Good morning, everyone. It's my pleasure to welcome you to ENGIE's Full Year 2023 video webcast. Catherine MacGregor and Pierre-François Riolacci will present our Full Year performance and our medium-term outlook, following which we will open the lines for a 45-minute Q&A session, and with my polite request of limiting your questions to one or two only, please. With that, over to Catherine.
All right, and good morning, everyone. Very pleased to be here today and to share with you our presentation on our 2023 performance and medium-term outlook. In a constantly shifting environment in 2023, I am very happy to report another year of strong performance for ENGIE. We reached the middle of the earnings guidance range that we upgraded in November, in fact, beating the earnings in 2022, which was already an unprecedented year. We maintained the strong pace of our renewables rollout, and we had a pivotal year in batteries, both through acquisition and organic growth. We made further good progress in major aspects of our ESG targets and net-zero trajectory, and we fundamentally de-risked our group as we signed the final nuclear agreement with the Belgian government in December.
I want to thank all of our teams for their instinctive efforts in executing our strategy and delivering the energy transition. The results of your commitments are there to be seen in this presentation. Summarizing a few headlines' 2023 numbers, the EBIT excluding nuclear grew by 18% organically to EUR 9.5 billion, contributing to a 3% rise in net recurring income group share to EUR 5.4 billion. Cash flow from operation was upped sharply by almost 2/3, in fact, to EUR 13.1 billion, boosted by higher earnings and working cap improvement. And gross CapEx, which I repeat, is always selective, always disciplined, is up by almost half, in line with our 2023-2025 business plan. And I should add that in 2023, if I take the year in isolation, 72% of our gross CapEx is eligible, and 66% is aligned with the EU Taxonomy, and both these numbers are up versus 2022.
Consistent with our payout policy, we are proposing a dividend of EUR 1.43 for shareholder approval at the AGM later this year, and this corresponds to a payout ratio of 65%. Moving to the next slide, focusing on our performance in ESG, starting with the greenhouse gas emissions from energy production in 2023, sorry, they were 52 million tons, down from 60 million in 2022, and that is a big improvement, underpinned, of course, by our decarbonization journey, but also helped by lower load factors at our CCGT units and soft demand in Europe. The share of renewables in our total power capacity was up to 41% at the end of December, which is fully on track towards our 2030 targets.
In terms of gender diversity, we have reached 31% in the proportion of women at management level, and we stay focused and committed to our aim of managerial parity between men and women in 2030. We are committed to net-zero carbon by 2045, and I am proud that Moody's recently aligned our ambition with a 1.5-degree Celsius trajectory with a solid level on the implementation of these objectives. This demonstrates our progress and compares favorably with the SBTi certification of well below two degrees Celsius that we received at the beginning of last year. And then looking at the coal phase-out, we're continuing on schedule for a complete exit by 2027, as we announced disconnection of two of our Chilean coal-fired power units and the conversion of a third one by the end of 2025. The rollout of our strategic plan continues at pace and across the board.
I'll just provide some details on renewables and battery storage in a moment, some highlights on the other GBUs. For example, in networks, where in Brazil, we won a further power transmission concession, while in Q4, we sold part of our stake in the gas network operator TAG. We sharply boosted our flex-gen activities with a breakthrough year in battery storage. Notably, in Q4, we commissioned a significant amount of batteries in the United States. In energy solutions, we had another strong year in district heating and cooling with an order intake of EUR 2.7 billion. Some details on renewables and battery. First of all, starting with renewables, where we have now become a substantial renewables player globally and across all the major technologies. In renewables, size matters. It makes a difference. It makes us more competitive. It makes us more influential.
You can see that we made particular headway in North America in 2023, also adding significant capacity in Europe and Latin America, and we also expanded our platform in South Africa. At the end of 2023, we had 60 projects ongoing with 6.3 GW of capacity under construction. Of course, growth is good, but always, execution is fundamental. I'm especially proud that we have delivered our projects under budget and with an average delay of less than two months. In PPAs, where we are ranked as worldwide leader by BNEF, demand is strong. Prices remain supportive, especially in the United States. We signed 2.7 GW of green PPA in 2023, and we are succeeding in differentiating ourselves through the sophistication of our offers.
We notably concluded the PPA recently with Amazon, which will be taking 473 MW of the output from the Moray West offshore wind farm of our JV Ocean Winds, and this is the largest green PPA that was signed in the U.K. Moving to battery and energy storage, as they are clearly a key element of our strategy, because it is so crucial to absorb the volatility of a power system where base load is rapidly giving way to peak load. 2023 was a pivotal year. The acquisition of Broad Reach Power was the standout event, providing us a growth platform and also an early-mover advantage on two key U.S. energy systems, ERCOT and CAISO. Multiple other countries are also making strides in battery storage, and we are seeing this trend towards more hours of usage per capacity.
Among our major 2023 highlights was the commissioning of our so far largest unit at the Hazelwood site in Australia and also the award of a permit to construct 200 MW of battery in Vilvoorde in Belgium. Staying in Belgium, turning to the next slide, we achieved a fundamental de-risking of our company by signing a nuclear framework agreement with the Belgian government. It is worth repeating because it is really fundamental for our group. The agreement removes all of our nuclear waste liabilities, and it sets up a joint venture with the Belgian government to extend two reactors by 10 years to what we call a Flex LTO, operating under quasi-regulated conditions. We are on track in the process of the discussion. We expect closing by the end of this year. A word now on our 2024 outlook.
