Good morning, everyone. I'm Delphine Deshayes, the new Investor Relations Director at ENGIE. It's a great pleasure to welcome you to ENGIE's 2022 Full-Y ear Results and M arket Update Presentation. We have four speakers this morning, Catherine MacGregor, Pierre-François Riolacci, Paulo Almirante, and Frank Lacroix. Jean-Pierre Clamadieu, our Chairman, will make a short introduction ahead of our market update presentation. A quick view of this, of the agenda for this morning. In the first part, Catherine and Pierre-François will review our results and the main events of 2022, followed by a short Q&A session.
In the second part, after a 10-minute break, Catherine will lead us through our market update. She will be joined by Paulo, Senior EVP in charge of renewables, and Frank, who recently joined us as EVP in charge of energy solutions. Pierre-François will present the capital allocation and the 2023-2025 financial outlook before some concluding remarks from Catherine. Finally, there will be a Q&A session at the end of this presentation. We'll take questions from the floor and online. Before starting our presentation on our full- year results, we'd like to share with you a short video on ENGIE's 2022 highlights.
2022, an unprecedented year. Geopolitical tensions, climate emergency, energy price volatility. In this crisis context, ENGIE, a responsible player, mobilized on all fronts. In Europe, diversification of gas supply sources, record LNG unloading, gas reserves 100% full to secure winter supplies, supporting the purchasing power of our individual clients, assisting the competitiveness of our professional clients, actions to enhance energy efficiency and sobriety. This unparalleled crisis confirmed our vision, that of a balanced and diversified energy mix based on the alliance of electricity and gas. Our strategy aims to accelerate in renewables, +3.9 GW of new renewable capacity, +8 GW of offshore wind projects worldwide in development, 65 renewable projects under construction worldwide. Create energy decarbonization solutions for our clients, +400 MW installed in heating and cooling networks. France, Belgium, Singapore.
Over 12,000 new charging points to accelerate low carbon mobility. 480 MW contracted in on-site energy production for our clients. Bring flexibility to the energy system. In the United States, acquisition of a 6 GW 33 project portfolio of solar and battery storage capacity from Belltown Power. Develop and transport increasingly decarbonized gas. In France, 8 TWh per year and almost 500 renewable gas production units connected to the GrDF and GRTgaz grids. In Australia, development of the Yuri project, one of the world's first industrial scale renewable hydrogen projects. Lastly, develop our infrastructures. Brazil, completion of the construction of the Gralha Azul project, 1,000 km of high voltage power transmission lines. In this crisis context, ENGIE has continued its transformation. A more industrial group refocused on 31 countries and its core businesses.
On the strength of these 2022 successes, ENGIE is accelerating its growth in the energy transition. Thanks to the commitment of its 100,000 women and men to stay on track towards carbon neutrality in 2045.
All right. Good morning, everyone, and welcome. Very pleased to host you this morning for what I hope will be an interesting event. First, for this first section, a few comments on what has been a very strong performance for ENGIE in 2022 in what has been a really unprecedented market conditions. In 2022, our teams have indeed put great effort into execution, delivering strong financial and operational performance. I want to highlight notably that we've increased our renewable capacity by 3.9 GW, which is really reaching our goal to step up the pace of capacity addition. We've maintained, in general, this very sharp focus on our strategic plan with what we like to call a high say-do ratio.
We have also played a critical role in supporting the security of supply in Europe and policy measures that have helped address these high energy prices that we have experienced. We've also continued to make progress in Belgium with the signing of an agreement in principles with the Belgian government. I will come back to that. I think more importantly, this recent crisis has actually confirmed the need to accelerate the energy transition, and this is where our strategy is fully aligned. Moving now to our financial and strategic progress for last year, the results really speak for themselves. We did post strong results in line with our twice upgraded guidance. EBIT grew 43% organically to EUR 9 billion. This was driven by a higher contribution, notably from GEMS, from Thermal, and from Renewables.
That led to a total net recurring income of EUR 5.2 billion. We also generated higher cash flow from operation, and this supported our gross CapEx of about EUR 5.5 billion, of which 58% went to our renewable activity. On shareholder returns, the board is proposing a dividend of EUR 1.40 per share, which is up EUR 0.50 from last year. It is in accordance with our dividend payout policy. It is critical for ENGIE to stick to our commitment and to be consistent with our policy. We also continue to roll out our performance plan, which delivered more than EUR 400 million of efficiency improvement.
We had a EUR 600 million plan over three years. Now we're at EUR 400 million, and this is pretty much across the board. We are ahead of our annual average implied by this three-year target, which is very good. We've maintained a strong balance sheet with high level of liquidity, which has been absolutely critical in this very volatile environment. Turning to ESG, we are fully committed to achieve their Net-Z ero ambition covering all three scopes by 2045. Of course, we have intermediate targets. In 2022, our greenhouse gas emissions from the energy production were reduced to 60 million tons, which is a reduction of 44% from our 2017 levels.
Through growing investment and also consistent delivery from Paulo's team here, the share of renewables in our portfolio increased again to 38%. We are obviously well in line with our 2030 target here as well. On gender diversity, ENGIE had 30% women in management at the end of 2022, and we plan to reach managerial parity by 2030, managerial parity between men and women. All these efforts and progress have been externally recognized, as indeed, we made progress also on our CSR ratings year-over-year, notably from MSCI from A to A A, and also Moody's ESG from 68 to 70. Very pleased with that as well. Few comments on our operational performance. A strong performance, which is really also driven by the strength of our integrated business model. Progress pretty much on all fronts.
I've commented already the renewables, the 3.9 GW addition over the last 12 months. We had notably projects in Scotland with Moray East, Eolia in Spain, projects in France, in Chile, as well as in the U.S., where we posted very strong performance in the U.S., especially in Q4, where we managed to commission more than 600 MW of solar and wind projects. Ocean Winds is continuing to make some really nice headways. We were awarded a lease area for a floating offshore wind site in California of 2 GW as an example of that progress. In general, in renewables, we're driving very fast forward. We have currently 65 projects under construction.
In terms of the strength of integrated model, it is well shown through our business GEMS, which has helped us commercialize renewables by signing a total amount of 2 GW of green corporate PPAs. As an example, we signed a very nice deal to supply 5 TWh of green power to Google. This confirms our position to be among the leaders on green corporate PPAs in the world, which makes us greater for our customers to support their decarbonization efforts. Of course, GEMS benefited from record high level of activities, driven mainly by very high volatility that we experience in the market. Pierre-François will cover this more into details.
Thermal business contributed to the security of supply and the system stability with high level of reliability, flexibility, and also the ancillary services which are more and more in demand as renewables are developed and inject more and more energy into the grid. In networks, of course, we had record activity. I will come back to this as I discuss the security of supply, but also internationally, in Brazil, we have reached more than 99% of the build-out of our 2,800 km of power transmission lines, and also TAG, our assets there in Brazil, internalize our O&M organization of its gas pipeline. Some really good progress on the integration of TAG. In Energy Solutions, we are continuing efforts to increase the efficiency, and we're building this platform for long-term growth around our asset-based business.
We have installed near 1 GW of capacity in distributed energy infrastructure. We have also won about 250 MW of contracts in France, Spain, Italy, also in the UAE. We have won multiple concessions to build and operate 12,000 EV charging points. Finally, in supply, we've been very engaged with our customers to try and help them with the energy price challenges and help implement affordability initiatives. In general, a strong operational progress, which has demonstrated the resilience of our integrate model in what has been a super volatile context. Few words on what has happened on the security of supply. Sometimes we take it for granted that we are in such a situation with our storage level this winter, but that didn't come without effort.
Indeed, ENGIE played a critical role in Europe as a gas infrastructure owner, operator, and a gas supplier presenting 10 European countries. We have, through diversification, allowed to find other sources of gas to be able to replace the Russian gas and pretty much eliminating our exposure to this Russian gas. We've used existing new suppliers, pipe gas and LNG, and manage indeed to fill the storage in a very good, at a very good level at the beginning of this winter. What that has meant is that our infrastructure activities in gas transport, distribution, LNG terminals, and storage, of course, have all been operating at a very high utilization rate. We've also made further progress unlocking the potential of biomethane in France, which has a role to play here, with the connection of 492 biomethane units to our grid.
Now the total production in France is reaching more than 8 TWh per year, which is showing the potential of this gas component. A few words to our actions that were taken to support the energy affordability and the security of supply. We were able to contribute to the government measures, we've taken dedicated initiatives for our customers, as well, of course, to our own employees. Just to describe a few of them, we have contributed EUR 1.1 billion in the 12 months of 2022 through existing profit-sharing mechanisms in Belgium and France. To that EUR 1.1 billion, you have to add another EUR 900 million, so EUR 0.9 billion, that were spent on inframarginal rent caps following the EU exceptional measures that were taken to address high energy price.
These infra-marginal rent caps are mainly related to our nuclear assets in Belgium, as well as contribution, exceptional contribution in Italy. In terms of strong commitment to enhance the security of supply, we also provided EUR 1.8 billion of working capital to support gas storage levels in France, as we, in some way, over-stored last year in order to be better prepared for the winter to come. We've also supported our employees with nearly EUR 600 million. That included exceptional bonuses, a global employee share ownership program, and other benefits. This was obviously in recognition of their tremendous efforts to handle the crisis and also in what has been an inflation, a high inflation environment. We've also engaged on public policy measures.
We provided EUR 1 billion of working capital support to implement the tariff shield in France, price cap mechanism in Romania and Chile, as well as in Belgium with what is called there the social tariff. As we already announced last summer, we've also been helping vulnerable customers with dedicated measures, trying to support as much as possible SMEs, alongside, of course, initiatives to help clients reduce energy consumptions, especially on days of high demand. As part of our vision that the energy market in Europe needs to remain integrated, ENGIE is also actively engaged in discussion on many policy measures, especially the new European electricity market design that the European Commission is working on.
Before I give the floor to Pierre-François, just a quick update on Belgium, where we have successfully phased out Doel 3 at the end of September last year, very recently, Tihange 2 earlier this month. As we announced early January this year, we have continued to make progress in Belgium, where we signed an agreement in principle with the government there. This agreement sets the framework for a 10-year extension of Doel 4 and Tihange 3 nuclear reactors. This agreement is really focused on ensuring a fair risk-reward balance that includes a legal structure which would be equally owned by the Belgian state and ENGIE. A cap on future nuclear waste management costs, and that would include a risk premium for the transfer of those liabilities. A set of guarantees also to ensure the proper execution of our commitments.
Subject to the progress that we need to continue to make over the next few weeks, the goal is to sign a final agreement before summer. Of course, in the shorter term, our priorities in Belgium remain to maintain the highest standard of nuclear safety, high operational availability, and also to prepare for the upcoming shutdowns for the remaining reactors. With that in mind, we'll give you shortly a financial outlook with a focus on group EBIT excluding nuclear activities as a reflection that nuclear is not part of the strategic priorities of ENGIE. I'm now going to hand over the floor to Pierre-François. Thank you very much.
Thank you very much, Catherine, and good morning to all of you. Thanks for making it. Indeed, quite a solid set of results. I'm not going to repeat the key numbers that you can see on this level. Maybe just to mention the very strong deleveraging that is achieved, despite the economic net debt being flat-ish compared to last year. Solid 2.8x economic net debt to EBITDA. That's, of course, a key number. Just maybe just to make another one on the dividend, which is EUR 1.40. That's, of course, a significant increase year-on-year. It is just simply complying with our dividend policy, this is of paramount importance for both the board and management. We want to stick to it.
Of course, not all of this EUR 1.40 is easily repeatable in the short term. We are very committed to a sustainable and healthy growth of the dividends in the long run. Let's go deeper in the numbers. Of course, this sharp increase of EBIT with three main drivers, GEMS, Thermal and Renewables. EUR 2.7 billion of your whole of organic growth. I will of course, double-click of each of these box. Maybe just to mention, and I'm sure you've noticed that Q4 is actually slowing down. Q4 is even slightly behind 2021, and there is some reason in there. There are timing effect that we flagged during our call on the Q3, which are actually impacting, but also the impact of the inframarginal taxes that came late in the year with some retroactive effect.
We have a positive effect on the FX, as you can see, + EUR 300, slightly negative on the scope. This is linked to 2021 disposals, but also a couple of assets that were disposed further in 2022 in line with our code exit and geographical refocus. Let's go to the precise numbers and start, of course, with Renewables. EBIT, EUR 1,627 million. It's another year of very strong organic growth in Renewables, + 19%. Maybe it's worth to highlight that in that case, wind and solar EBIT are actually at par with hydro. I think that's also a strong signal of what is happening in our asset base. I think that's a very good, very good story. What are the key drivers of the performance? The first one is growth.
I mean, we have been commissioning new capacities, and this is translating into a good EBIT. That's about EUR 300 million coming on the back of this commissioning. We had market conditions which were rather a tailwind in hydro in particular, that we are able to capture in France. Last but not least, despite focus on growth, we have been delivering on performance which is contributing and significantly. As the size of the portfolio is increasing, we have increasing opportunities to actually leverage further our performance, which is, of course, an encouragement. You remember that in 2021, we had this Texas extreme weather event, which was a negative, of course, it's not there anymore, it help us a bit.
These positive items were actually offset partly by the severe hydro condition that we had in France, which ended up with lower volumes, but also some expensive buyback around the summer. That's a hit. On the other hand, you remember in 2021, we had a positive one-off with the GFOM adjustment in Brazil, which was about EUR 300 million. All in all, pretty obvious in the waterfall, it's a strong year for Renewable. Network, as you know, is a very strong contribution to our EBIT, EUR 2,371 million in 2022. It's quite stable actually year-on-year, and with a mixed picture. In France, our distribution activities were of course impacted by the warm condition with lower volumes compared to last year.
On the other side, our transport, regasification facilities, storage activities have been delivering at a record level, as Catherine was mentioning. As you know, this positive and negative, they will actually equalize over time through the clawback mechanism, which is embedded in the regulations. That will happen in the short or medium term. Overall, they are actually value neutral. The net balance, however, in 2022 was slightly negative on this temporary effect. In Latin America, our operations benefited this year again of their intrinsic growth and also some indexation on inflation. I would mention to close that one, that we have managed to monetize the market volatility through our storage assets in the U.K. These are non-regulated activities which allow for the on-account trading. Of course, we've been able to capture higher margins this year due to market conditions.
Energy Solutions has been also posting a strong organic growth of EBIT, 17% at EUR 412 million. It's a very good year, supported of course, by higher energy prices, but also a good commercial dynamic. These positive effects have been offset to a certain extent by warmer temperature, which hits the volume, and of course it is sensitive, and the reversal of some 2021 one-off in America. I'm sure that you have noticed that the EBIT margin is under pressure. This is due to the energy selling, which is embedded in the revenues because we are selling energy. On that one, we have very small margins. The higher is the price, the higher it will dilute the margin relative to the rest of operations. One word on our favorite, which is EVBox.
On that one, which is of course difficult, we do have positive signals in operations. The production is actually ramping up. Our process announcement is on track. We've made very good progress in fixing our issues. Now, the key parameter to scrutinize is of course, the growth of the European market. You know, in the long run, we are confident that is quite supportive. We had significant improvement of our financial results in H2 with reduced losses. We expect to reduce in 2023 our losses further with the target being breakeven in 2024. There is no secret that this business is not core to ENGIE. The plan is to monetize this asset as soon as we be comfortable that we can achieve a decent valuation for an asset which is a good asset in a strong market.
