment program we have in Belgium, we have in Germany in 2023, that's something that we clearly not have on the agenda. Second, in terms of equity raise, that might be necessary in, let's say, the longer term. Based on the current investment plans that we have in Germany and that we have in Belgium, it's not that we see an urgent need to do an equity raise in the next 12 months.
Of course, we can be opportunistic at certain moment of the time, depending on market conditions and evolution of the market. In terms of, let's say, funding needs, and you know that we fund based on gearing ratios and the regulated gearing ratio for Belgium, and 25% equity, 75% debt, at German level. Based on, let's say, evolution of those ratios and current investment plans that we have, we still with the capital increase that we did last year, we still have some buffer. It will mostly depend on market circumstances then, on the one hand. Second, of course, outcome of the regulatory discussions.
And depending on possible revision that will be done, it will impact on not the cash flow that we have at level of Belgium and at level of Germany, and so it could also have an impact on the on a possible timing and success of the operation. So that's the reason why in terms of amount and in terms of timing, we are not more precise for the time being. And that's for sure, something on which we will comment in December, during the Capital Market Day, giving much more precise indications about the financial means that will be requested over not only 2024, but also the longer period and the longer regulatory frameworks.
Maybe on the second question. As we have mentioned, in previous calls, this is of course, the situation that we monitor closely, because any move in ownership could have an impact on the 50Hertz situation. We have, of course, the benefit that through our partnership with KfW, we have a quite open dialogue with the government on potential consequences. What we see today is that they're relatively happy with the way how 50Hertz is run, and the way how they can have transparency on the operations as well on the role that Elia Group plays into making sure that the Energiewende gets delivered. In that perspective, we feel quite comfortable that we are in a position that at least, when something would happen, there will be a dialogue in which we can participate.
There seems to be no urgency, or at least, less urgency, from the government to look at a fast consolidation of the TSOs. They're now focused on making the deal happen, and that, of course, has been quite influenced by the fact that the Dutch government has changed into a government of current affairs. Meaning actually, that all negotiations, as far as we know, has been stopped, waiting for the list of topics on which the current government in current affairs can work on, and that need to be voted by the Dutch Parliament, somewhere in the second week of September. We wait, is the TenneT deal on the list, yes, no?
It will have an impact on the way, of course, how that negotiation will go. We are not in the driver's seat of that negotiation. It's very clear that the negotiation topic is a 100% carve out of TenneT Germany and taken over in a first step by KfW. There are some discussions today about what could be a second step of a placement of that capital. They're very immature at this point of time. As said, like, it's not something that we would worry too much about today, because we think that we're in a relatively okay position. Maybe last thing to add, in our press conference in Germany, I stated the official position of the group towards this deal. It's very clear that Elia is committed to its relevance in the German market.
That means that we will defend our position or look at potential opportunities that a shift in ownership will bring, and then we will evaluate that at due time and come back to the information that will follow out of that. It's too early now, given the fact that any negotiation around the TenneT deal has been stopped and is waiting for this parliamentary discussion in early September.
Thank you. I think that we had a very interactive Q&A. Still a point. Sorry to interrupt you. I realized that I forgot to answer one question that was raised on expected evolution of the net debt. Sorry for that. Looking at all the questions that we raised, that's one I skipped. To give a quick answer on this one, and if I remember well, the question was relating to a net debt position, excluding EEG, which make it much easier to answer because you know that on EEG we might have indeed some kind of fluctuations.
The answer is that we don't expect, let's say, material change here on the net debt by the end of the year, compared to what we have today. We will have, let's say, some cash movement, but not something to materially impact the position of the net debt compared to where we are at June. Thank you, Catherine, for this additional clarification on the question asked by Mafalda. I think we can now close the Q&A, and I wish you all a very nice afternoon.
Thank you, Yannick. Indeed, if there are no further questions, I suggest that we bring this presentation to a close. Thank you, Yannick, Chris, Catherine, for your contribution. Thank you also to Stéphanie Luyten, working behind the scenes and the whole technical team. A recording of today's presentation, the slides and the script will be made available online later today. Thank you for joining us and enjoy your day.