The market environment has normalized faster than we would have anticipated, although geopolitical tensions clearly are ever-present. But the energy transition still continues to accelerate. At ENGIE, we are well-served because we have this integrated structure and this adaptability provided by a flexible asset mix. In 2024, we now expect net recurring income group share in the range of EUR 4.2 billion-EUR 4.8 billion, which is higher than our previous guidance. Our dividend payout policy stays consistent at between 65% and 75%. Now I will hand it over to Pierre-François for details on our financial performance.
Thank you, Catherine, and good morning, all. As just discussed, clearly, another strong year for ENGIE in 2023 on the back of up-to-schedule execution and also beyond market conditions. I'm not going to dwell further on these numbers. Just highlight that we propose a dividend of EUR 143 per share. Of course, not all of it is easily repeatable, but you know that we are committed to a sustainable and healthy growth of the dividend going forward. Let's now dive into the numbers and start, of course, with the EBIT growth of 18% organically. That's +EUR 1.5 billion year-over-year. It's driven by GEMS, by retail, and by renewables. I think it's worth to note that despite the mild temperatures that you had in Q4 and especially in December, we are landing the full year midpoint of the guidance.
We have overall observed in the year positive impacts from volumes and prices. We have a contribution from commissioning notably on renewables and the result, of course, of the strong delivery of the performance plan. I'm going now to be a bit more granular in the key variations per business and starting, of course, with renewables, which stands slightly above EUR 2 billion. The scope impact is positive due to acquisition in South Africa, in Europe, a bit late rather late in the year. Looking at organic growth, we achieved a positive 19% increase. We see a continued positive price effect, notably due to a favorable comparison against last year. We had some buybacks at more than EUR 100 million. However, better capture prices were largely offset by taxes, notably for hydro in France. We had some positive volume effects, again resulting from a better hydrology in France.
We had commissioning of a renewable CapEx for EUR 167 million in year, which is, of course, great. Performance is positive, albeit a bit limited due to the G&A, which are reflecting some high inflation that we had in the year. And you know we take everything in our G&A variation. Now, negative others are mainly due to significant DBSO margins that we had in 2022 and that we don't have anymore in 2023, in line with our strategy as announced in the previous years. So again, record year for renewables, all variables being basically favorably aligned. Networks EBIT is down, EUR 107 million organically. It's a 5% decrease, mainly driven by lower volumes in France. It did in France, volumes were down, especially in distribution networks as a result of energy sobriety, but also another warm winter.
It's very important to highlight that we are protected by the French regulation against these lower volumes through a clawback mechanism that will actually apply from the start of the new regulation, that is this year, 2024. In addition, the regulated French business benefits from an inflation protection, inflation indexation of the regulatory asset base, which mitigates over time the impact of inflation on cost. It is worth to highlight that in 2023 also, GRT Gaz received additional revenues from capacity subscribed between France and Germany. Abroad, our business has been performing well. In Europe, we saw some positive tariff increase, as well as higher margins for storage activities in the U.K. and in Germany. In Latin America, we have posted a chunky 22% organic growth due to the full commissioning of Novo Estado power lines in Brazil, but also increased performance, especially in TAG in Brazil.
As you can see now on the graph on the left side, energy solution was significantly impacted in 2023 by two one-offs in the U.S. and in the Middle East. You remember that we are facing indeed cost overruns for the construction of combined heat and power production plants in two universities in the U.S., two contracts. We have booked a provision for onerous contract of EUR 150 million in H1. A remediation plan is on track. We have threatened our project management capabilities to bring this project under control, but also make sure that it does not repeat in the future. The second one-off of EUR 38 million relates to the recognition of a different tax liability in our hybrid participation because there was a corporate tax that was actually created in 2023 in the UAE.
Aside from these non-recurring items, of these two items, Energy Solutions is doing well across the board, posting a healthy 10% organic growth in EBIT. Operational performance translates into EBIT margin improvement. That's plus 63 basis points, notably on energy performance and management. Commissioning impact on local energy networks and sustained commercial development with increased selectivities are also contributing. This leads us to be confident for the delivery of our ambition in the coming years. For flex-gen, in Europe, we were significantly impacted by the market normalization during the year with a steady and fast decrease of prices. CCGTs have been often out of the market, and generation volumes have accordingly significantly decreased. Our locked position from the hedging has helped us to capture higher spreads, but offset by a lower level of ancillaries from record high in 2022, while at the same time, our CRM activities saw significant growth.
Market volatility is reducing, and as such, we have captured less value from our flexibility assets in Europe. Those headwinds in Europe were somewhat mitigated by the situation in Chile, which has improved in 2023. The year-on-year variation benefits also from the negative impact that we had in 2022 due to the tax contribution, extraordinary tax contribution in Italy. Overall, it's a strong year for flex-gen in 2023 after a record year in 2022. Retail EBIT is up EUR 587 million organically year-on-year, including a significant timing effect. You remember what we said in October? The fourth quarter would remain strong compared to last year, as the latter suffered from a substantially negative impact of timing effect. We had again some timing impact on Q4 2023, but to a far lesser extent.
So that timing effect explains half of the strong price performance that we achieved year-on-year, this plus portfolio management resulting in better margins compared to 2022, where you remember we were loss-making. Then comes a negative volume impact due to the mild winter, but also the customer sobriety, which is partially offset by some sourcing optimization. All in all, significant recovery year for retail despite a mild winter. Let's move now to our nuclear activity, where we see a strong decrease of the contribution, EUR 0.6 billion, stemming from the same drivers that we have discussed throughout the year. You can see here the comprehensive impact of the closure of the two units, Doel 3 and Tihange 2, for more than EUR 500 million. And for the sake of clarity, this is including the nuclear tax impact of these two units.