Thermal has been posting a very strong year, EUR 1,768 million of EBIT +47% organic. Very positive, of course, due to higher spreads that were captured by our European gas plants and also pumped storage assets, alongside with a very strong level of ancillaries. No surprise because Thermal is, as you know, exposed or to be with the maximum actually market exposure due to high level of optionalities embedded in the assets. Delivering that kind of results require a high level of operational excellence, but also very strong skill to monetize the value of the optionalities. It is quite remarkable, but in this kind of price environment, it can also trigger some issues, and we had some. It's clear that an outage in the current market condition can cost a lot of money.
We had some issues also in Chile and Australia that I've mentioned before with an unbalanced supply and demand market, which is creating some pressure on existing positions. I'm sure you all remember the Italian extraordinary tax, which has been hitting Thermal significantly last year. This tax, we believe, is not okay, and we are contesting, as you know. It was a very good year of performance from Thermal assets, and kudos to the teams. Supply EBIT is definitely under pressure. It's minus EUR 230 million of organic decreases this year on supply and slightly negative, - EUR 7 million EBIT. Here we are talking about supply B2C. It's not supply B2B, it's supply B2C, it's a retail market. The first driver of this performance is of course, a reduction of 20% of the volumes.
Out of this 20%, you have about 40%, which are actually correlated to climate. You have also 60%, which are more correlated to customer behavior and demand reduction, of course, triggered by the price signal. Our activities in France have suffered even further. They are negative, as you can see, - EUR 150. That's - EUR 350 compared to last year with two main drivers. First, there are some cross-year timing effects, which, in the context of a strong price variation, they are usually minute, but with the price we have, they can become more significant and we will recover part of this timing effect in the next couple of years. There is also the cost of the support measures that we have decided to our vulnerable customers and small size businesses. Two last points that I need to mention.
Despite the pressure that we get from the environment and the customers, of course, which are struggling with these prices, our teams have been focusing on delivering a seamless execution of service, which is really great and at the same time to improve performance further, as you can see on the graph, which is supporting our long-term competitive position. The last one I want to mention is that we do have some increase of bad debt, basically in every market, but actually to a very reasonable extent so far. We are talking about a few tens of millions for all our main countries. Nuclear, which is, of course, still a strong contributor to our operation. EUR 1,026 million of EBIT this year, + 7% organic growth. Actually a limited increase year-on-year with a significant downturn in H2 as expected.
Good to know that volumes are down year-over-year. This was actually anticipated due to planned maintenance, but it's another strong year of operation in terms of unplanned activity and availability. Quite strong. Even if we had some downtime, you remember around summer. Still a very high contribution driven by the prices, high capture price, but seriously mitigated by the taxes which have been increasing in Belgium very significantly. That's the case of the specific G2 tax, which is up quite significantly, as you can see. You remember that the calculation mechanism is based on a notional hedging policy and using forwards. It's pretty disconnected actually from the capture price, and this is something to bear in mind. As you can see, quite an increased amount.
Of course, you have the inframarginal rent cap that came valid 1st of August 2022, at a threshold of EUR 130 /MWh and this is an extra EUR 400 million that we have to pay on 2022. Let me grab this opportunity to address the impact of the nuclear provision increase, not direct impacting a bit, but since we are on nuclear, I need to stop there one minute. Overall, it's an increase of EUR 3.3 billion of provision with for what is going to Synatom, which is a big ticket, EUR 2.3 billion for dismantling and EUR 0.7 billion for waste management. You know that we are not in agreement with this amount and we are contesting having discussion with the CPN, but it is what it is.
It is, of course, fully booked at the end of 2022. Dismantling provision. They imply that we recognize an asset on the face of it. That's IFRS. Part of this asset cannot be sustained during the residual life of the plant and therefore is impaired in 2022, and that amount to EUR 1.2 billion. The remaining parts, about EUR 1 billion, will be, a bit more, will be actually amortized over the residual life of the asset and will impact the EBIT in the future from 2023-2025. Overall, the provision increase impacts our non-recurring net income for EUR 2.1 billion, not related to EBIT, but worth to mention since we are on nuke. We go to others.
Others is EUR 1,848 million. It's a lot about GEMS, which is posting a very strong contribution +EUR 2.1 billion year-on-year. As already explained on the nine months result, GEMS performance is outstanding, basically in all activities with opportunities to maximize the value of the gas contract optionalities, high volumes with healthy margins and risk management, of course, monetization of the market volatility. It is not directly visible, thanks to the strong performance of all activities. You should keep in mind that these earnings include the cost of the hedging action to reduce the Gazprom exposure that was managed during H1. It is also impacted by part of the Italian extraordinary tax that I was referring to for thermal.
I will come back on GEMS a bit longer together with Paulo in the next session. In the others variations or the others of others, you will find the impact of the exceptional bonus that we have decided to give to each of the ENGIE's employees, EUR 1,500 per employees to support them in the current challenging environment. One world on the performance plan that I've mentioned already a couple of times, we are ramping up with a contribution this year of EUR 0.4 billion, which is quite significant and coming on top of the EUR 100 billion that we had in 2021. Main contributors remain operation excellence, improvement also of loss-making entities with many concrete action. I'm not going to well too much.
I need to mention the strong cost control on G&A, in corporate, in all countries that is allowing us to offset inflation and also absorb the growth of our operation while still controlling our G&A. More importantly, our GBU organization is actually gaining momentum, building benchmarking tools, digital solutions, spreading and implementing best practices, pushing innovation and not reinventing the wheel everywhere. It has become clear that the performance culture is increasingly embedded into our day-to-day operation, as you should expect. In line of these results, we confirm, of course, a EUR 0.6 billion target over 2021-2023, which is already achieved for a significant part. Maybe, it's good to look how the stronger performance in EBIT is translating into net results.
Good to see, probably good to spend a bit of time on financial expenses, which are up by about EUR 300 million. The majority of this increase is linked to a lower income that we have from Nord Stream 1 dividends, Nord Stream 2 interest, and also higher interest on margin costs, which have been on average on a higher level than it was before, and a slight increase of cost of debt. The tax charges were EUR 0.2 billion higher, and that's mainly driven by, of course, the increase in profit, with an effective tax rate sharply down from 29% last year to 23%. This is linked to certain countries where we only partially recognize deferred tax assets in Europe, in the U.S., and in Australia.
You also may remember that 2021 was impacted by one of in the U.K., which was posting a high rate. The reported net income is EUR 0.2 billion. What is the EUR 5 billion difference between the recurring net income and the reported net income? First, it's a negative that I was mentioning a bit earlier on the provision, north of EUR 2 billion, that was mentioned on December 20, during the call. It is made of the EUR 1.2 million impairment that I was mentioning a bit earlier, plus the extra provision for waste management. There is another negative of EUR 1 billion, which is linked to the credit loss recognized on the loan to Nord Stream 2. You remember that was a H1 event.
There is a remaining negative EUR 1.6 billion of impairment, mainly on the thermal assets in Chile and Morocco, and also a prudent review of the balance sheet. There is a negative impact of the mark-to-market on commodities, which is net of tax, EUR 2.8 billion. This is due to hedging instruments, which are actually covering hedging commercial contract. Commercial contract are not mark-to-market. These ones are mark-to-market. Of course, they will net over the life of the contract. There is no further impact, but there is this negative mark-to-market. Then I need to mention the capital gain on EQUANS disposal, which is EUR 2 billion+ .
Going to cash flow now, I think the big one is, of course, that cash flow from operation is up EUR 1.5 billion compared to 2021. It's good to see that the operating cash flow is up EUR 2.6 billion, which is broadly in line with the EBITDA, it goes pretty straightforward to operating cash flow. Interest and taxes are up EUR 1 billion year-over-year, in line with increased financial charges, also higher taxes, which are triggered by improvement in profits. The working cap requirement variation compared to last year, the variation of variation is zero, the actual working cap variation is -EUR 2.4 billion like last year. You are familiar now with this format to explain the working cap.
I'm not going to dwell on it, but I would like to just draw your attention on the cumulative impact over two years, which is quite significant. indeed, it's close to EUR 5 billion that we have tied in the business over the last couple of years due to prices increase. We have discussed that at each quarter since the beginning of 2022, the key elements are always the same. Gas storage is up. It's up because we have higher volumes, that is on the back of security of supply, and it's up because the prices to build the storage is also higher. we have receivables net of payables, which cumulated 2021, 2022 are also increasing by about EUR 3.3 billion, driven again, by the high commodity prices.
Due to business mix and strong discipline in paying our suppliers on time, we've been able to decrease our DPO, Debt Payable Outstanding, by 15 days to 50 days by zero. That is good, and we are proud of it. We are also, due to rigorous billing and strong collection, we have been able to reduce our DSO by about six days to 38 days. Again, quite balanced, strong working capital management, but still, this EUR 5 billion. Worth to mention that there is a tariff shields in many countries which have been put in place. The overall impact all in is about EUR 1.3 billion worldwide. This is net of the securitization program which have been executed, especially in France. Good to know that we have not incurred significant cost with relation to this payment defaults.
Interestingly enough, we've been able to minimize the impact of the margin calls with accumulated impact on the two-year, which is only EUR 500,000 . It's clear that markets are getting more efficient to manage capital consumption. EUR 5 billion injected that we expect to reverse in the short to medium term, of course, along the way of price normalization. Despite this temporary but significant working cap consumption in 2022, it's still a year of turning points in our financial flexibility with very significant deleveraging measure in both ratios of debt to EBITDA. On top of strong cash generation, disposals are bringing, as expected, a significant resource, especially with the finalization of EQUANS sale. This allows to cover and more working cap consumption, increased gross CapEx, accelerated nuclear provision funding, and higher dividends to the parent company or shareholders.
Net financial debt is therefore down EUR 1.2 billion. Economic net debt is increasing slightly impacted by the EUR 3.3 billion upgrade of the provisions in nuclear, also supported by the evolution of discount rates lowering post-employment provisions. As debt is controlled and you fully benefits of improved operation, our debt ratios are sharply down, now standing at 1.8x for net financial debt to EBITDA and 2.8x for economic net debt to EBITDA. It is worth to mention that these figures can be considered as a low point and will increase in the coming years. They give us ample headroom to manage operation in a prudent bandwidth of economic net debt to EBITDA, I will come back to that one, with an unchanged maximum of 4.0x. That, of course, I will comment in the next section.
With that, I turn back to Catherine to conclude this first part dedicated to the full-y ear 2022.
Thank you very much, Pierre-François. To conclude, we just to leave you with three key messages. In these unprecedented years, ENGIE truly demonstrated its resilience. We reacted, we were proactive, we attended to our customers, we provided security of supply, and generally, we managed the crisis really well. The second is that allowed us to post a strong financial results. Third, very importantly, we also maintain the momentum on our strategic roadmap by advancing at pace, particularly with the progress on renewables. Thank you very much for listening. I'm gonna pass it down to Delphine for the short Q&A.
Thank you, Catherine and Pierre-François. We now have a short 15 minutes Q&A session before continuing to the market update presentation. Please, can I ask you to keep your questions just to 2022 results, as there will be plenty of time later on for our questions on the market update. If you don't mind limiting your questions to one or two only. We'll start by taking questions from the room, and then we'll take some questions from online. Before taking questions from the room, operator, could you please remind our online participants the process for asking a question, please?
Yes. Anyone who wishes to ask a question may press star and one on their touchtone telephone.
Thank you, operator. We have a first question on the floor.
Thank you. Good morning, everyone. Congratulations for the release. Maybe the first two questions will stick to 2022 and maybe a little bit on 2023. With regards to the working cap first as a balance, you mentioned EUR 4.8 billion of total impact related to the current market environment. I was wondering if you could provide an idea of what could be the magnitude of these figures with regards to the recent drop or slight drop in power market prices in terms of impact, if we had to mark-to-market it.
Also if the evolution and notably the market reform, which is currently under discussion could have an impact in this kind of figures going forward, in your forecast. My second question would be maybe related to, so to remain in the short term to the supply side. I think that you mentioned that you had a drop in volumes, for a bit more than EUR 150 million in terms of impact. Could you tell us what would be conjuncture and what would be structural in your view, regarding these elements? Also regarding the other topic of EUR 100 million still in the supply business, is there is any recover that could be expected in 2023 or not on these figures?
Okay. Maybe on the working cap first. Yes, of course, I mentioned that the reversal of the components of this increase is coming with the normalization of prices. You would expect that when prices start to normalize, it will come back. It takes a while, and as you can imagine, the storage part is not equally the same, that receivable part. The receivable part is very much linked to the volume. As it normalize, you should see it coming quite quickly. You need to take into account, of course, the seasonality because our volumes are not the same in summer and in winter, so it can really create some phasing impact. You know that there is nothing more complicated than to anticipate the working capitalization.
We are working on it, very close to it, but that should not be something that is lasting for a long time. Storage is a bit of a different story because it also depends when you are actually moving physically, stocks around. It's clear that's not a reversal that should be back-ended, and you should expect when price normalize to see that reversal coming. About the impact of regulation, depends, of course, a big one is about the tariff shields, because if tariff shields were lifted, that would be definitely helping. It's clear that we expect this mechanism to, of course, decrease as the price is normalizing. Same story. Then it will help us to recover what has been stored so far.
The good thing is that today, as I mentioned, we didn't have any significant issue with these tariff shields. I mean, all of them have been recovered and are being recovered according to regulation. We cannot point to any significant issue in there. We are helping with the balance sheet. That's part of our contribution, as you know, to society. We are helping at a cost which is okay for ENGIE. On supply, maybe.
Maybe on the supply and the volume destruction or the volume drop in what we saw, indeed, quite a hefty demand drop. There are really two effect. One, which is the temperature, which obviously, we will see what happens there. Then the other part, so it's about half and half. Half temperature and the other half is really demand destruction. Demand destruction with a very strong demand destruction among some of our very heavy energy-intensive customers. So, you know, heavy industry have dropped sometimes north of 20% in terms of gas demand. So we really saw this big destruction in demand. While residential, which was more around, let's say 10%.
The hope, though, is that the sobriety effort continues, and so some of that demand destruction, so apart from climate, the remaining half, some of it should stay because it is sobriety, it is actually virtuous behaviors that we are going to need for next winter and the winters to come, huh? Let's face it, even though right now the gas situation is very positive and that's reflected in the gas price, we continue to see some tension in the system because the volumes from Russia have not been replaced physically in the global market. Sobriety is going to be very important.
We do hope that the demand destruction, which is linked to potentially production having been stored, that will recover on the basis of a, you know, lower price and there is some elasticity there that we hope to see as well. A bit of a mixed picture. Weather, difficult to forecast and demand destruction, some of it should come back, we hope. Some of it should stay.
We have now some questions online. Operator, could you please start with the first question?
The first question is from Vincent Ayral with JP Morgan. Please go ahead.
Yes. Good morning, congratulations for these strong results and guidance to 2025. They have been rarely so debated by the market. What we see on energy is a solid and growing guidance, supporting an exceptional dividend yield. I'd like to ask my questions on the guidance in the nuclear developments. Starting by the nuclear. Nuclear, we're having discussions, both contested provisions and the life extensions. It would be great if we had a bit of an update on that on the timeline where we are. There you have flagged the negative impact of potentially higher provisions, but not so the positive impact of life extensions, which lowers D&A financial results and provisions. That could represent somewhat a material offset.