Then the positive price effect over the period is actually fully offset by the increases in infra-marginal tax rent cap and the specific nuclear tax that we have in Belgium. Volumes are positive on the back of very high availability in our Belgium operation. And last but not least, depreciation and amortization as a result of the 2022 triennial review of the provision is increasing. So a good year from an operational standpoint, but contribution getting lower. Let's move now to our last business line. And we go to other activities, mainly GEMS, which have delivered a EUR 1 billion organic growth year-over-year on the back of good market conditions, but also great execution. These results are coming from the performance drivers again that we have commented during our H1 presentation. I'm not going to come back on that.
As expected, the second half for GEMS was negative year-on-year, mainly because of this unfavorable comparison basis. You remember the second half in 2022 was stellar, but also some timing effect. It is worth noticing as well the progress made on the cost structure that translates into higher EBIT in the bridge. That is the +EUR 71 million that you see in green and a lot of hard work, but good to see that it is coming through. Let's now look a bit deeper into GEMS' financial performance and what it means for the future. We've shown here some details on activity, geography, and commodity, both for 2022 and 2023. You can see that that split is balanced and, of course, in line with ENGIE's portfolio, ENGIE's footprint. On client risk management and supply represent about 40% of GEMS' total EBIT, an increase versus 2022.
This part is actually less subject to market variations than the asset management and optimization. Two, most of GEMS' EBIT is coming from Europe, in line with our footprint. However, geographies outside France and Belgium had an increasing contribution in 2023. And three, as for commodity are concerned, 42% of the EBIT arises from power and 58% from gas and other, a bit more exposed to gas than, but rebalancing towards power. Now, a quick word on the results for the year. We faced unprecedented market conditions in 2022 and 2023 with significant cross-year and intra-year effect. As expected, GEMS had a very strong first half in 2023, and the second half decreased due to market normalization, but also with large variations of technical reserves and timing effect.
Winter-summer seasonality is embedded in some contracts, which benefit to H1 for a couple of hundred million, and that is reversed in H2. For 2024, we expect the underlying EBIT contribution close to EUR 2 billion based on strong performance of our client risk management and supply activities, and also high-margin contracts which are locked in. On top of that, we expect also continuation of provision reversal, both being somewhat related. Last but not least, bear in mind that there will be, as usual, some seasonality in the year. So not all quarters are the same. A few words on the performance plan. As you see, we achieved about EUR 700 million gains on performance over 2021-2023, above our initial target of EUR 600 million. Main contributor remains operational excellence from standardization and industrialization of our processes, procurement gains and savings, and also contract renegotiations.
Continued improvement is now the bread and butter of our GBU organizations. Overall, it's a great performance, knowing that high inflation has negatively impacted our performance on G&A. We will continue to simplify and optimize our G&A cost structure. We have further identified, for example, new reservoirs of productivity addressable with new technology. We have, for example, 15 generative AI projects dedicated to that in our secured environment. Last point, the turnaround of our loss-making entities is a bit below our expectation, and we are very attentive that all necessary actions are taken to improve the situation. Let's now look on the main items on net result. No mention of EBIT. Net financial expenses are up EUR 0.2 billion due to higher cost of debt, but also higher discount expenses on long-term provisions, mainly nuclear. EBIT is better than expected, with limited cost of carry and also higher returns on cash.
Income tax is up by EUR 1.5 billion, and the ETR is set as 27%. Taking all this, the net recurring income stands at EUR 5.4 billion. On the right side, you see that the net income is EUR 3.2 billion below the recurring net income, and this is due to three main items. The first one is, of course, the impact of the Belgian agreement that we signed, which is EUR 4.4 billion negative. We have also booked impairments for EUR 1.3 billion, notably on coal power plants in Chile and on a specific portfolio of renewable assets in the U.S. Third, we recorded a profit of EUR 2.4 billion on mark-to-market of energy derivatives, net of tax. Let's move to the cash part. The cash flow from operation CFFO amounted to EUR 13 billion, up EUR 5 billion compared to last year.
One methodology point is that the impact of the GEMS' market reserves is reflected in both the operating cash flow and the working cap. It's offset in the working cap, so it's a wash on the CFFO. Therefore, when you look at the year-on-year improvement, it comes primarily from the reversal of the 2022 high level of net working cap. You can notably see the reversal of our gas inventories, but also in the unbilled revenues, which is, of course, driven by market normalization. This was expected, but even better when you see it in the numbers. The negative impact on NUC is mainly related to the G2 taxes in Belgium that were paid. Net financial debt increased from EUR 24.1 billion -EUR 29.5 billion, with significant maintenance and gross investments, high dividends paid in 2023, and also the funding of our nuclear phase-out.
The economic net debt is also increasing, mainly due to the increase in the nuclear provision on the back of the agreement signed with the Belgian government. The leverage ratios remain strong, with economic net debt to EBITDA at 3.1, well below our 4.0 threshold. Let's now conclude with our guidance for 2024, which is based on the market prices at year-end 2023. You will find in the appendix the details of the assumptions. 2024 is, of course, marked by uncertainties in the market environment and downward pressure on energy prices, but remember that we have hedged a large part of our open position this year. We expect a range of EUR 4.2 billion-EUR 4.8 billion of net recurring income in 2024, below 2023, but well above 2021, which is a better basis of comparison in terms of price environment. With that, I turn back to Catherine to present a short outlook for the next three years.