Could you help us quantify this, please? And the second on nuclear is the G2 Belgium nuclear tax, which seems very high and absolutely decorrelated from the achieved price, especially when we consider there is a power price cap. I assume this is based on forward curves, but is there a true-up mechanism there? It seems almost illegal to pay a tax on prices you're not even allowed to achieve. That would be useful to understand what's the situation, if there is a true-up and what type of guidance we can get indeed on the nuclear tax for 2023. I have a last one, which is on the guidance assumption and the power price cap. What have you assumed there? Is it extended beyond mid 2023?
I understand that this is a third question. If you do not wanna answer it, you can leave it back to the room and then maybe someone else will ask this one. Thank you.
Okay. Thank you Vincent, for these three questions. Maybe just to start a little bit on the indeed the nuclear discussion that we are having with the Belgian government. This discussion have progressed well, as I've mentioned in my prepared remarks. We had an LOI, which was signed in July, and then we signed an agreement and principles, back in January, laying out quite a lot of work that still need to be carried out over the next few weeks and for the remaining of the year.
A few dates to keep in mind is indeed to have signing of the transaction, let's say before summer, and in a few weeks, hopefully we will have an intermediate agreement that will lay out the floor or lay out the path towards this signature before the summer. Quite a lot of work to be done. Obviously a lot of streams, as I think you understood from the description of the high level description of the deal. There needs to be the definition of a structure that will be owning these two units that are the subject of this extension. There is the definition of this cap and this transfer of liability, the timing of which needs also to be refined.
Of course, the LTO risk management from a remuneration standpoint, what kind of remuneration mechanism and risk-sharing mechanism that also needs to be defined now as part of the deal. I think the comment that I made in my prepared remarks was also to mention that eventually we will be guiding EBIT excluding nuclear, and this will be the discussion of later on. This clearly means that nuclear is not strategic for ENGIE. It also means that we're not necessarily expecting nuclear to be core of our business model. What we will be looking from a remuneration mechanism from this deal is to really mitigate the risk and have as low a risk level as we can on this remuneration mechanism. You want maybe to comment a little bit more on the remuneration deal?
A couple of comments. First, just to clarify again and again, our guidance is EBIT excluding nuke. It is net recurring income, including nuke. You have a discrepancy here in the guidance because the net recurring income, of course, is also the base for the dividend, and these assets are still there and contributing for the next few years. It's very important that you make a distinction between EBIT and net recurring income. Indeed, there might be some positive indeed impact of the extension. Some of it is probably a different amortization profile of some of the assets, if they are indeed extended, so that will help a bit. There would be, as you mentioned, Catherine, the remuneration of the extension itself. Let's be careful. We have decided that nuc is not core anymore.
That means also that in terms of risk profile, we are not prepared to take a significant merchant exposure. We are not prepared to take a significant CapEx exposure. We are aiming to something which is de-risk for ENGIE. Therefore, you should not expect also that we have a huge return coming from this extension. That will be a modest return. By the way, it will be, you remember, through a 50% stake in the joint venture. Keep in mind when you try to model potential upside that this is something which is not the same animal than the one we are talking about.
You have a very good question about G2 and the inframarginal tax, which indeed are based on the price, which are forward and which can actually be significantly different from the ones we capture. This is definitely something that we are looking deep in for the inframarginal tax, which is a new one. We believe that the fact that we cannot prove that this price we have not achieved is definitely an issue. That's a part of the discussion that we have with the authorities.
Thank you. On the impact P&L from the life extension, I'm not talking about the P&L impact in 2026 when they're effective and it's JV. The day you recognize you will do a life extension, you still got a couple of years at least where basically your provisions will go down for two reactors because the liability will be postponed. The depreciation, same story. Your higher provisions, you said basically that you have recognized a dismantling asset which is to be depreciated over three years. That has a significant impact on your P&L negative. We would expect all of this to lower. There would be a P&L impact before the life extension becomes effective, and that could be a few hundred million EUR. That's what I was looking for in terms of quantification. Thank you.
I think it's a bit too early to quantify, and that we have not done. It's not, it's not part of our story. Let's secure first this extension, let's see how it works, and then we'll discuss what it means P&L-wise in the next three years.
Thank you very much.
Thank you. I think that's all that we have on for 2022. Now we'll have a short coffee break before starting the 2023-2025 market update presentation, at 10:00 A.M. Thank you.
Welcome back, everyone. We'll now present our market update. Catherine will be taking you through our strategic overview. After that, we'll take deeper dives into renewables, the role of gas, distributed infrastructure, and our GEMS business. We'll be joined by Paulo Almirante on Renewables and Frank Lacroix on Energy Solutions. We'll take a further short break at the end of it before Pierre-François presents on the financial outlook. After that, there will be a 45-minute Q&A session where you'll get the opportunity to ask your questions to our speakers. Now, I'm pleased to invite on stage our chairman, Jean-Pierre Clamadieu, who will introduce this presentation.
Thank you. Thank you very much. Heavy menu indeed, so I'm just the appetizer, and I will be very quick. I'm delighted to introduce this session. I would like to share three messages from the boardroom. The first one, and I guess it was obvious in the previous presentation, is that 2022 has been an incredibly challenging year. I think the team made a great job navigating through a lot of obstacles to make sure that we can weather the impact of the energy crisis and at the same time continue the transformation of the group. We are now a more focused group, ready for the next stage of the transformation.
Second message is that 2022 was also a very challenging year for the world economy, especially in Europe. We've seen government, we've seen corporation adjusting very quickly to a very challenging scenario to mitigate the impact of a crisis. When it comes to Europe, especially, I think we don't have any other options in front of us than to accelerate the energy and climate transition. I think this is the only way to achieve, at the same time, strategic independence and recreate a competitive environment to help our industry develop. This makes ENGIE's strategy as it was set by the board in 2020 and implemented by Catherine and her team when she came on board.
This makes this strategy even more relevant. I guess, the last comment is that today we would like to update you on how we can accelerate our transformation, step up our efforts, and increase our commitments to be indeed a true leader in the energy and climate transition. The board of directors supports completely this strategy. We think that it will drive value creation, opportunities, results for the planet, for our customers, for our employees, and obviously, for our shareholder. We are convinced at the board that we have the best possible team to implement this strategy. With that, the floor is yours, Catherine.
Many thanks, Jean-Pierre, and hello again, everyone. Indeed, a bit less than two years ago, we presented our putting our strategy into action, which was a three-year plan. Much has happened in the energy world since then, which is why we felt it was important that we give you an update on where we are on this three-year plan, and also the current updated outlook, because so many things have changed. It has changed, and we are now more focused, we are simpler ENGIE, and we are geared towards growth. We will cover this morning the following. First, I'll come back to our execution track record. To give you a little bit of the perspective on the energy markets, and also what we like to see as an unmatched positioning to capture value from the many opportunities that lie ahead of us.
We will also deep dive in some of our businesses, and I will do that together with Paulo and Frank. Finally, Pierre-François. After the break, Pierre-François will present our capital allocation and outlook. Let me start with first taking a look at our execution track record, as despite the unprecedented turbulence in the energy market, ENGIE did stay the course and has now established what we like to call a robust platform to move forward in 2023- 2025, and even beyond. Pleased to say that indeed we have progressed on our 2023 targets. Some of them actually are already met, particularly on the refocusing of the group, now nearly complete . Our disposal plan has been completed actually ahead of time with the closing of EQUANS last year. Our geographic footprint now down to 31 countries.
If you remember in 2018, it was 70 countries. We have significantly stepped up our renewable growth in line with our ambitions. Third, we have applied a disciplined capital allocation approach. Of course, we want to do that because we want to improve our financial performance, but also to enhance our competitiveness so that we can indeed capture these many growth opportunities that we see. Finally, we have simplified our organization. If you remember, we had 25 business unit. Now we have four global business unit to work towards this more integrated, more industrial group, more focused on performance.
These achievements, having done all this in the environment that I've mentioned earlier, are obviously a testimony of the strong capabilities of our ENGIE teams, the ability to deliver and to execute on this strategic plan in what was a dynamic and volatile backdrop. Now we want to capitalize on this simpler, this more industrial ENGIE. It is time to ramp up our growth. On the one hand, we will keep expanding in renewables, both power and gas, and also distributed infrastructure from Energy Solutions. On the other hand, our networks global business unit will keep supporting the security of supply, Thermal and Supply global business unit will provide more and more flexibility solution to the system and will come back to the flexibility concept.
In fact, to reflect this Thermal and Supply, i'm very pleased to announce that we will rename it, Sébastien Arbola is here. We Thermal and Supply to Flex Gen and Retail. This is how we will refer to this new global business unit going forward. As you know, we are strongly committed to achieving a net zero ambition covering all three scopes by 2045. This is at the heart of our purpose. It's a societal, it's a business responsibility, which is why I'm very proud to announce that we are now SBTi certified, well below 2 degree C. To pave the way to this ambition, we are adding two intermediate targets. Four other countries, among which Brazil, will reach net zero across the three scopes as early as 2030.
We will reduce the carbon intensity of our energy production and consumption by 66% to reach the 110 g of CO2 per KWh by 2030. The strong commitment to ESG translate into a long-lasting leadership position in the Green Bond market. We are within the top three corporate Green Bond issuers globally, and our latest Green Bonds that were issued in January were once again largely oversubscribed. As a responsible company, we recognize more broadly the importance of preserving nature. Today, we have visible actions on biodiversity, fresh water and ocean, and forest and biomass. As an example, last year, we launched our label, TED, which is certified by Bureau Veritas, which covers three main themes that are critical to renewables project development. Territories, nature and climate. These requirements go beyond the regulatory setup. This label today is applicable in France.
It will soon be in five more countries. This approach is important because it helps ensure the right level of ownership of our projects by local stakeholders. This actually de-risks the execution of our project. In fact, it strengthen the delivery of our renewable pipelines. This is a good example of how aligned our ESG objectives are with our business ambition. Moving now to energy markets. It is clearly unprecedented moment for the industry and for ENGIE. We are entering a new energy order driven by a paradigm shift of the energy markets with strong tailwinds, you mentioned them, Jean-Pierre, for the energy transition and climate emergency. Security of supply, energy sovereignty have reemerged on top of the energy policy agenda alongside still climate. On the energy market, we anticipate midterm supply tension to remain. Why?
Because gas supply will stay structurally deficient because of the interruption of Russian gas flows. The drop in demand has obviously helped the market's balance. However, until new LNG capacities are commissioned, which should happen from the end of 2026 onwards, this tension is likely to remain. As a consequence, we expect energy prices to remain fairly volatile in the short to midterm. In parallel, the energy transition is supported by strong headwinds. First, because the climate crisis continues to grow in intensity with its shares, unfortunately, of natural disasters, it is imperative that globally we reduce the emissions. We have no choice. We have to advance. Also because the energy transition will relocalize energy production to a large extent, which will enhance energy sovereignty.
In fact, the IEA estimates now that renewables share of global power generation needs to more than double from 29% in 2021 to cover 60% in 2030. That's more than double. Many governments are obviously supporting this momentum through dedicated policies. We've talked a lot about the Inflation Reduction Act in the U.S., also here in France, with the recent law accelerating the renewable development. In this new energy order, it is more than crucial, it's more crucial than ever to develop a balanced energy mix to enhance the sovereignty and the reliability of our energy system. We have this strong belief that no single technology can be the solution to deliver a smooth energy transition. We have this vision of a balanced energy mix, which includes the development of large scale renewable energy capacities.
They will bring affordability and of course, low carbon power, but they will need to be complemented by flexible dispatchable power generation such as CCGT, our pumped storage assets or batteries. They will also be complemented with these new distributed energy infrastructures that will be required to decarbonize heat, to decarbonize mobility, utilities, et cetera. In this mix, gas and gas infrastructure will be key to providing this flexibility and also to minimize the cost of this energy transition. As we say at ENGIE, the best infrastructure are the ones that are already built. Indeed, the energy transition will not succeed without gas. A few striking examples. In France alone, if we were to meet peak demand on a cold day with electrical solutions only, we would need to build 150 GW of additional power capacity.
150 GW of power, which means 90 nuclear reactors. We would need to just double the existing transmission network. This simply cannot be done. In Germany, more than 20 GW of additional CCGT capacity is expected to be built in the next decade to meet the power demand and ensure system resilience. Worldwide, one-third of greenhouse gas emissions are coming from heavy industries that will not be decarbonized by electrification only. Of course, by 2050, this gas will be predominantly low carbon, and that will happen benefiting from the strong support scheme. For example, in the EU, where EU has doubled its ambition since last year and is planning to invest EUR 25 billion for the development of decarbonized hydrogen as an example.
For this reason, gas is expected to remain at around 25% of the primary energy mix in Europe in 2050, which is the same level as it is today. We firmly believe, we have this conviction at ENGIE, that it is this alliance of molecules and electrons that will make this energy transition a success. What does this all mean for ENGIE? It simply means that we are remarkably positioned to capture value from those many opportunities which are provided by this new energy order I have just described.
Indeed, we have an unmatched positioning, which is built upon the strengths of this world-class industrial global business unit that are making the energy transition happen, delivering value by developing all of the components of the energy mix that I have just described. With our renewables platform, that Paulo and his team are developing, among the world leading, that we are continuously strengthening. We own and operate the critical networks to ensure the security of supply in Europe. We have this large portfolio of flexible generation assets, which are key to address intermittency and the more volatile energy markets. These distributed energy infrastructures that we develop and operate to support the decarbonation of our clients. Each of these components is important, brings value in itself.
What the market really needs is that these assets are integrated through effective and efficient energy management to make sure that the electrons and the molecules are at the right place at the right time for our customers. This is where it gets tricky. This is where a company like ENGIE can make a difference. I can assure you that to do this, to do this integration, the barrier to entry is very high. You have to have the right assets. You have to have the right portfolio of assets, meaning that these assets need to be sufficiently complementary in nature. Even this is not enough. You need sophisticated system, including very robust IT infrastructure. You need very deep market expertise. You need asset management capabilities. You need the market access. You need the financial strength.
You need all this to truly provide this low carbon, affordable, resilient energy system, which is why we believe we have here a key source of differentiation at ENGIE. This integrated model is supported by this industrial culture and that we keep strengthening. This is truly work in progress. It's a key driver of our performance improvement, topic close to my heart and to many of us here, in the executive committee. Maybe starting with safety. In 2020, we launched ENGIE One Safety plan to rally the entire organization and our contractors around this crucial issue. The number of serious accident has dropped, but clearly we are not yet there. We have work to do, and I'm determined that we will continue this critical effort. Turning to performance improvement.
I'm really proud of the operational excellence of our now world-class industrial GBU, global business unit. We have simplified the organization, the process, and we have driven sharp execution with strong performance monitoring. Alongside this operational excellence, we are also increasing the efficiency of support functions. We have a key role to play, notably through the streamlining of our corporate center and also increasing the level of shared services. Ultimately, we will shift from managing performance plan in a project time mode to efficiency improvement that is really embedded in the way we work. We still aim to have a bit of a net EBIT contribution from this effort of about EUR 200 million per year on a continuous basis. We will also leverage digital and procurement.