Thank you. So now to our medium-term outlook for 2024 to 2026. I will start by emphasizing that the energy transition momentum is accelerating and unstoppable. We did see some bumps in 2023, with, for example, debates over affordability and also the impact of higher interest rates. But the headwinds are outweighed by the tailwinds. I can refer you to the ambition that was stated at the end of the COP28 to triple renewables by 2030, but the facts also speak. EU renewables power generation was up by a record amount in 2023 and accounted for 44% of demand. While not only was coal-fired output down by 27%, but gas-fired production was also significantly down.
In a marginal cost system, the accelerating deployment of renewable, in my view, amply demonstrates that they can be affordable. More than ever, I am convinced that our growth strategy, based on a combination of green molecules and electrons, is the right one for a manageable and affordable energy transition. So I have no hesitation in maintaining an unwavering commitment to the same strategy, with focus, of course, on consistency of execution and adaptability to fluctuations in our market environment. We will add more flexibility to our output and our offers to complement the constant acceleration of renewables. We will continue to offer on-site infrastructure to support our clients in their drive to decarbonize. And we will optimize our infrastructures, both on gas and power, to ensure that supplies are secure. Our commitment remains total to net-zero carbon by 2045.
We are well on the way to our renewables targets to 50 GW by 2025, 80 GW for 2030, unchanged since 2021. Our ambition is to produce 20 TWh of green distributed heat, cooling, and power by 2030. This is for our district heating, cooling, and on-site production activity business line. We believe strongly in the growth outlook for this business, which is absolutely essential for the decarbonization of the cities, where we rank among the largest operators. We are committed to building a green gas business via biomethane and hydrogen that extends the full length of the value chain. And although it is true to say that setting up the right conditions for investment in green hydrogen is progressing more slowly than we would like, I am convinced that hydrogen remains a fundamental enabler of this energy transition. The will and the need are absolutely there.
We are well in advance in battery storage, already halfway to our 10 GW capacity target for 2030, if I look at what we have on operation, under construction, and on secured capacity. In renewables, we, again, extended our pipeline in 2023 by 12 GW to 92 GW. Over half of this is either secured or in advanced development, and we have a well-balanced geographical and technological mix. Having such a pipeline is very important. It expands our selectivity in choosing what to go ahead with and what to walk away from. Being a leading renewable player gives us greater profile, more control over our supply chain, and our purchasing power. We can be ruthless in achieving or exceeding our return expectation with a spread of 150-250 basis points over WACC.
Turning to networks, the French regulator, La CRE, has announced the remuneration of network businesses for the upcoming four-year regulatory period starting this year. The regulator has, as we would expect, taken account of the lost revenues from the low gas volumes in the last regulatory period. They also have taken some account of the recent rises in inflation and in interest rates, which had the effect of limiting the decline in the returns for this new regulatory period. The introduction of a nominal remuneration rate on new investment gives us a different trajectory, with more revenues and cash flow at the beginning. Those decisions reflect the regulator's view towards the long-term sustainability of gas tariffs and safeguard the long-term viability of gas network assets, essential to the energy transition.
Our international power network business is on a growth path, where we are significant in Brazil and Chile, countries where we have a long-established presence, which provide stable regulatory framework and, in fact, in Brazil, also greenfield project opportunities. Last year, we won a tender process for this 1,000-km concession in Brazil, and that should come on stream in 2026. There is a significant need for investment to reinforce power infrastructure. Without it, the energy transition simply cannot work, and at ENGIE, we have the know-how to play a part in this trend. This next slide discusses how we aim to get the most value out of our fleet of flexible generation assets, as it is not just about spreads and volumes anymore. It's also about grabbing the near-term opportunities in the context of power markets that are moving inexorably away from baseload and towards intermittent production sources.
You can see the sheer scale of price movements on the day-ahead Dutch Power Exchange last year on this slide, with this chart on the left-hand side that shows the daily difference between the highest and the lowest priced hours. This shows the opportunities that are available to us to maximize short-term price movements, opportunities that can only become more frequent. And to take advantage of this, data is the cornerstone: moves in demand, temperature, wind speed, sunshine, to name but a few. And, of course, then it's the capacity to act on this data to meet the needs of our customers and to create the maximum value for ourselves. And this is a domain, of course, where we are accelerating the deployment of the very latest AI technologies. As I already mentioned, battery storage, BESS , is for us a crucial component of a truly flexible power generation combination.
Following our acquisition of BRP as well as substantial organic expansion, we jumped forward in an industry where the early mover advantage is vital. So we expect to have 2.4 GW of BESS capacity by the end of this year, which is close to double the 1.3 GW operational that we had at the end of 2023. These advances allow us to further the power of our integrated business model, which truly makes us unique. First, through this fleet of flexible assets that we are developing. Second, through our portfolio of B2B clients that demand more and more bespoke solutions. And third, through the expertise of GEMS, tracking all trends and orchestrating the whole connected process. As a quick reminder of GEMS activities, we have two categories. We have the asset optimization, which is upstream and downstream, the client risk management and supply.
The asset optimization business derives its EBIT through developing and maximizing our flexible portfolio of power and gas assets, as well as offtake contracts. So here, we are taking fullest advantage of market volatility. The client risk management business is customer-facing, and EBIT is driven by margin and by management fees, and far less so by prices. And in the context of the energy transition and an uncertain geopolitical context, the large energy users need all the help they can given decarbonization and electrification trends. And they are willing to attach a higher value for such a product. Our expertise in this field is well recognized. The most recent annual energy risk commodity rankings of March 2023 put us at number one global natural gas dealer and number two global power dealer.
So GEMS represents an indispensable part in the growth that we are anticipating for the group over the coming years, and Pierre-François will detail further what it means in terms of numbers. These structurally growing activities underpin our medium-term financial outlook. Looking ahead to 2026, which will be the first full year of the Belgian Flex LTO in nuclear, we estimate our net recurring income group share in a range of EUR 3.7 billion-EUR 4.3 billion. We are reaffirming our dividend policy, which is unchanged from the past, with a payout of 65%-75% and a minimum of EUR 0.65 unchanged. We continue to target a strong investment credit grade and economic net debt ratio no higher than 4x EBITDA. Now, turning to Pierre-François for the detail of this outlook.
Thank you, Catherine. And now, let's get a closer look to this plan and how it will drive our profits going forward. And, of course, let's start with the 2024 EBIT excluding NUC. As you can see on the graph, we expect, of course, prices and volatility to normalize with a negative impact of -EUR 1.9 billion year-on-year in 2024. Our activities exposed to merchant prices have still some open positions, even though, as you know, limited by our hedging strategy. Also, retail significant price effect in 2023 is expected to reverse partially, and this is included in this number. Second, volumes have a neutral impact. We expect some tailwind on the temperatures, but hydrology, on the other side, was favorable in 2023, and we also expect ancillary services contribution to go further down. Investments are paying off.
Commissioning should drive an increase of close to EUR 500 million, mostly coming from renewable networks and also our battery business in the US. Performance is expected at +EUR 0.2 billion, coming from all the businesses. Now, if we look a bit further down the road in 2026, it is worth spending a couple of minutes to see earnings power on that year. As you can see in the blue bars, the core business EBIT CAGR is quite impressive, a double-digit figure over five years. That's good. Of course, the last two years were exceptional due to the level of prices and volatility, and this is expected to normalize by 2026. That's the negative impact of -EUR 3.5 billion that you see on the graph, and that will hurt our activities exposed to merchant prices. But this will be largely compensated by investments and performance.
Investments will be the main driver of growth, mostly coming from renewables, but also from Broad Reach Power, our acquisition in the U.S., and from networks and from energy solutions. Performance will also sustainably support EBIT growth in all our GBUs. Nothing new, actually, in this waterfall that was detailed during the market update, but it is another proof point of how it is unfolding, including and up to 2026. A key contribution to our earnings is coming from growth. We have, indeed, many opportunities to invest in our core business, and we plan to stick to what we told you during our capital market day last year: selectivity and discipline. The graph on this slide shows for all significant projects over 2021, 2023, their respective IRR, and you can see that, on average, these projects have exceeded our targeted return of WACC plus 200 basis points.
It demonstrates strict compliance with financial criteria. Moreover, to reflect the increase of interest rates in 2023, we have revised twice our hurdle rates in Q1 and Q3 upwards. Our WACC has increased year-on-year by about 50 basis points, and the average IRR of projects in 2023—this is not a coincidence—are also 50 basis points higher than the average in 2021, 2022. Going forward, our profitable growth is supported by healthy pipelines and also excellent operational capabilities in our core countries. Selectivity will stay at the heart of our investment decisions and will stick to a spread of 200 basis points above WACC. Before we go through the guidance GBU per GBU, I would like to focus on GEMS and NUC. For GEMS, we are confident our normalized earnings are actually increasing. First, the market environment is stabilizing, rebasing with still more volatile and favorable levels compared to prior crises.
Second, GEMS' geographical expansion, combined with geographical spreads, generates new opportunities. Third, expanding the asset base under GEMS management, like with batteries, will turn into also more opportunities and potential for profit. And fourth, the customer's flight to quality and the demand for complex products, like green PPAs as consumed, is benefiting to GEMS. As a result, we expect the normalized EBIT of GEMS to be at EUR 1.5 billion, with customer-related activities becoming predominant and asset-related activities gradually transitioning towards new businesses. Let's move now to a quick summary on NUC. ENGIE signed a final agreement on December 13th with the Belgian government. The key principles, you know them. I'm not coming back to it.
I will simply highlight the cash payment for the transfer of our waste liabilities in two installments: a bit less than EUR 12 billion in 2024, a bit less than EUR 4 billion in 2025, funded by cash and assets fund. So what does it mean in 2026? In 2026, there will be no more merchant risk on the Belgian operations, and it means that the nuclear waste obligations will be transferred to Belgium. So we'll stay only with our drawing rights in France in terms of merchant exposure for about 1 GW. To conclude, as a result of plant shutdown in Belgium and LTO and reduced risk exposure, we expect a more stable EBIT contribution between EUR 0.2 billion and EUR 0.4 billion. So what are the main EBIT drivers for the other GBUs on a three-year horizon? Starting with the positive side, of course, renewables.
We expect 14 GW of new capacity over 2024, 2026, and continued improvement of availability and global performance. So EBIT is expected to keep on increasing against 2023, which is a demanding year and despite lower energy prices. In 2026, EBIT from renewables will basically double compared to 2021. Networks will benefit from inflation impact on the RAB and from the clawback mechanism on volumes and costs that I mentioned previously. Investments will also contribute to the growth in France and most notably, of course, abroad. In energy solutions, growth will come half from CapEx contribution and half from performance, of course, from a low point in 2023.