On the digital side, just a few words to say that we have more than 3,000 experts who have a deep understanding of digital, of course, but also of our industrial activities, all these being rooted in very solid IT foundations. Over the recent years, what we have done is that we have crystallized our knowledge, again, over hundreds of studies and projects and all of our energy-related experience into what is now seven global proprietary platforms. Now the focus is really to deploy at scale, which is where, what we still need to do. This will then become a true competitive advantage. Biljana here is spearheading these efforts. The other key area of focus for us is procurement. Clearly procurement is a strategic lever of differentiation of performance.
Thanks to now a linear organization with our four global business unit, we have been able to streamline our processes to capture many synergies. We are now sourcing all the critical components centrally. We are working also on developing alternative sources for better risk management, capturing innovation also to develop tomorrow's solution. Let me now, please give me a minute to pay tribute to the commitment of the 96,000 people at ENGIE, to their professionalism, their expertise that is quite unique, their engagement. They are really making the energy transition a reality. We have a strong employer's brand, a business model that is fully aligned with a meaningful purpose, which means we are attractive to talent. Last year alone, now we were able to accelerate hiring by a daunting 15% in 2022. We are also committed to regular learning and training.
It's very important to remaining competitive and remaining at the right level of expertise, especially in this energy world where we have new segments that require new competencies, new resources, and so that need is growing fast. We are also focusing on career management, succession planning. We want to make sure that we develop the leadership team of tomorrow. Today, among our new global leaders pool of talent, 9 out of 10 are actually coming from within the group, which is very good. Finally, we are committed to diversity. In 2022, we launched Be.U@ENGIE, which is our global diversity, equity and inclusion policy.
In this world where, obviously, talent is very scarce, positioning ENGIE as an attractive place to work, as we say at ENGIE, we like to say, "ENGIE is the place to be," we are convinced that this provides us with a competitive edge over the years to come. It is thanks to our excellent teams, our strengthening industrial culture, which I've just described, our unmatched positioning and energy management capabilities that we are pleased to confirm our targets of 80 GW of renewable capacity by 2030, 8 GW of additional distributed infrastructure by 2025, and 4 GW of hydrogen production by 2030. In parallel, we are upgrading our target for biomethane production to 10 TWh per year, and also aiming at installing 10 GW of battery storage capacity by 2030.
To reach these targets, our growth CapEx will increase from the EUR 15 billion-EUR 16 billion level that we had in our previous plan to EUR 22 billion-EUR 25 billion for this new 2023-2025 plan, which is a step up indeed of 50%. This capitalizes on the success of our disposal program, our good 2022 results, which contributed to our economic net debt falling below the 3x EBITDA. Now, let me be very clear. We intend to maintain strong discipline in our capital allocation to ensure that this investment contribute to earnings growth. 70% of our gross CapEx will be dedicated to renewable and distributed infrastructure from energy solution. Strong geographical focus. 90% of our CapEx will be spent in just 10 countries. Growing alignment with the EU taxonomy, with minimum of 75% of our CapEx that will be aligned with the taxonomy.
Of course, in preparation for the future, we will dedicate about 10% of investment to the development of this green molecule I referred to before, as well as battery storage projects. This investment plan will enable us to increase earnings, deliver sustainable growth in shareholder returns. Turning now to our financial outlook. Following a flat earnings period from 2016 to 2019, which was linked to low growth, some underperforming mature assets, and also some disposal relating dilution, the Group has actively deployed its 2020 strategy plan to build a new growth platform. This in the backdrop of the double crisis of COVID and the consequence of the Ukrainian war. This new growth platform will be fueled by the investment plan that I have just described now with, again, a selective approach to what is a very rich set of opportunities.
With a strong focus on execution of our project and still continuous performance improvement efforts, this growth platform does offer good visibility on future earnings. This will translate into a progressive and sustainable net recurring income growth, which shows nicely on the graph, especially when you look from the 2021 level, reaching between EUR 3.4 billion and EUR 4 billion in 2023, and rising steadily to reach between EUR 4.1 billion and EUR 4.7 billion in 2025. Our dividend policy being unchanged with a 65%-75% payout range on continuing net income group share over the period 2023-2025, with flow unchanged. This consistent policy will provide steadily growing shareholder return to our investors based on the trajectory that we are showing here on this slide.
All this maintaining a strong investment-grade credit rating with economic net debt no higher than 4x EBITDA. Now we're going to be zooming into a few of our businesses to share the opportunities that we see, a competitive advantage, clear priority for delivery in the medium term, and we will start with renewables, and I will call then Paulo. Over to you. Thank you.
Thank you, Catherine. Good morning, everyone. I will give you an update on the implementation of the renewables roadmap that we have presented in May 2021. Let's use the same year of reference, 2020, that was used at that time to see how the business has evolved since then. When we look at the slide, the first graph on the left shows that we have delivered 7 GW of additional capacity, 3 GW in 2021 and 4 GW in 2022. This confirms the ramp-up of our growth from 3 GW to 4 GW per year on average for the period 2022 to 2025. This is a significant level of growth in the current market context. Around 70% of the additional capacity was commissioned on our priority markets, France, U.S., Brazil, Chile, and offshore wind. Again, totally in line to what was presented by us in May 2021.
We have now reached a total installed capacity at 100% level of 38 GW. We have grown again according to the plan that we have presented. When you look at the graph in the middle, you see that we have produced in 2022 112 TWh of green electricity, an increase of 30%. Regarding the market exposure, in 2022, we were 80% contracted. If you look at the bottom of that graph, you see the delta, which shows that the proportion of contracted production is also 80%, 2022 terawatt-hours. We keep, as it is usual in our business, 20%-30% of merchant exposure. This gives us the flexibility to choose the best route to market with the best contracted format and at the best time. That's where GEMS and our integrated model play a key role.
When you look at EBIT, Pierre-François already presented the figures for 2022, here looking at it from 2020, it is a growth of 47%, EUR 500 million. Again, quite significant and demonstrating, if you look at the delta at below the graph, demonstrating that EUR 400 million is coming from the additional capacities. New assets are contributing to EBIT quite significantly. We can say that despite the exceptional market circumstances, we are delivering on capacity addition, and there is a clear and significant conversion into EBIT contribution. Let's look now at our pipeline. In fact, the race for renewables is not so much about adding capacity.
It is about the ability that we have to develop a pipeline that can deliver projects with a competitive LCOE, a pipeline that is able to be implemented in different phases of maturity, depending on the stage of development of the project. Our global pipeline is now 80 GW. This is 40% above 2020. When we look at the different stages, 55% is in advanced development, meaning the permitting is almost finalized and is secured or in execution. The technology mix is well-balanced. Geographically, the pipeline is diversified, but with an important point, two-thirds are in the U.S. or in Europe. You know these are two regions with strong incentive for renewables and with an attractive environment for investment on this field.
Our development is mainly in-house and organic, with a global development team of 1,000 people, which accounts for 20% of the renewables workforce. We have also an objective to acquire target companies in specific markets that give us the critical size on that region, but also reinforces our pipeline. Just to finalize on this one, for the 2025 target that you see at the end of the graph, we need to have 12 GW of additional capacity to meet 50 GW in 2025. You can see that our pipeline of 27 GW provides a very healthy cover ratio to achieve that objective, a 2.2x cover ratio. We are on track to achieve the 50 GW for 2025. Growing in renewables is not only about pipeline.
We need to have competitive advantages, and I want to highlight three competitive advantages: a robust platform, strong industrial competencies, and an integrated market position that supports the development of assets by transferring some of the production that is produced into the downstream positions that we have under this integrated model. I think the first of that competitive advantage I would like to highlight our team of 5,000 people fully dedicated to renewables. They are experienced, skilled. They are now organized, as Catherine mentioned, in a global business unit with global systems and processes. More importantly, they are working in the ground very close to the stakeholders. You all know that the main bottlenecks for development of renewables are acceptance and permitting, and we are working on that to accelerate the deployment of renewables. Catherine mentioned the TED label.
This is a certification of our assets. It is a demonstration to the local stakeholders that we are not implementing or complying with existing legislation. We are going beyond that. We want their involvement. We want to make sure that the best available technique is deployed to minimize the impacts of the assets for the local communities. Second competitive advantage, our industrial competencies. I would like to give an example how we have been performing in terms of delivery. For the 74 projects that have entered into construction since May 2021, we have a delay of less than two months and the cost overrun of less than 4%. These are deviations that are typically accounted on our contingency margins. We feel this is a significant achievement in the current context with war in Ukraine, COVID in China, import tariffs in the U.S.
This represents for us a significant achievement, that the delivery that was expected in May 2021 is happening within the ENGIE Renewables business. I just finalize on this slide with again reinforcing the benefit of an integrated position, the competitive advantage that we have to be able to bring assets that can be supported directly by our customers. All of that combined demonstrates or contributes to demonstrate the EBIT growth that I've shown on the first slide. Continue on competitiveness. You know this is crucial in our business, how better to illustrate our competitiveness than the success achieved by offshore wind. Offshore wind is a partnership between ENGIE and EDPR, created in 2019, named Ocean Winds, which has already achieved today 1.5 GW of assets in operation.
You can see on the slide that the end of 2022, a pipeline of 1.2 GW have already been developed. This is 1.2x since 2020, so quite a significant increase on the pipeline of offshore. As you know, quite a competitive environment. We have secured 15 GW of seabed leases in five countries, France, U.K., Poland, South Korea, and the U.S. More relevant even on these metrics, only in 2022, we were awarded 8 gigawatts of seabed leases, so significant increase during last year. I also want to make a point on floating, because in addition to bottom fixed development, Ocean Winds is a market leader on floating offshore. It has a pipeline of 9 GW, but also benefits from a shareholding in PPI, Principal Power, a company that has the most advanced floating technology that exists in the market today.
When we know that U.S., Europe have announced massive targets for the development of offshore wind, we feel we are very well positioned from an industrial expertise and from our pipeline to deliver and to take the opportunity that this market will present to us. I think on the previous slides, we have shown that our portfolio is diversified from a geographic point of view. It's well-balanced from a technology point of view. On this slide, we want to show that the portfolio is also resilient. If you look at the first graph, you see that today almost 80% of our production is contracted. We have the means, the competencies with GEMS to choose the best route to market. You can see there that we have regulated tariffs, feed-in or CFDs. We have different commercial contracts, midterm, long-term, and we keep a part of the portfolio merchant.
Our objective for the period to 2030 is to stay contracted above 70%, providing significant visibility to our business and securing our returns. We have already sold 60% of our portfolio over that period of time. We're well-positioned. This is not only for operating assets, it's also for assets that are under construction. We are well-positioned to continue to develop our business without going to further exposure in the market beyond what we expect to be on the 20%-30% range. The graph in the middle of the slide shows the unlevered IRR for a representative sample of projects under construction. You know that, Pierre-François already mentioned, Catherine alluded to it as well. We know that we have a strict discipline on our investments, both on geographic footprint, we want to stay focused on specific geographies, but also on the investment criteria.
When you look at the graph, you can see that our projects, majority of our projects are in the range of 6%- 11% IRR, providing an attractive spread to OC. This excludes the sell down margins and excludes the services that we provide to our partnerships, typically industrial services, but also energy management services. If you look at the right side of the slide on the business model, you can see also that we are increasing the percentage of capacity that is consolidated. 50% in 2020, evolving to an objective of 60%0 70% for 2030. We are achieving this by increasing the develop-to-own model for new assets, but also by reconsolidating some assets in our priority markets. I think with this, we can say that our portfolio is resilient and is providing an attractive level of returns.
On this final slide, I would like to confirm our objectives of 50 GW for 2025 and 80 GW for 2030. Europe is accounting for 50% of the investment that we're going to do in renewables out of an envelope of EUR 13 billion-EUR 14 billion that will be invested in the period 2023-2025. This is followed by Latin America with 30%. The 10% that is showing for CapEx in NorAm is a result of the tax equity framework that exists in the US to support development of renewables, which requires less CapEx for the same megawatts. When you look at the pie chart with the technology, you can see that in 2020, we're going to increase, or comparing to 2020, we're going to increase our onshore wind business by 70%, and solar will increase by a factor of four.
Also important to note, the share of hydro is reducing to 35%. This is an important element. In 2020, hydro accounted for 60% of our Renewables portfolio. In 2025, it will account for 35%. To conclude, two messages. I think we have presented that we are delivering on our targets, and our execution is being performant and achieving the objectives that we established. Our portfolio is diversified. Our portfolio is resilient with a 70% contracted profile, and that provides a good level of earnings visibility. With that, I hand over back to Catherine.
Thank you very much, Paulo. Indeed, strong execution, credibility, strong pipeline growth. Very, very nice job and nice perspective from our Renewable global business unit. Thank you. I will now cover two of our global business units, Networks and Flex Gen, which are going to be very important to contribute to the energy mix that I described earlier. First of all, to remind everyone the critical role of our gas network. This is a picture we chose, our layout and our footprint there. In the context of what happened last year, our infrastructure have really shown that they play a major, a critical role to maintain the security of supply and to limit impact on cost by making sure that the molecule gets at the right place at the right time.
We unloaded a record volume of LNG in our terminals, about 65% increase in volumes versus the prior year. We have now made France a major LNG entry point into Europe. Our terminal, import terminal, are now strategic for the flows into Europe. Storengy has played fully its role in security of supply and by enabling storage facilities to be filled up to 100% at the start of 2023, and now our projections show that it's also looking pretty good for the beginning of the next winter. We doubled the volume of gas transported from France to Europe, and for the first time, we exported gas directly from France into Germany.
The LNG market that is expected to remain very dynamic, as I briefly mentioned earlier, there is absolutely no doubt that this infrastructure will keep playing a very important role to contribute to the security of supply to the energy solidarity at European level, as is often now reflected in the EU policies introduced last year. For example, with the policy around storage as an example. Now, not only these assets are clearly strategic, they also translate into attractive financial profiles for the group. They indeed benefit from what is a stable regulatory framework, and they provide stability, they provide visibility on earnings and also strong cash flows. On this asset, it's important to know that our profitability is largely immune to inflation and also to volume risk as there are existing clawback mechanisms.
Our networks have consistently also demonstrated a strong operational performance and the highest safety standards. Over the 2022-2025 period, we expect our asset base, and this is combining France and overseas, to grow from EUR 36 billion to EUR 39 billion. Our networks generate strong cash flows, about 42% of the total group CFFO. Of course, this gives us the scope to invest, to maintain safety, to maintain reliability, but also to develop renewable gases. It is indeed the development of these renewable gases that will ensure the long-term sustainability of these gas networks, and this is why we're planning to invest EUR 3.5 billion of CapEx between 2023 and 2030 in grid connection, and also to adapt the networks.
These investment efforts, they will allow us to connect to our grid about 50 TWh of French biomethane production capacity expected by 2030. This rollout and this increase in biomethane is actually ahead of schedule, which really highlights that decarbonization of the existing infrastructure is real. It is achievable. It is happening. On the production side, and given the strong biomethane growth potential, biomethane is gas produced locally, we have revised our target of production to 10 TWh per year by 2030, covering our presence in Europe. Looking further ahead, hydrogen will play a key role in decarbonizing the heavy industries. 2022 has clearly confirmed now that there is a strong market momentum. For example, shipping companies have placed orders for 58 methanol-fueled ships, which creates huge demand for e-methanol starting by 2025, and this e-methanol needs hydrogen to be synthesized.
With our integrated business model, ENGIE is positioned very well to seize this opportunity of hydrogen, and starting with renewables, because we will be providing this green energy, which becomes a feedstock to this hydrogen production. Flex Gen will produce hydrogen and other e-molecules, thanks to its expertise in managing complex industrial projects. Infrastructure will be at the heart of the European hydrogen backbone, with project like H2MED as an examples, but also with our storage solutions. Energy Solutions engines will be instrumental in commercializing and supplying these H2-based solutions for our customers. We have ambitious 2030 targets, which are underpinned now by a vast and solid project portfolio, including actually five projects that were selected recently under the IPCEI supporting scheme, and these projects which translate into around EUR 4 billion of investments between 2023 and 2030.
I want to spend a bit of time now on flexibility. Flexibility which value is increasing, and it will keep increasing as we are deploying more and more renewables into the grid. The evolution of the energy system is gonna need, sorry, different types of dispatchable capacities that will answer different flexible needs. From hourly flexibility, that is typically provided by batteries, to daily and weekly flexibility with assets such as pumped storage and CCGTs, and then to seasonal flexibility with gas storage. ENGIE just happened to have all of these types of flexible assets in its portfolio. Of course, we have gas storage. I've mentioned that. We have that in France, Germany, in the U.K. We have 51 GW of thermal fit, which will play more and more this role of flexibility provider.
We have 4 GW of pumped storage assets, we now have a strong pipeline of battery projects in the U.K., in Chile, and in the U.S. We have a very rare combination of assets that positions us very well to support this system with all its flexibility solutions. How do we extract value from these assets? We extract value from this asset from a combination of market spreads, ancillary services, balancing services for the network, as well as capacity remuneration mechanism. You are basically paid to be there as a flexible asset. Our fleet is second to none in providing these services. We are always continuously working on operational excellence, of course, for this asset, because it's very important. Availability of this asset is very important.
We also have selective extension and upgrade of our CCGTs in the works, as well as refurbishing and sometimes extension of our large pumped storage assets in Belgium and in the U.K. With all this effort, what is really nice about our story on flexibility is that our fleet's CO2 emissions will continue to drop steadily, initially, of course, through the coal exit plan that we are executing, through also efficiency gains, but then with the addition of this 10 GW of batteries that I've mentioned, but also decarbonization of CCGTs with biomethane, hydrogen or its derivative, or a blend of hydrogen, and also sometimes carbon capture when economically feasible. To summarize, our networks and Flex Gen global business unit will be fueled by the decarbonation of gas.
They will provide essential bricks for this energy mix, this balanced energy mix that must be developed and that I described earlier. They will provide to the group stability on earnings and also strong free cash flow generation. I'm gonna now say a few words on energy solutions before passing the floor to Frank. As you know, a couple of years ago, as part of the strategic review of our portfolio, ENGIE decided to refocus on its core expertise. Notably, we decided to sell our asset lights activities, multi-technical activities, and this translated into the sale of ENDEL and most notably, EQUANS last year. Post EQUANS, the remaining energy service businesses, energy solution, is now squarely refocusing onto distributed energy infrastructures which benefit from extremely strong macro trends, they are simply indispensable to the decarbonation of industry, cities, and customers at large.
To take this business to the next level, we have recruited Frank Lacroix, who joined us exactly three weeks ago, he's fairly new, so be nice with him. He has more than 27 years of experience in the energy sector, specifically in the asset-based business, with a proven track record of large scale transformation project and also strong focus on operational excellence and performance. Frank has an acute understanding of the value creation that can be realized from developing and operating these energy distributed infrastructures, He will be tasked now to industrialize this profitable growth, focusing on a selected number of countries and of activities. A few challenges, many opportunities, absolutely no pressure on you, Frank. Thank you.
Thanks, Catherine. Good morning, everyone. I'm really happy to bring my strong experience of 27 years, indeed, in the energy sector, where I started as a young engineer in the field, became years later, CEO of Dalkia when it was the energy branch of Veolia. Whatever the pressure, Catherine, I am very pleased to be here today and to present Energy Solutions activities. As you know, we are focused on growing in buoyant markets, driven like never before by three key factors. The climate imperative, obviously, also denser, smarter and more resilient living ecosystem and the sharp push toward more energy independence, further accelerated in Europe by the Ukrainian crisis. These three factors generate a strong demand for green and sustainable investments on new infrastructures or the renewal of the aging ones.
By their side, public authorities are also increasingly supportive on distributed energy system as part of the energy transition. Many countries, core region for ENGIE, are offering a range of considerable incentive and subsidies. At ENGIE, we support our clients to combine greening, efficiency and sobriety by creating, modernizing, expanding and refurbishing distributed local infrastructures and bringing associated services based on guaranteed results. We are customer-centric, and we help them to consume less and better. To do so, we now provide a simple, proven and comprehensive range of offers that meet our client decarbonization roadmap through three activities. The first is local energy networks, including district heating and cooling networks and sustainable mobility, mainly in cities and communities. The second is on-site energy production, consisting of infrastructure dedicated to industries or properties such as distributed solar and on-site utilities.
The third is the energy performance and management, including energy performance services and decarbonization advisory. With those three activities, we intend to increase significantly our EBIT by 2025, and we aim at achieving this trajectory through two pillars, growth and performance, with two business model that are fully complementary. On the one hand, local energy network and on-site energy production, they are our key development priorities. Here, we follow an asset-based model, business model, investing with strict financial criteria and operating the infrastructures while improving performance throughout the lifetime of the contract. We are combining growth acceleration with an industrial approach based on selectivity and operational excellence by prioritizing activities on geographies that show the greatest potential. Focusing on the most valuable offers and clarifying optimization through cost control measures and operation streamlining.
On the other hand, for energy performance and management activities, so-called asset light, the priority is to increase intrinsic performance, which is expected to result in higher EBIT margins to be doubled by 2025. Let me now zoom in on how energy solutions is able to create value through the example of district heating and cooling contract. We are developing the fourth generation of DHC. Various technologies now enable us to optimize the network energy balance and to manage a complex mix of energy sources based on an increasing share of diverse local and renewable source and waste energy recovery. The sophistication of this kind of asset and its management increase significantly the barriers to entry, which support a high renewal rate. Our top market position, reputation, and expertise in technology and client assets together make us a unique player in this field.
On average, DHC contracts have a 15-year term, offering a long-term revenue visibility. Moreover, during the lifetime of the contract, additional revenues can be added through densification, extension of the network, or project to greenify the production. Those changes also often lead to an extension of the duration of the contract. To illustrate this, a good example is the 20-year contract renewal to manage the cooling network in Paris, announced a little bit more than one year ago. Thanks to our proven track record and technical expertise, we secured the renewal of this concession. We are now committed to almost triple the size of this largest cooling network in Europe over 20 years. In France, we are the market leader in district heating with around 40% share. This market will grow in the coming years, as shown on the graph, for two reasons.
The first is the acceleration in densification and expansion of existing networks. They are more and more attractive due first to their 60% share of renewable on average, and second, to their final heat cost duration with a very low exposure to volatile energy market price on average through roughly a mid 20%. The second reason is the objective of France to increase dramatically the share of heat provided by district heating and also to enhance the level of renewable sources in their mix. Thus, the number of those facility will raise up from 900 to 2,300 in 2030. Those network being supplied by renewables resources over 70%. We aim to maintain our leading position to 2030 through network densification and expansion as well as through new network developments.
Supporting this goal, we leverage our digital platforms to gain new customer and improve the efficiency of the network. NEMO support the design and operation to of larger networks, reducing energy consumption by around 3%- 5% on average, while Predity offers real-time optimization of smaller networks. Turning now to the second business case with distributed solar in the U.S. Distributed solar is a key component of our offering as it brings together the three main needs of our clients: green energy, competitive energy, and reliable energy. This activity is part of our growth strategy, bringing us recurring cash flows with contracted revenues for a major part of their operating life. The key success factor here is industrialization.
Profitability of the asset relies both on CapEx control, for which engineering skills and procurement optimization are critical, and once commissioned, on OpEx control by optimizing operation and maintenance. As a consequence, our U.S. platform for this platform in the U.S., our main focus has been to create and develop an industrialized model that can be replicable and scalable. On the one hand, by standardizing projects, simplifying operations, and leveraging technology and digital platforms, we have the potential to grow this activity significantly. On the other hand, we focus on regions with the highest growth and profitability potential. Northeast, South, Texas and New Mexico, and the Great Lakes region. We target doubling our distributed solar installed capacity to reach 600 MW-700 MW by 2025.
I'd like to highlight the fact that our integrated model allow us to maximize synergies, first between Energy Solutions and Renewables GBUs. For example, through our shared procurement for solar PV panels with Paulo, which increases our competitivity and allow us to win. Secondly, within the Energy Solutions perimeter, by leveraging our industrialized model in other geographies, for instance, in Europe. Those two examples show how we intend to capture growth opportunity in those two markets. To take a broader view of the world GBU, we reaffirm our intention to add 8 GW of distributed energy infrastructure by 2025, which represents an increase of a third. To do this, we will accelerate investments by committing around EUR 1 billion per year in gross CapEx for 2023-2025, compared to EUR 0.7 billion in 2021 and 2022.
Of course, these investments will remain aligned with our strict investment criteria. The average project IRR for DHC and distributed solar was around 7% for recent projects. Keep in mind that these project IRRs have to be compared with low WACC driven by a combination of proven activities based on mid to long-term contract with low merchant exposure in stable countries. In line with group strategy, we also may carry out selective non-transformative acquisitions to reinforce local leadership or accelerate specific developments. Once again, to conclude, we are combining this growth acceleration with an industrial approach. Selectivity, operational excellence supported by the development of digital platform, automatizing processes, optimizing supply chains, and improving the efficiency of our operations. Here is the road, with that, I hand over to Paulo, who will present GEMS.
Thank you, Frank. Let me start by saying what means GEMS. Global Energy Management & Sales. I can assure you it is not a black box. It employs 3,000 people, 1,300 dedicated to the energy management activities, and 1,700 dedicated to the B2B energy sales. GEMS operates amongst the most sophisticated systems we have in the energy group and that exist in the energy markets. If you look at the slide, you will see that GEMS is at the center of our business. GEMS is connecting upstream assets with downstream clients. GEMS is critical to keep the energy flowing. If we look at the left side of the slide, you see that we have a portfolio of 350 TWh of long-term gas contracts, 29 GW of flexible power plants, and 21 GW of renewable assets.
The mandate is pretty simple. Add value by combining synergies, flexibility and optionality that exists in this portfolio. When you look at the right side of the slide, you will see that on the downstream side, GEMS supplies 324 TWh of gas and 195 TWh of electricity to our B2B and B2C clients. Quite significant. Important to note here that the B2C sales are on the P&L of our retail business unit. In summary, GEMS sources energy from ENGIE assets and third parties, contributes to the security of supply, and integrates all the positions of the group, upstream and downstream, optimizing the exposure of the group to the energy markets. Let's look at the next slide. On the left, you see that beyond the upstream assets, GEMS also books capacity in various European energy infrastructure.
You can see that for gas transport, we have 150 TWh, for storage, 57 TWh, and for power transport, 23 TWh. A simple example. Let's say that we have gas in France priced at PEG. In this case, EUR 97 per MWh. We have transport capacity contracted between France and the Netherlands at EUR 1 per MWh. We can arbitrate every time that TTF is above EUR 90 per MWh, it makes sense to ship gas from France to the Netherlands to our B2B supply clients in the Netherlands, priced at TTF. In this case, if TTF is 100, we would create a value of EUR 2 per MWh. Pretty simple. Of course, we have to have the flexibility, we have to have the portfolio. That's how simple it is. There is more on this portfolio.
GEMS can arbitrate, and instead of shipping the gas to the Netherlands, it can choose to supply the gas to our CCGT fleet in France and produce electricity with it, monetizing the optionality we have on the thermal generation. Our portfolio is full of this type of flexibility, can provide GEMS, can allow GEMS to create significant value by optimizing all the positions that we have upstream and downstream. Let me give you a more sophisticated example. In this case, GEMS is connecting a renewable asset with a customer. The renewable assets of ENGIE that are developed for different clients, for different market structures. In this case, we have a client, BASF. This is a real case. BASF wanted to have delivery of green power to their sites across different countries in Europe. Not for a single site, but they, BASF wants more, like most of the clients.
Wants a baseload profile, not as produced. On this baseload profile, it is fundamental that GEMS aggregates the intermittency of different renewable assets and creates that baseload profile that can be sold to BASF. In this case, GEMS's structured a 25-year PPA for 21 TWh of power, green power, and aggregates that intermittency, providing risk management services to BASF. On the left side of the slide, you see that GEMS's assigned since 2020 68 TWh of green power. GEMS's has signed 2 GW in 2022 of new corporate PPAs. Not only of corporate PPAs, corporate PPAs and distribution PPAs, so the distribution companies, making, according to BNEF, ENGIE the second developer in the world in two consecutive years regarding the signature of PPAs. I mean, this is the business of GEMS's. What are the financials?
For that, I prefer to leave the floor to Pierre-François, which will give you an outlook of how GEMS will perform in the future. Thank you.
Thank you very much, Paulo. I will conclude this GEMS's part before we go for a well-deserved break. Indeed, GEMS is not a black box. It's a strong industrial tool. It can once in a while be a money box, but that's not too bad. Definitely with the right controls, with the right discipline, it is a strong contributor to results. On that note, of course, the 2022 performance was outstanding in many ways. I will not dwell on it. Of course, we expect in 2023 that we will come down compared to the very high level of 2022 as the prices and volatility go on normalizing.
It should remain well above the historical level that we had in the past and as late as 2020 and 2021. Why is it? First, this because GEMS is different. B2B activities have been transferred to GEMS, and they are commercial activities which are now fully integrated in the value chain. The volumes of sales have also increased, and we are still rolling out GEMS, its expertise, its systems, its tools everywhere ENGIE is operating, so we are gaining size and consistency. The second driver is that with high and volatile energy prices, new opportunities crop up in the asset base. This means a higher number of transaction with clients ready to pay a premium for top-notch expertise.
Also we do expect volatility and prices to fall back in the coming years, but we don't believe they will revert soon to the pre-crisis levels, especially in Europe, where, as Catherine was mentioning, supply chain in gas is changed. The outcome is that GEMS is expected to be, in the future, a significant contributor to group earnings with hardcore EBIT close to EUR 1 billion and potential upside coming on top of it in supportive market conditions. In the longer term, GEMS will reinforce further its strategic role for the group internally as an integrator and as a unique tool to manage our energy risk, but also externally as an essential partner to manage our customers' energy flows and risk. First, the asset portfolio includes new assets such as batteries, electrolyzer, methanizers. They are creating new business opportunities that we will develop both upstream and downstream.
Second, markets and clients' needs will become more sophisticated, meaning the need for additional risk management expertise. Now it's time for a quick break and let's make sure we meet again at 11:30 A.M. sharp.