On the other side, on the back of the normalization of the energy market, both on prices and volatility, we expect GEMS' EBIT not to stay at 2023 level, but they should reach near the normalized EUR 1.5 billion EBIT that I just mentioned. On flex-gen, acceleration in batteries and increased capacity remuneration mechanism is expected to only partially offset lower spreads captured and the market normalization. In retail, after a low in 2022 and a high in 2023, margins should stabilize in between over the next few years. Let's have a quick look on the cash inflows and outflows. Sources of funds should reach between EUR 50 billion and EUR 55 billion, most of it coming from operating cash flows.
The EUR 4 billion disposal is mainly fueled by the partial disposal in TAG that we completed in January, but also the finalization of the code exit of the geographical refocus and the disposal of some loss-making entities. Excluding nuclear phase-out, the cash outflows will stand around EUR 60 billion for the four years. Maintenance CapEx should be EUR 10 billion-EUR 11 billion, and gross CapEx expected to be EUR 29 billion-EUR 33 billion. Dividends to shareholders and to minority shareholders in our subsidiaries, and also a couple of other elements, should land between EUR 17 billion-EUR 19 billion. So cash outflows are a bit higher than cash inflows. Net debt is going to rise for a few billions over the next years, but the credit ratios will stay within our target.
Economic net debt to EBITDA will increase until 2026 due to gross investments and to a lower contribution from NUC and GEMS in that year, but it will remain below our 4.0 guidance, and it is expected actually to come back to our normalized bandwidth of 3.2-3.5 after 2027. As I said before, if and when needed, we will adapt our investment plans to our financial capabilities and will keep flexibility in our asset base. Let's now turn to ENGIE in 2026 and how it compares actually to 2021, which was not a bad year, you may remember. First, ENGIE will be simpler and more focused. Two, ENGIE will be significantly de-risked with the nuclear phase-out in Belgium and a lower relative EBIT contribution of flex-gen merchant activities. Networks and energy solutions show resilience through inflation protection and growth, with only residual exposure to merchant.
Renewables offer 70% of contracted or regulated revenues. Third, ENGIE will have unlocked profitable growth with increased contribution from renewables, from GEMS, from networks. ENGIE will be very well positioned to capture gross opportunities while the needs for renewable energy and power infrastructure are massive. GEMS will operate as a franchise, leveraging volatility and market optimization, but with no directional positions. Last but not least, ENGIE will be greener with a material shift to green power generation. To finish, let's look at our EBIT excluding NUC and the net recurring income group guidance by 2026. Details on our assumption, again, can be found in the appendix. I have already commented in detail the EBIT expectations, also the 2024 net income. Just to focus on one point, in 2026, we are expecting net recurring income between EUR 3.7 billion-EUR 4.3 billion. It is significantly above pre-crisis level.
2026 EBIT excluding NUC and net recurring income are expected to be respectively 66% and 33% above what they were in 2021, showing how the group is actually transforming its asset base while growing profit and despite increased interest rates. This outlook is close to the guidance that was presented a year ago, albeit slightly above in 2024 and 2026, and despite a significant rebasing of energy prices and thanks to the increased sustainable contribution from GEMS and the positive impacts of clawback and higher interest rates on networks. We have kept our dividend policy unchanged with a payout of 65%-75% of net recurring income with a floor of EUR 0.65 per share. With that, I will hand over to Catherine to conclude this presentation.
Yes, thank you. To finish, I would like to draw attention to this journey that Pierre-François just described between what we might call the old norm of 2021 and what we might call the new ENGIE of 2026, which will be, again, the first full year of the Belgian nuclear LTO. We expect the new ENGIE to generate earnings powers of around EUR 4 billion based on a far stronger foundation. And how are we achieving this? By simplifying the group, by improving our performance through better focus and adaptability, by de-risking, notably with the removal of the Belgian nuclear waste liability milestone, by aligning the group to the growth tailwinds of the energy transition with this combined effect of boosting our ability to attract top talent, all of which leaving ENGIE a more stable and far stronger group in 2026.
More stable, with limited merchant exposure and a strong cushion of regulated and contracted business. Always, though, retaining this full and unrivaled potential to maximize the myriad of opportunities presented by the energy transition. Thank you very much. I think we can now turn to the Q&A session.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Arthur Sitbon with Morgan Stanley. Please go ahead.
Hello. Thank you very much for taking my questions. I have two. The first one is my impression from the slides and from what you've been saying is that 2026 is the year of true earnings, that's the year when you will have had the full impact of normalization on commodity prices and full impact of the nuclear closures. I wanted to check if this is consistent with what you see. After 2026, I suspect that's when we'll really start seeing the organic growth coming from renewables, energy solution, and batteries and driving net income growth. Is that correct? What would be your idea of ambition for the pace of growth on these more normal years? That's the first one. The second one is just to make sure I understand. The net income targets for 2024 to 2026, I think, are on commodities assumption as of the end of December.
Commodity prices have come down quite significantly since then, but you've been talking about a decent resilience to that. Is it possible to have a sense of the impact from the mark to market on these targets? Thank you very much.
Maybe I'll start with the first, and Pierre-François will complement and take the two. I think you've got the picture right. We have this transition journey between now and 2026. I think we showed you that in 2026, our merchant exposure, notably with the nuclear shutdown/change in model, is going to be drastically different. Of course, we will continue to have some merchant exposure, but it will be more limited.
Then, given the investment plan that we have, the ambition that I've shared with you, the 80 GW in renewables, the batteries, obviously, our network and regulated asset base, we are indeed planning to start growing nicely from 2026 as a result of this investment plan and the targets that we have shown you. So we really are going to 2026, is indeed a pivotal year for us, hence the emphasis on the new ENGIE.