Okay, guys, it looks that we can start again and, let's go straight into-- I need the tool. Thank you. Let's start straight into the numbers and I'm sure some of you are familiar with that one. It was used a couple of years ago to explain the value creation is with ENGIE strategy. No rocket science here. You can recognize some three key action lines, all of which are supporting our net zero commitment in 2045. The first one is driving simplification, and it's simply moving from a holding base system with 25 business units into a four global business units model and also more than halving the number of countries since 2018.
Second key action is improving the business mix in favor of renewables through a consistent and strict allocation of capital. Third, it is enhancing our performance with continued improvement and operation experience. Beyond the 2022 numbers, looking at the underlying business and what happened this year, executing on these three elements is going to bring steady earnings, steady earning growth, and to provide shareholders with an attractive and sustainable dividend, whilst maintaining in the long run investment credit grade. Where do we stand early 2023 on that note? We have executed our strategy consistently and effectively over the last two years. Simplification, I mentioned the strong GBUs who are steering the wheel. Disposal, disposal plan upgraded from nine, 10 to 11 and actually completed one year ahead of schedule, not increasing the scope, but just delivering on valuation.
Business mix, you've seen the gross CapEx going up with over EUR 10 billion on the two years, 50% in renewables. Performance, out of a three-year contribution plan of EUR 600 million, EUR 500 million already achieved with an impact on EBIT in 2021 and 2022. What about earnings? Leave aside 2022. If you just look at the net recurring income CAGR on the continued business since 2021, which was not a bad year, using our guidance. You will find a healthy double-digit growth, which is quite a compelling story given the size of the company. I do need to comment once again, the very strong deleveraging achieved in 2022. The question is, how do we keep on delivering that way? It will of course, go through acceleration of capital expenditures. I mean, it was mentioned by Catherine, but also my other two colleagues.
That's critical. Total growth CapEx are expected to increase 50% from EUR 15 billion-EUR 16 billion in three years to EUR 20 billion-EUR 25 billion in three years, with investment in renewables doubling, building, of course, on the strong market momentum. Also we'll be leveraging our infrastructure portfolio, the booming demand of our customers for distributed energy solution, and the development of new flexibility solution, especially in batteries. There will be no deviation from capital discipline. All investments will be fully aligned with our industrial strategy. I mean, CO2 reduction, I mean business lines, but also geographic strategy. More than 80% will be organic. Of course, we'll have some bolt-on acquisitions like Eolia, which by the way is developing quite well. There will be also some investments to fully control more mature assets and the cash flows that go with it.
Again, more than 80% organic. There will be a smooth and continued ramp-up, which started actually in 2021, driven by skilled business development teams and also strong controls that we plan to further strengthen. One key word, selectivity, to make sure that we secure returns and profits out of growth. Selectivity is key for results, and we will measure through EBIT growth. One key point is that going forward, we want to focus on EBIT excluding nuke, as it should be the base of the valuation of the business in the long run. Not because we are not committed to our nuclear assets, but in the next three years, like in the past, there will be volatility and contribution of nuke due to native merchant positions, which are very significant, potential LTO impact, tax changes.
Also from 2026, contribution will be significantly reduced with the stop of our Belgian assets or for what will continue with a limited contribution through a stake in a 50/50 joint venture. As you can see in the blue bars, core business EBIT CAGR from 2021-2025 is quite impressive, about double digits. Of course, 2022 is an exceptional year due to the level of prices and volatility, which is expected to normalize in the next couple of years. There will be a negative impact on the back of prices volatility of -EUR 2.5 billion, -EUR 2 billion, as shown on the graph. That is the reason why EBIT 2023 is expected to come down year-on-year, but will still be increasing substantially versus 2021.
The key point is that we still plan to make our way back to 2022 numbers in 2025 on pure self-help, delivering growth with a + EUR 1.5 billion EBIT impact coming from our investments, but also being more efficient with an ambitious continuing improvement plan of EUR 200 million a year. On top of this, we do assume the normalization of prices that extraordinary taxes would gradually reduce along the way, which give us some upside in others against Forex and scope. Let me share you what is supporting our projections. Critical to the success is that our investments convert into good results and good cash flow. Growth needs to pay off. It starts with strong alignment on strategy.
I'm not going to dwell further on this one, there is incredible value to invest where you're good at, and ENGIE has learned the lesson the hard way. It comes to strict compliance with financial criteria. Those criterias that take in account the business model, can be the market risk exposure, the contracts, the volume, it takes in account the geographies. As you can imagine, we use many of them, and can be NPV, can be a return on capital employed, payback. The key one, of course, is returns versus WACC. For the sake of simplicity, I would sum up our process saying that we apply, like many, a premium over a project WACC.
The graph on the left shows for all significant projects over 2021 and 2022, what are the respective IRRs. Not surprisingly, they are set for most of them at a premium to group WACC. That average premium is actually for the portfolio about a couple of hundred basis points in line with our targets. It is not enough to have good business case. You need also to deliver the business case. We are not denying that we face challenges, especially coming from supply chain tension, but also the scarcity of resources for people. Not mentioning the turmoil in the markets. We take comfort from a strong track record of the last 18 months in project management. I'm sure you have all taken notes of Paulo impressive delivery on renewables.
Also in our capability with our integrated model to actually take advantage of market changes. We have tangible proof points with the contribution of growth to our EBIT development year-on-year in 2021 and 2022. Critical to drive earnings in the long run is also performance, because growth is not enough. We will use again the learnings of the last couple of years. To harvest the full potential of productivity, and it is still significant in ENGIE, we are shifting from a project mode performance plan to efficiency improvement embedded in the organization. The key drivers, they stay the same. That's operational excellence, which is steered by our GBUs through benchmarking new digital solution. You've heard Frank, you've heard Paulo, and you could hear also all the colleagues all aligned in that direction. It is also turning around some underperforming assets.
We've come a long way, we still have a few hard nuts to crack, including EVB ox that I mentioned earlier. Let's be honest, we will be failing during the journey. There will be more, we'd have to fix it, that's part of our job, to react very quickly and turn around businesses which are not delivering as expected. The last one I need to mention is cost control on G&A, which is still very important. We do face headwinds on inflation, we do face sandwich on the labor market, we need still to keep high control standards. That means relentless effort to improve structurally our cost base as we are doing in HQ as we speak. We have embedded the targets in our management cycle from plan to budget to forecast to actuals.
We have clear accountability in the P&Ls with the GBUs and also functions. We have full transparency on the levels, we are following up the contribution relentlessly. That's what you would expect from any well-run business. One word on portfolio management, because if we want to harvest the results of growth, we need to make sure we do not dilute growth with disposals. Here, of course, the good news is that the big tickets of the disposal plans are done and dusted. We have achieved, as you know, very, very attractive valuation. I'm not going to repeat. We have reached this EUR 11 billion mark, even if we still have a small tail of assets to dispose to be fully done, not only on the number, but also on the strategic target.
You should, going forward, expect continuous trimming of our portfolio, albeit at a far lower rate in the coming years, less than EUR 1 billion a year, with only modest scope for dilution of our earnings. What does it mean on EBIT and the variance between 2022 and 2025? You can see our range guidance is EUR 7.5 billion-EUR 8.5 billion, stable versus 2022, which was EUR 8 billion, but almost double-digit CAGR from 2021, so quite an impressive number. On the positive side, as you could expect, renewables with 12 GW of new addition in 2023-2025 and higher capture prices, EBIT is expected to keep on increasing around 20% per year on average. Quite impressive.
In Energy Solutions, strong progress in the distributed infrastructure, but also recovery in loss-making and underperforming assets that will take back returns to normal level. In Retail, margin should recover from a low 2022 that was impacted by warm temperatures, but also exceptional market conditions. On the less positive side, on the back of the normalization of prices, GEMS EBIT will not stay at 2022, but again, we don't expect GEMS to go back to the levels of EUR 300 million- EUR 400 million that we had before, and again, because GEMS is different. In Flex Gen, we do expect strong operational performance, still offset by lower spreads capture after, of course, unprecedented 2022 numbers and also the final consequences of the coal exit, which is going to be completed by 2025.
Networks should remain stable with inflation, temperature normalization, and investment contribution almost fully offset by regulatory reviews starting in 2024 in France, but also some portfolio management. Although nuclear is non-core, its earnings do contribute to the net recurring income. EBIT in nuclear is expected to rise on higher realized prices, more than offsetting lower volumes on reactor closures in Belgium. For all businesses, the contribution of continued improvement will be, of course, substantial to our growth of earnings. What is going to happen between EBIT and net income? First, financial charges will rise. They will rise because of the increase of financial debt as proceeds from disposals are being reinvested. Gross CapEx in 2023-2025 will be significantly higher than in the previous period.
It is worth to mention that also we plan to maintain a high level of liquidity, and this is coming with a cost. The financial charges will rise also because of higher costs related to nuclear provisions with an increased total provision amount, so this actualization. Also because a higher interest rate environment, despite our net financial debt being largely fixed. Whereas the average cost of debt was below 4% in the recent years, we now expect to be in the range of 4%-5% in the coming years. I'm talking about the cost of net debt. On the other hand, tax rate is on its way to normalization after a substantial fall in 22%-22.6%. We expect the tax rate to settle in the 23%-26% range, consistent with our geographic span.
Partly offset of course by lower EBIT for Belgian nuclear, where tax is paid above the EBIT line. Minorities should broadly align with group EBIT growth, even if GEMS contribution decrease is not mitigated by any minority partner when, on the contrary, renewables results often imply partners. All in all, strong EBIT growth will convert into strong growth of the net recurring income. It is important not only to have result, but to convert this result into cash flow. You remember in the first part, the cumulated 2021-2022 impact on the working cap, which was negative by about EUR 5 billion. As markets calm down, we expect working cap requirement to recover, driven to a large degree in inverse correlation to where the energy price curve is actually going.
This is expected to be a nice tailwind to our CFFO, which will rise sharply in 2023, and then achieve annual levels of over EUR 10 billion a year. Putting numbers together, it is fair to assume that incremental EBITDA will outpace EBIT growth, which is impacted also by higher depreciation and amortization for about EUR 1 billion in 2025. When you put your number together, be mindful of that one. However, we are not completely done with volatility on CFFO. As you know, margin calls can still be significant given current prices and volatility. They equalize, of course, over the life of the financial instrument, but there are timing effects which are impacting the CFFO big time, as you've seen in 2022.
Overall, we expect cumulative CFFO for the period 2022-2025 to amount to a chunky EUR 40 billion. This is of course critical to finance our growth. Growth that you can see reflected in the step up of our capital expenditures. We plan actually to increase capital employed by roughly 15%, excluding nuclear between 2022-2025. Just a small aside here. We have changed our definition of capital employed. We now include in the capital employed the initial margins, because they are needed for the business. We also include the nuclear financial assets. There is more details on the full reconciliation in the additional materials. Of course, when you're adding assets, it doesn't flatter the number, but it makes a return on capital employed measurement a very relevant indicator of the earnings power of ENGIE.
It's also easier to benchmark against peer, and we thought it was good to be very transparent about our return on capital employed. Let's go back to the subject at hand. Renewables is going to be by far the main driver of capital employed growth with a high teens annual rate. As a result, the share of renewables in capital employed will go up from below 30% to at least 35%, overtaking networks for the first time. The second driver is Energy Solutions, where capital employed is growing at low- double-digit rates as our business becomes more asset backed, as explained, and therefore more capital intensive. Flex Gen, more flattish, with a cold exit, of course, the end of some PPAs, but offset by new businesses such as battery storage.
I would add that the capital employed in nuclear is significantly negative, and that is the reason why we prefer to communicate excluding nuke, that would boost otherwise our return on capital employed. It is important to understand that although earnings can be somewhat volatile, we've shown that, our capital employed split is both balanced and resilient to market conditions, and it will become even more going forward with the growth of renewables. Networks, the blue part, are almost completely regulated or contracted with even strong inflation protection and should remain so in the future. In 2025, as Paulo explained, renewables should be about 70% contracted via long-term PPAs or feed-in tariff or CFTs. In energy solution, the bulk of our capital employed is of course in distributed infrastructure, which is mainly contracted mid to long term.
Last but not least, as explained many times and illustrated again in 2022, our exposure to inflation is neutral. Revenues of our regulated and contracted activities are inflation adjusted. For our merchant activities, inflation is actually underpinning commodity prices. As mentioned before, we have adjusted our return on capital definition to include initial margin and financial asset on nuclear. That is reducing our 2021 numbers from 9% previously reported to 6%, as you can see on that graph. You see that in 2022, we rose sharply from 6% to 9%, mostly through the impact of higher energy prices and our merchant volumes in Flex Gen and hydro in France and of course, the higher contribution of GEMS. We have also improved the profitability of Energy Solutions business, which however remains low.
By 2025, we are confident we will be running a portfolio of assets yielding returns in the range of 7%-9% with an attractive risk profile and a superior potential for further growth. Our journey is based on growth, and growth is based on profits and cash flows. Let's look at how this reconciles over the 2022-2025 period, including 2022, where we have the bulk of proceeds of our disposal plan already de-risked and executed. I mentioned before that we expect CFFO of over EUR 40 billion on that period, and that disposals from 2023 onwards will fall to a portfolio management rate. In total, we expect 2022-20 25 sources to be in the low to mid EUR 50 billion range. That's the column on the left. We are expecting to maintain a strict optimization of our maintenance CapEx around EUR 9 billion-EUR 10 billion, and gross CapEx, including what we spent in 2022, will be in the EUR 27 billion-EUR 30 billion range.
Based on a reaffirmed dividend policy at group level, dividends to shareholders on minorities in our subsidiaries, but also some various elements, should land between EUR 18 billion-EUR 20 billion. This adds up to a mid to high- EUR 50 billion range, which is only incrementally higher than our expected source of funds. Of course, we need to add about EUR 11 billion from nuclear funding, including the 2022 amount. That means the full funding of waste management provisions by 2025 and dismantling provision by 2030, and both of them will be impacting the net financial debt. It means also the funding of the EUR 3.3 billion increase of nuclear provision as calculated by the commission back in December of 2022.
You remember for the sake of valuation, that the nuclear provisions are actually already included in our economic net debt, so please don't count them twice. How is this cash generation leaving our balance sheet and credit metrics? Our net debt is going to rise, as you would expect from 2022. Our EBIT guidance implies a falling EBITDA in 2023, but then, of course, rising again. We expect our economic net debt to EBITDA to rise quite strongly in 2023 before decreasing, all being well within a level that we consider as comfortable going forward. Indeed, albeit we keep our 4x economic net debt to EBITDA ratio, we plan to run the business in a normalized bandwidth of 3.2x- 3.5x, as shown on the graph.
I need here to mention that we will be, of course, adapting our investment plans to our financial capabilities, and we keep flexibility in our asset base. Time for the outlook, last but not least. Let me remind you our EBIT projection and provide you the guidance for our net recurring income each year by 2025. The usual details related to our set of assumption are in attendance. It is worth to mention that given the high uncertainties in market environment, but also regulatory frameworks, we have decided to keep larger ranges for our guidance as well as contingencies deemed appropriate to the context. We expect a range of EUR 3.4 billion-EUR 4 billion for net recurring income in 2023, below 2022, but well above 2021, which I would say is the best basis of comparison.
We expect around 10% increases in 2024 and 2025, as our gross CapEx and performance improvement support our numbers above the EBIT line to a greater extent than expected increase of financial costs and normalization of tax rate. We have kept our dividend policy unchanged with a payout of 65%-75% on net recurring income with a flow of EUR 0.65 per share. With that, I will hand over to Catherine to wrap up.
Thank you very much, Pierre-François. Ladies and gentlemen, this concluding the presentation with just a few key messages. The fact that I hope we were able to convince you that ENGIE is indeed very strongly positioned. With a unmatched strength, we have a solid asset portfolio, we have a highly competent and engaged team, and we are fully committed to make this energy transition happen. We have built an industrial platform, which is very focused on execution with what is now a sound financial structure. We are developing this balanced and resilient energy mix, which combines the electrons and the molecules, and which is actually what the market and the customers need. We are accelerating our growth and with a disciplined capital allocation, and we are clearly offering a compelling investment profile.
We are also paving the way to our net zero target, with this ambition to have four of our countries net zeros as early as 2030. Thank you very much. Now I will pass it on to Delphine to open for the Q&A session. Thank you.
Thank you, Catherine. Now we'll open the floor to your questions. I remind you that we'll also be taking questions online. I would be grateful if you can keep them to a maximum of two. Just before taking questions from the room, please, operator, could you remind our online participants the process for asking questions?
Anyone who wishes to ask a question, please press star and one on your telephone.
Okay, now questions from the room.
Thank you. Louis Boujard from ODDO . Two questions, of course. Maybe the first one, I apologize for that. On the nuclear and on the sensitivity of the guidance by 2025, I think that you mentioned that you have some contingencies elements of EUR 500 million per year in 2023, 2024 in your guidance, and EUR 200 million in 2025. Could you elaborate a little bit more on what specificities in terms of contingencies is included in these figures? Eventually as well, if you could provide us with a sensitivity and a mark-to-market with regards to the power market price, more specifically on the 2025 guidance net income, if possible, considering that the power market price have had a huge variation since the 31st of December 2022.
The second question would be maybe on the financing part of the future growth. Indeed, there is missing part of close to EUR 11 billion according to the slideshow, a bit of disposals which is expected. I guess that it takes a EQUANS disposal already in the figures that are mentioned in the slideshow. Eventually there is a bit more room for that. What is your expectation when you think about eventually speeding up in terms of farm down? Is there any health and alternatives disposals that you have in mind by 2025?
Thank you. I think the contingencies that you are referring to are the four outage in nuke. You know that there is a consistent policy in there, which is that we have to plan for potential stop. By the way, in 2022 we had to use a chunky part of the floor. This is usual and there is nothing new compared to the way we have been guiding on nuke with that regard. You are mentioning also. There are other contingencies, but they have nothing to do with four and there is no number on that. That's another story. On the exposure to market price, you know that nuke is globally quite open merchant.
We have a hedging policy that we are complying with, even if we are slightly at the low end, but complying of course with the hedging policy. There is always something, there is always a silver lining in everything. The, the good thing with inframarginal tax is that they capture the high part of it. We have some sensitivity, but reduced to a certain extent to the highest prices that you can get. Now, of course, price will be in 2023 as it is very usually one of the big ticket that can move our numbers. No surprise with that, but nothing more than what you would expect. Again, a sensitivity bit reduced by the inframarginal taxes, which are actually topping off our numbers.
On financing, yes, I mean, if you take the two bars on the left and the right side, there is before funding of nuke, there is indeed some imbalance. The plan is to close that gap with debt. We are very transparent on that. Now, do we have flexibility in the asset portfolio for more sell down, farming in? I think that we are done with our disposal plan, strategic disposal plan. We don't want to reopen, but that we can be agile and do some time. For example, for when we are growing, we can definitely have minority partners joining us, and that can ease the burden. That's the kind of flexibility we can use.
We have a question from Juan at Kepler.
Yes. Thank you. Good morning. Juan from Kepler here. I have two on my side. The first one is coming back on Belgium, especially on the security of supply situation for 2025. What is your assumption or what is your view about the recent news flow that we saw, or the possible extension of three reactors over the one to two year period to cover the gap between the restart of the November 2026? That it will be the first on this side. What is the expected timeline there? Because you have some gas assets that are covered over with a CRM mechanism in the country. What is the timeline that you expect to commission those assets in the country? This is the first one.
The second one is on regulated tariffs on gas in France. As we know, during the summer period of this year, they're going to end. What is your assumption going forward for this part of the supply business? Is this part of the rebound that we expect both in earnings and working capital? Thank you.
Thanks for the question. I'll say a few words on the security of supply for 2025. Indeed, it has been a quite intensely discussed matters now with all the stakeholders in Belgium, with the view that 2025 is going to be a little bit of a tense path where, you know, some of our reactors will obviously be stopped as per the current law, and some of them would be under the LTO if indeed the agreement comes into force. Which is why, by the way, Belgium has organized CRM auctions to which we contributed, and you're right to say through, for example, one of our gas power CCGTs, which is currently under construction. I'm bridging to your second question or second part of the question here.
In terms of the short-term extension for what we call the non-LTO units, which are the oldest units in our portfolio, so there will be three remaining on Doel 1, 2 and Tihange 1. These ones are not under the scope of an extension at this stage, and we don't plan f or them to be.
Simply because right now there is no safety framework, nuclear safety framework as such, that exists that would provide for such a short-term extension. When we look at extension of currently Doel 4 and Tihange 3, we look at a very well framed existing framework, which is a 10-year extension, which has a name, it's called LTO, and it is what is currently under discussion with the Belgian government. We are focusing all of our efforts to the extension, on the extension of these two units. Obviously working with all the stakeholders in Belgium to see if there are other solutions that can help the 2025, 2026 path of ways, where indeed there will be a little bit of tension in the energy system of Belgium.
Then to the point of the CRM and the gas CRM, to which we contributed, we have indeed one project. We have currently one under construction. The second one didn't get a permit at this stage. One is progressing, and the date for being it ready is 2025. Should be just in time to contribute to the security of supply questions that you have mentioned. I think there was also the second question, which was on regulated tariffs, right? You're right to say that the gas regulated tariff is due to stop by end of June. This is really our working assumption. I think one has to make the difference between the regulated tariff and the tariff shield. People are often confused, right?
That doesn't mean that-- I t's not because the regulated tariff for the gas will stop that the government will not continue with the tariff shield to protect the consumers. For us, you know, regulated tariff normally will stop by June. That's at least our understanding in the current discussions we're having with our stakeholders. There will be likely tariff shield to protect the consumers, still in place for a while. With the current scheme, no change here in terms of, you know, the working cap advance that we are doing to help and to contribute to the government to the existing govern ment scheme.
Do we have? Yes.
Thank you. Arnaud Palliez, CIC Market Solutions. I have two questions. The first one is on GEMS. You mentioned the evolution in the nature of the business, and I would like to know if there is a change in the level of capital employed as a consequence of this evolution. If therefore the you can be a bit more specific about the return on capital employed for this business. That's the first question. The second one is about the debt. When we look at the debt trajectory until 2025, it seems that you have room for maybe more M&A. I would like to know if you are considering a larger deal than the bolt-on you mentioned for the existing businesses? If also, you mentioned it, the fact that you want to increase your stake in some projects, if it is included or not in the growth CapEx?
Maybe I will start by commenting on the growth CapEx. Then Pierre-François, you complement and also address the GEMS question. Just to say that at EUR 22 billion-EUR 25 billion of growth CapEx is all-encompassing. This is really the envelope that we are working within. Indeed, many organic because we do believe that it is the best way for ENGIE with the expertise, with the system, with our integrated business model, with our people to add value. This is really the mainstream development priorities for us. Of course, we are not necessarily forbidding ourselves to look at this type of bolt-on transaction that can help us accelerate, that can help also bring synergies to existing assets. I think you've heard from us how important it is to have the right portfolio of assets.
Sometimes an asset can bring a lot of value by the sheer fact that it is very complementary to our existing portfolio. I think we've done that really nicely with Eolia in Spain, which is doing very well. We've also done that to help accelerate on the battery side, in the U.S., where we've purchased a company which has solar assets and battery assets and will help us accelerate and get to our 10 GW. These are quite typical of the type of M&A that we would get engaged in.
The key point is that we're really, really trying to change a little bit of the ENGIE culture on M&A, which means that we are very, very focused in demonstrating that we can make these assets that we would buy better by applying our operational and industrial levers. We're really, really trying to force ourselves to show this value that we are adding by doing that. That's very, very important.
Yeah. GEMS, return on capital employed, I'm not going to share that one. There is a good reason for that, is that the capital employed in GEMS is of course reflective of what it is. From a working cap perspective, it's basically two very different things. One, it's a commercial business. It's a B2B business, which means that we have receivables, we have customers, we embark a working cap, which is of course directly into that one. It is volatile because it depends on prices as for the rest. It's exactly the same story that for the rest of the group. You do have this part of capital employed. You have another part which is more linked to the market activity. Here we have a key component, which is margin cost.
Of course, the margin cost, they are in the capital employment initial margins. That's of course, again, another source of volatility. That's why we believe it's not relevant to look at the return on capital employed of GEMS because of the volatility of the capital employed. It's no secret that in 2022 it was slightly accretive to our members. Still, not going to commit on that.
Good morning. It's Chris Moore from Carbon Tracker. Thank you for the presentations. I have two questions. In the growth CapEx figure you gave us, EUR 22 billion-EUR 25 billion, I think you said that 75% would be eligible for EU taxonomy. Can you maybe give us a feel at Group level of what the big ticket items are for the non-eligible portion, the 25%? That's the first question. The second question is, you gave some new targets in net zero this morning, including lower carbon intensity from energy production. Would it be fair to say that that just reflects the increase in the renewables build-out you've talked about or are there other things going on here?
Maybe you could also talk a little bit about Scope 3 emissions, which I think are more than 75% of Group total, and where you haven't really said very much this morning. Any color would be appreciated. Thank you.
Okay. Let me start maybe by the second questions, which is around the lower carbon intensity. You're right to say that, you know, our production portfolio is being reshaped through heavy investment in the renewables. I think you see it very clearly in Pierre-François's slide where he showed the distribution of our capital employed, and you see how renewables is actually overtaking networks, right? It's a nice slide. Clearly we have an effect from that. Remember, with our flexible assets, our CCGTs will be more and more used as flexible assets as opposed to base load. The usage of our CCGTs will also be different, and we will decarbonize them by using, first of all, making sure that they are the most efficient, as efficient as possible. Here you have a benefit as well.
Starting to blend the feedstock gas that we use to produce the power. Blend potentially eventually hydrogen, although this is a little bit more far-fetched, blended of gas, decarbonizing the gas, using biomethane or low carbon gas is also something that is part of the mix. Of course, the batteries, which are the ultimate low carbon production asset. This is really having a portfolio which is structurally less carbon intensive and mixing and transitioning this portfolio towards that will have a big impact. I think the other question, which was on EU taxonomy, for example, the gas plant that we are developing in Belgium is not taxonomy aligned.
This is not because it's a gas asset, it is because it's a gas asset that is above the thresholds that are considered by the EU taxonomy aligned. As you know, not all of the gas powered assets will be aligned. For an asset to be aligned, you need to be very, very low CO2 emission. This one is efficient, it's a good asset, but it doesn't fall into this criteria. It will not be aligned with the taxonomy, and this is just an example. It doesn't, by the way, put in question its business model on, because it was the response to an auction, the business model is guaranteed. This is an example of one of the big ticket items that falls under this 25%. Scope 3. Scope 3, gas sales.
Here it's really about decarbonization of the gas. I go back to my speed on biomethane, hydrogen and derivative. That's gonna be a massive contribution to Scope 3. And then everything we do, of course, with our suppliers, which is, you know, going back to making sure that we also accompany our suppliers towards their decarbonization efforts, which poses very exciting challenges in terms of partnership, in terms also of making sure they are indeed, you know, doing the right thing. We are helping them sometimes even in order to decarbonize themselves. Otherwise, we have a risk of not being inclusive enough, particularly on local suppliers that, you know, have to pass this barrier to entry or this extra cost that decarbonization can represent for suppliers. That's the two key buckets on Scope 3 that I can mention.
We'll now take some questions online. Operator, could you please start with the first question?
The first question is from Ajay Patel with Goldman Sachs. Please go ahead.
Good morning, and thank you very much for the presentation. I got two questions, please. The first one is to look at slide 56 in the last presentation. I was just trying to understand that you had flexible generation there broadly the same level as 2022, and we've also talked about GEMS being above the normalized level of 2021. I'm just wondering how much of that is already locked in via, like, physical contracts that you may have? Also, why do you believe that flexible generation stays at that level? Are you basically anticipating closures of capacity leading to higher spreads for thermal or keeping spreads higher for longer, or is there some other assumption there? The second question, please, is in the press release where you talk about the key assumptions.
You write inframarginal rent caps based on current legal text. You have this few words after, which is and additional contingencies. I'm just wondering, what do you mean by the additional contingencies? That to say that you have some contingency in the guidance for extensions of these rent caps, or is it something else? Further detail would be really helpful. Thanks.
Yeah. On that one, additional contingencies, you know, there is a bit of intimacy about the additional contingencies that a couple might maintain. I think that, you know that we are facing quite a lot of uncertainties. It's about the market, but it's also about the regulatory framework. You probably all remember how these taxes were implemented. The markets are cooling down. Sounds like things are normalizing, but you never know what can happen. We know what is the low, and we know that there might be risk associated still with potential extension and that kind of thing. We had to take a management call about what is it that we need to prepare of. Of course, being also consistent with our price assumption.
On that note, we have what we believe are adequate contingencies to face 2023, 2024, 2025 at this point in time. Of course, with still significant exposure on market prices, which go together with inframarginal taxes. There is clearly here a kind of a natural hedge that help us to be a bit more assertive. All in all, we believe that we have a balanced guidance with the right level of contingencies as it can be. That's on the second one. On the first one, I mean, you need to remember that 2022 was not at the top in terms of availability, so we can do still better.
I think that's also, will part, will help us, and the availability and the fleet will help us. Of course, we expect spreads to normalize. There will be some significant headwinds. At least that's what we can say. You need also to remember that during last year it was very difficult to hedge clean spark spreads. Clearly, there was lack of liquidity in the market, but also, there was a risk about gas being available. It was definitely not the best time to maximize hedging. We have open positions, and we need to recognize that on Flex Gen, we have still significant volatility, more than usual, due to this less hedged position. Of course, now that the market are normalizing, we are actually fixing, but it will take a while. So b e open that there is here more volatility than usual.
Sorry, to be clear there, I think it's EUR 500 million step up from 2021. That EUR 500 million in thermal, a portion of that is just improvement of availability of the plant. Some of it is the expectation that we see some normalization of thermal spreads, but maybe not fully. Is that, is that right?
I think that's correct. That's correct. Price assumption is not what it was in 2021.
The next question is from Arthur Sitbon with Morgan Stanley. Please go ahead.
Hello. Thank you for taking my question. The first one is on the potential nuclear life extension on the two reactors. I was wondering if you take into account the impact of this life extension on your, well, on your financial targets for 2023-2025. Typically, on CapEx, on any potential further increase in provisions, first, on net economic debt to EBITDA and on D&A. That's the first question. The second one on gas networks. I think you were talking about EUR 3.5 billion of growth CapEx there. I was wondering, I think it was related to biomethane and hydrogen. I was wondering how will that CapEx be remunerated?