Thank you, Catherine. Actually, it's a nice transition to answer the other question about the guidance because, of course, I mean, our model is not based on betting on the prices. I mean, we have this consistent strategy with investments, with performance that we should not neglect. And of course, this is what we are building, this growing base year after year.
Now, of course, we have residual exposure to merchant prices, even if we are de-risking, and even in 2026, we'll get up. We have now. We know also that the transition is not completed, which means that we will have decent prices, we believe, in the mid-term for quite a few years, fueled by the investment requirements on one hand, but also by the rise in power demand, which is going with electrification. Now, clearly, we know that we are today under pressure in terms of prices. We see that. What can we say? In the short term, for 2024, we are not going to mark to market the guidance every month. That's for sure.
Of course, as we are releasing the numbers, we have run our views on the end of January, and I can confirm that we are within the guidance with the prices that we had indeed at the beginning of the year and end of January. Remember that our merchant positions are significantly hedged for 2024, from 62%-75% depending on the different exposure, average 71% at the end of last year, and gently increasing, of course, as the year is passing by. Remember also that we have some natural hedge, some buffers coming from taxes. For example, the sliding scales that we have with CNR and the French hydro, for example, the inframarginal tax, which is still in France and which is hitting flex-gen. So we do have still some buffers. So that's why for 2024, we believe that indeed we have some visibility.
Now, in the mid-term for 2025 onwards, clearly, again, our strategy is based on growth, but also equally protecting shareholder returns. This strategy is underpinned by strong cash generation. So we need that cash generation to achieve. So if prices were to go down and stay low, so lower for longer, then we'll take action. We'll take action, but we, of course, are not going just to see the prices coming down and results coming down. We will mitigate the impact. We will act on our cost base and operations to protect earnings and cash flows, and there is still room for improving the cost base in ENGIE. We have also flex in our asset portfolio to tune down the CapEx spend. I mean, for example, in 2025, we have only 50% of our CapEx, which are committed.
So we do have this flexibility to move, to postpone, to cancel, depending on priorities, strategic priorities, and of course, returns. Then, if needed, we can also step up in disposing of some assets subject to good valuation, of course, and no impact on strategy. So we have this flexibility. All actions will be gradual, will be commensurate to the market environment that we are monitoring, of course, on a regular basis, with priority to delivering the strategy and always disciplined capital allocation.
Thank you. Your business, would you look to use that flexibility from the Belgian nuclear deal to rethink some of those assets? Could you even raise your exposure to renewables, perhaps, through your LATAM business? I guess EDP bought out their minorities in Brazil. So just a bit of color and flavor on how you might use that additional flex from the Belgian nuclear deal. Thank you.
Okay. So maybe I'll start with the last one. I think you're right to point out this deal as really a key de-risking moment for us. We talked a lot about the waste liability, but we also have indeed some more flexible in our asset-based. At this stage, and what Pierre-François described is that we don't have any changes to our strategic plan. I think we've pointed to about EUR 1 billion a year disposal program, which is really more of a normal housekeeping activity that we do in general. So right now, this is the main plan.
I think what we are talking about is that if we wanted to use this flexibility, if prices beyond what we are seeing today were to stay low in the mid-term, then we would have flexibility in our asset base, and we would be using it based on what we've said, the obviously valueless core and less aligned to the strategy. I think I would leave it to that. Profitability in gas contracts?
Yeah. On your first question, yes, you understood correctly that indeed, with the forward, as we could see at the end of January, we confirm that we are in the guidance. Then I did not mention gas contracts. I mentioned contracts in general. This is including gas. But what is important is that indeed, these are all the contracts related to our downstream, so the commercial sales that we are doing.
You know that we have this principle that we hedge at inception, which means that when we are selling, we are also securing the sourcing, which means that then, for the duration of the contract, we have locked in the margin. And I think that's what I was alluding to. And it can cover more the supply part. So it's about power. It's about gas. It's about LNG as well. So it's in different parts of the business of GEMS. We can indeed have longer-term contracts. Longer-term contracts, which can be indeed beyond one year. Some of them are actually two years, three years. And the longest of them, they take us indeed up to early 2026, which helps also to give us a bit of visibility. And as you can imagine, it is fading away with time.
And the good news is that indeed, up to now, we have been able to still lock in decent margins on this multi-year contract, which is a strong support to the visibility we can have on GEMS. I'm not going to enter much more details. As you can imagine, this is also commercial information.
Sure. Okay. Thank you. That's very helpful. Thanks.
The next question is from Ajay Patel with Goldman Sachs. Please go ahead.
Good morning. And thank you very much for the presentation. I wanted to return back to slide 39, please, the one on GEMS. I look at history, and you see in 2021, GEMS made EUR 500 million or so of profits. And in broad terms, the sustainable guidance is broadly three times this number going forward.
When you look at the drivers in your presentation, you can see that the key drivers, be it price and spreads, geographical spreads, volatility, have all come down substantially and look like they're like that in the market right now. What gives you so much confidence that you can deliver that EUR 1.5 billion? And could you maybe use the variables that you highlighted on slide 39 to give us a better idea of what the bridge looks like so that we can have confidence that number is there and can be delivered? It just seems very large relative to if I compare it with other utilities. And then the second one is on the dividend. Your guidance has EPS going down while the transition is happening, and we find that base level of net income to grow from.