If you intend to have it as part of your regulated asset base, is it CapEx that is already approved by the regulator, or you have a, well, or at least you have an ongoing discussion, or you're confident that this will be approved? Thank you very much.
Okay. I'll start by the second question. Just to say that on the gas networks, clearly the biomethane CapEx, which tends to benefit GRDF and GRTgaz, is already part indeed, of the remunerated assets. That's already taken into account. Where the market is a little bit less mature in terms of regulation is on hydrogen. The discussion with the regulators indeed is ongoing. It is not yet decided that a hydrogen-related CapEx will be part of the existing wrap. A work in progress on this one. Maybe, maybe just to complement and a bigger picture, that obviously you have seen what is happening now between Spain, France and Germany. You've seen what happened in some of the import terminal. You have seen what is happening also on the storage assets, where we have currently discussion.
To actually extend the capacity of our storage assets. While a few years ago, the regulator was asking us, "Do you need all these storage assets?" The dynamic is changing fast and furious. We see that, and that's obviously, very positive for us, in the way we look at our networks assets. You want to say a few words on nuclear extension?
On nuclear extension and our financials, the short answer is no. It's not taken into account in any shape or form. When we have a deal, we'll come back to you and explain the, what it is. It's clear that our guidance is on a bit extreme nuke, and that also part of the reason we want to move there, it's because this uncertainty doesn't help to understand what's happening in ENGIE. Of course, the impact on net income will be disclosed in due time when we have clarity about the terms and condition of the potential extension, which is now too early.
Another question, operator, online?
The next question is from James Brand with Deutsche Bank. Please go ahead.
Hi. Good morning, straight. Good afternoon, depending on where you're located, and thanks a lot for the presentation and congrats on the good results. I have two questions for me. Firstly, for Catherine, you mentioned in the first presentation on the results, that the cap on the nuclear liabilities would involve a risk premium. You used the language a couple of times for the transfer of the liabilities. So I just wanted to clarify, are you expecting to do a little bit like how the German utilities did? You're expecting to actually, when the cap gets announced, to transfer the liabilities over to the Belgium State and pay the premium to get them off your balance sheet? That's kinda how I interpreted that language, just to check that. If so, why?
Why pay the premium if you can negotiate cap? Why not just leave them on the balance sheet and kinda see how things progress and what the costs actually are? The second question is for Pierre-François on the ROACE target. Obviously the biggest improvement there is targeted for Energy Solutions. I'm sure some of that is the normalization of losses in EVBox. I was wondering whether you could just kinda go through, like, what the key things you need to do in that business over the next kind of two years or so to drive that improvement and what the main risks are? Thank you very much.
Yeah. Just very briefly on the first question. Clearly the deal is including the discussion with the Belgian government on the waste management part of the liabilities to define once for all an amount, which would be a combination of waste category management tariffs and volume. You have a tariff, you have volume per category that gives you an amount. The whole discussion that we're having with the Belgian government is to make sure that this amount is set once for all. Once it's set once for all, the liability corresponding to this activity is indeed transferred to the Belgian government. Now, the analogy with the German solution is a little bit different.
While we accept the fact that there could be a risk premium associated with this transfer of liability, one has to understand that the provisions that we have already on the balance sheet, on ENGIE balance sheet, to handle the waste management, does include today a fair amount of contingencies. If you see, we have the EUR 3.3 billion increase at the end of December. There was also some contingencies put as part of this figure. Important to note, to keep in mind that it is a different situation from the German situation because a risk premium, and some of you might have an amount in mind, was applied to very little, if not zero contingency amounts, which is different from the situation that we have today.
Just to keep in mind that it is a little bit different, which is why we are refraining from saying a solution, a German-like solution. Maybe, Pierre-François, proceed.
Yes. On return on capital employed for ES, of course, still some way to go in fixing some of the underperforming assets that would be helping us. There is also profitable growth, which still is expected to bring some accretion to earnings. Last but not least, you see that we have a key target in improving our margins in energy performance management. Which is not going to come with any additional capital employed. It's really a margin improvement, which is going to be significantly accretive on return on capital employed of the ESGBU. That's these three topics, which are of course underpinned by a strong performance drivers and growth that are going to uplift our returns on capital employed in ES.
Thank you very much.
Operator, do we have any further questions online?
Yes. The next question is from Michael Harleaux, Société Générale. Please go ahead.
Hi. Good morning. Thank you for taking my question, and thank you for the presentation. Just one question from, on my end on the renewable growth and pipelines. We've seen quite a few companies expanding their pipelines but keeping the targets unchanged, which implies that everyone is getting a bit more selective and that reaching returns is only getting harder. On the integrated utilities side, we've also seen some fairly big acquisitions, notably in the U.S. Based on your presentation and your target towards 80% of the growth to be organic. It seems that you're not exactly experiencing the same problems as everybody else when it comes to renewable growth. If you could help us to think about that and how should we be seeing ENGIE compared to peers? I'm thinking obviously about the comments made by Ørsted on pipeline or the acquisition of RWE in the U.S. Thank you.
Paulo, this is what we call the red carpet question. Maybe I'll pass it on to you to describe how good you have been at executing indeed and at establishing a good track record, therefore making sure that our pipeline will be delivered in a credible manner.
Well, I think it all starts with setting realistic and credible targets. When you set that, I think then delivering on that target is possible, and that is what is happening with ENGIE. In 2021, we defined this path. We presented the roadmap, and we are executing it, and we have the results transferred into the P&L that we have shown. Pipeline is a very tricky subject. People can present all sorts of pipeline. We do not include prospects on our pipeline. We tend to be very selective with our development to reduce development costs because they go into the LCOE of the projects and make the projects potentially uncompetitive. That's the way we are approaching development of renewables, and that will continue in the near future. Certainly, competition is strong. It will continue.
On the other side, we have a huge demand for green power. I can tell you today that we have more demand for our green power than assets that we can build in the short term. This will continue for the foreseeable future, and we expect to achieve the targets that we have announced in 2021, and we are in good track to achieve them.
Thank you. That was very helpful. Thank you very much.
The next question is from Peter Bisztyga with Bank of America. Please go ahead.
Yeah. Hi. Thank you for taking my questions and for the presentation today. My first one was on EU power market reform. I'd be very interested to hear what you think will happen on that front. Which direction you think the European Commission will take, and what the key risks or indeed benefits for your strategic plan could be. My second question was just to really clarify a couple of things around 2025 guidance. One just on this issue of contingencies and price caps. Could you maybe clarify that if current inframarginal price caps were to be extended through to the end of 2025, would that have any impact on your current guidance? The second question, I was wondering if you could give a second clarification, I should say.
Could you give us any indication of what your NRIgs ex nuclear would look like in 2025? You've given us EBIT ex nuclear. I'm just wondering what the underlying net income would look like. Thank you.
Let me start with the EU market reform and the benefit to our strategic plan. Maybe just taking a step back to talk a little bit about the regulation risk, because this is something that is much talked about, and I think it's always good to take a little bit of a perspective on the topic. To say that, when you think about prior Ukrainian war, all the policy discussions on the energy world was about decarbonization. It was all about, you know, Fit for 55. We're making sure that all the energy transition gets accelerated and across all sectors, actually. The war started, and there was this obviously moment of panic.
The policy shifted completely into, first, what has all struck us very much, which is a very volatile behaviors with a lot of policy measures, interventions being taken with the view of addressing several things. First of all, very importantly, the security of supply. Then the volatility of the markets, and you've heard the number of times, price cap applied to Iberia Peninsula, the power price cap, the gas cap. There was a lot of measures that we're trying to say, "Okay, how do we do to moderate the market?" Of course, the protection of the consumers, and here we were in the world of the tariff shields, et cetera, right? How to protect the consumers. Obviously, the prices have dropped a little bit.
The volatility is still there, but the absolute level of prices have dropped quite a bit. You can see that the policy is shifting a little bit to a bit more strategic thinking, okay, the Russia crisis has put energy sovereignty in the really at the forefront of what we need to address. Decarbonization is still an imperative we need to address, and we need to have also affordability because we see what happens when, of course, the energy prices increases, and we need to protect the consumers. And then another aspect of that issues is competitivity for the industry. What you see what have happened in the IRA, you can see that EU now is not just looking at decarbonization.
Decarbonization is very important, but also how do we make sure we keep the affordability for the competitiveness of the industry? A bit of a long introduction. Sorry. I arrive to the market design. What that means for the market design, we believe, is that the market design has to be well thought. First of all, it cannot be a short-term measures. I'm very pleased that last year there was not reforms made to the market design because the market is very complicated. Energy market is very complicated. Taking short-term measures without understanding all the unintended consequence could have been a bad thing. I think it's very important, one, that the market remains European.
We all know that there is a big strength to have an integrated energy market where you can import and export electricity from one country to another. Those features are very precious to the security of supply and the affordability of the energy in Europe and have to be kept full, kept whole as part of the evolution of the market design. Our understanding today is that the market design discussions are going to be indeed respecting the fact that the European market will continue to exist, which is very, very important, and will be complemented with investment framework for the flexible assets that I have described. CRM type of devices to make sure, for example, that batteries get developed at the right place in the network.
CFDs or very largely PPAs to help provide contract with set price with green electrons for customers, for industries. This is the way we understand, you know, the market design discussion go. I would say even more a step back to that is that no matter what market design, we believe ENGIE will thrive because whatever market design is decided, there will be the need for additional renewable capacity. There will be the need for displaced flexible assets. Whatever market design is decided upon, we will be there. We will deliver good project. We will contribute to decarbonize the energy system of tomorrow. Let me repeat what was presented several times now, is that, yes, 2022 there was high energy prices and some of our merchant-exposed assets benefited from those high prices.
A lot of our assets, vast majority of assets, are actually contracted or regulated and therefore don't need to have very high energy prices to thrive. That is really the core of our business model, is the ability to generate good business from contracted, from regulated, and sometimes indeed a certain quantity of merchant-exposed assets. This combination will thrive, I would say, no matter on what market price. Do you want to say a few words on guidance?
Yes, of course, guidance, contingencies, and financial tax. I think we should be very careful that we don't boil down the story of ENGIE the next three years to the inframarginal tax. The inframarginal tax, they are there. We have of course taken a set of assumption around it. Look at what happened in 2022. They came very late, they came retroactive, Still we have delivered on the numbers. Why is it? There is a logic. If the inframarginal tax are extended being harsher, it means that the price environment is more buoyant. If it is there, it's not bad news for ENGIE. There is a kind of a natural hedge that I try to highlight. You know that we have wider range in our guidance. It means also that we want to cope with that kind of uncertainty.
That's the reason why we feel that our guidance is balanced and it is factoring in this kind of assumption. Is it changing our 2025 numbers significantly? The answer is that we've made a risk appraisal and we believe there is this natural hedge which is giving us some decent protection against whatever would happen. Even if it was a bit chaotic in 2022, I think everybody is wiser now, know better, and I think that we should be able to manage. When it comes to give a guidance on net recurring income excluding nuke, I think we are very transparent. We are giving guidance on EBIT excluding nuke. We are giving also, although it is a bit blurry, we are giving some indication of EBIT for nuclear in the next three years to come.
You are very familiar, Peter, with nuke mechanics. I'm sure you can work out, the bottom line if you want, and you will make your guess. You know there is no minority interest. Good luck with the tax assumption. That's it. I think that that's the kind of uncertainty you're gonna have to live with. It is embedded in our full net recurring income guidance. Very important, nuke is in there.
Amazing. Excellent. All right. Thank you so much.
Operator, we have time for one last question.
Okay. The last question is from Sam Arie with UBS. Please go ahead.
Oh, great. I just managed to sneak my question in. Thank you. Thanks for an excellent presentation today. We've learned a lot from it. It's been really very helpful. I have just a couple of questions I want to ask. One is maybe for Paulo and one for Pierre-François. Paulo, amongst all the good new things you told us today, I think one of the most interesting is this slide with your renewable returns on it. I think it was page 27 or thereabout. I remember that a few years ago in a similar ENGIE renewables update, in sort of Gwenaëlle's time, there was some guidance of generally a 20% to 25% NPV to CapEx for renewable projects.
It seems to me from the numbers you're showing today that could be much higher now, maybe more in the sort of 30%-40% or even higher type range. That makes a lot of sense to me because markets have been very bearish on renewable returns in the last year or two, but maybe overly focused on U.S. offshore wind. It seems to me things must be getting better in Europe and in onshore. I just wonder if you can comment, is my interpretation right that you're seeing returns in renewables getting better? Can you give us any sort of flavor of, you know, what's going on the ground with PPA levels?
You know, are you seeing willingness of corporates to pay for a bit more margin as well as for a bit more cost in new renewable projects? That's my first one. Maybe I'll pause there and perhaps Pierre-François I'll come back in a moment with a second question for you.
Well, you can ask your second question so that we get prepared. Paulo is thinking and I will be thinking in the same time. Let's be very pragmatic. Go ahead.
Very good. All right. I didn't want to go on too long, but sure. My question to you is just on the hydro side, and I think this is probably not a big issue, but in my conversations with the street it sometimes comes up that people are a bit worried about hydro conditions, obviously after the very dry summer in Europe last year. It's a bit hard from the outside to really think about how this could affect you in the future, given that, you know, you might have less hydro, you might have more thermal, you might have trading benefits. I wonder if you could just talk to us about, you know, what would the sensitivity be on your plan guidance if we end up with a few summers again, similar to last year in terms of the hydro resource?
I'll start. I think your assessment is pretty right. I think we have seen the demand increase for renewables. It's not anymore companies that want to show CSR targets achieved. We have a real demand for renewable power because in fact, it's the most economic power that you can buy today. Any company that wants to decarbonize, but also wants to have a good economic return, want to use renewable power. That has driven the demand, and the balance means that PPAs are going up. Prices are higher, both in Europe and the U.S., quite significantly, I would say mid- double- digits in both regions. That's one of the drivers for renewables. In addition, it's selectivity. We now are focused on delivering returns and EBIT. That's a feature of the ENGIE business today.
We are selective. We have established the realistic targets that we feel, not targets that are not achievable in terms of capacity. Then we have a nice pipeline from which we are selecting the projects in the markets where we see the demand and in the markets where we can deliver the projects on time, on budget, with the right level of returns. I think the sample that is shown in the slide is quite telling and quite representative.
Thank you, Paulo. On hydro, just a couple of comments. Yes, drought risk is definitely something that we are scrutinizing. We are talking about climate. This is also a part of it. First, it's good to be a bit split between two continents with exposure in hydro in South America and in Europe. The likelihood that we'll be hit at the same time is, of course, low. Two, usually, when there is a hydro pressure, there is a consequence on prices, which mean that if there is a drought, prices tend to go up. Again, it's a kind of a natural hedge, which has been working actually in a few countries quite well.
There is a very practical consequence, is that you need to be very careful with your hedging policy on hydro. It's clear that we see today that the rain level is not necessarily in line with long history data points. It means that we need to be careful when we build our scenarios for hedging, that we factor in that there may be significant discrepancies. We have adapted a hedging policy to make sure that we reflect on that. It costs us a bit of money in 2022, but we are fast learners.
This is the end of our Q&A session. Before enjoying a well-deserved cocktail, I hand over to Catherine for the concluding remarks.
Just, thank you very much for participating, for your question. I hope you can feel that the ENGIE team is fully mobilized. Thank you very much.