I was just thinking, how do you approach that in regards to the dividend? If EPS is falling for the next few years, will you adjust the payout ratio to assume a more stable dividend progression, or we shouldn't think like that? That's unfair. And you will just take that decision on a year-to-year basis. Any clarity there would be great. Thank you.
So maybe on the second question, of course, the payout ratio has the benefit of being a range, and we will plan to use the full range, and that will be decided every year. As you know, we have had good results for the past two years now, and so we've used the lower end of the range. Now, as variability will kick in, and we've showed you how, we might choose, obviously, the range.
The idea is we fully understand the sustainability and growing dividend pool from our investors' share. And if we can do that while staying in our pay ratio, that's something that we obviously could be using. But there is no a priori decision on that.
And thank you for the question on GEMS. We've tried to give you a bit more color about the split in geographies and product and also commodities. That is very important. But compared to 2021, we are not talking about the same GEMS. I mean, in 2021, the supply business was loss-making. I mean, today, this is a sustainable business. We have reorganized all the flows. We have our pricing model, which are there. We have all our processes, our tools, our knowledge. And now, we are making a stable, profitable business, which is a commercial business of selling.
Today, we have a platform which is delivering hundreds of millions euros of EBIT. Of course, if the market is really buoyant, it can go as high as you have seen. But it is a resilient platform that we have built with a sound commercial business that is delivering value. So that part, which was slightly negative, actually, in 2021, is now a good, profitable base. Another key lever, of course, is linked to geography. In 2021, GEMS was largely focused on France and Belgium. Today, GEMS is also covering the rest of Europe, increasing also in the U.S. and adding geographies, still adding geographies. So we have a tailwind because we are accessing more markets. So it's not only about leveraging new volatility. It's also leveraging existing volatility, existing margins, which were not properly leveraged before.
You can see the impact of driving the transformation of GEMS, clustering the business together, and really delivering the integration. That's on geography. The third engine, which is very important, is the new products which are emerging because we have now new products. I mentioned green power. I mentioned batteries. It's clear that this is a new scope that GEMS can leverage. When we go for the acquisition of BRP, we are also generating some extra business because we get that position on batteries. Then there is some value also made available to GEMS because that's part of the model.
So you cannot compare the former GEMS of 2021 and the one on 2026 because even with the same if you take the same kind of volatility of prices environment, indeed, the earnings power of the new GEMS is much bigger because there is now a sound commercial business, which was not the case. We have a larger geography, and we have more products that we can actually tackle.
And with fundamental and structural industrial movement, Ajay, I would add, probably pointing to semiconductors industries and data centers, which are developing massively, as you know, to support the AI revolution, all these need a lot of energy. And it needs energy fast, and it needs energy decarbonized. And here, there is significant demand in the markets, for example, in the United States, calling for green PPAs, but not just PPAs when there is sun or when there is wind.
They want 24/7 green PPAs. So there is a massive demand for sophisticated, reliable green electricity. And GEMS is among the GEMS people are among the best people to provide that. So the part of the customers is going to be helped by this demand, which is very structural. It's now because they need it, as you know, now, this movement is happening. And so that is obviously helping us being very confident in this EUR 1.5 billion as the core EBIT level of GEMS going forward.
Fantastic. Thank you very much for that clarity.
The next question is from Louis Boujard with Oddo. Please go ahead.
Yes. Good morning. Congratulations on joining. Thank you for taking my question. Maybe two questions on my side. The first one would be focusing a little bit on the impairment.
Of course, ECL, the impairment from the core asset is not a complete surprise because we had already the figures 10 days ago. But regarding wind and solar in the U.S., more specifically, I would like to know if it is related to company-specific elements or if it is related to the market environment that has been maybe tougher than initially anticipated, considering that the framework for the time being, notably in the IRA, has not necessarily moved. It's been a little bit of a surprise here. So could you elaborate and give a bit more details on this topic? My second question would be related to switch from GEMS to go to the nuclear, notably in Belgium, and maybe having a little bit more granularity regarding the contract that is currently ongoing.
I think that the press rumored a CfD price of EUR 81 per MWh for the 10-year extension. Do you confirm these figures? And as well, can you tell us if it's already a nominal price that includes inflation going forward or if it's a real price that could eventually be revised in the coming 10 years, depending on the inflation movement that we can see, and what would be the next final milestones that you see in 2024 to finalize this deal? Thank you very much.
So maybe just a start on the milestones and then hand it over to Pierre-François. So remember, so we signed end of December, and there are two really key streams that are going to be unfolding in 2024 on track, leading us towards closing of the transaction before year-end.
Those two streams are legislative work, which is actually progressing well, both at the Council of Ministers level and now we'll be about to go into Parliament. So this is for the change in law, law that will obviously be very important to secure in a hard-wired fashion this agreement for us going forward. And as you know, there is going to be a Belgian election during the year. So obviously, the fact that it will be this agreement will be compatible and hard-wired in the law is obviously very, very important. So that's ongoing. And then the other thing is the EU because, as you know, there is going to be a contract, a CFD type of contract. And indeed, it does need to be approved by European Commission.
So again, this is a stream that is going, as well as obviously, the deal on the Cap, which will be also looked at. This is ongoing. Two streams, nothing really to report. We are on track and so towards year-end. We have not published the price of the CFD, so no comment on that. I know there are a lot of rumors, but I don't know if you.
We can share with you the principle of the contract. The CFD price, as we speak, is not yet determined. It will be determined once we have the LTO plan. The LTO plan is depending, of course, on the discussion that we have with the safety authorities. It will be only just before the LTO that we'll get a provisional price. This price will be applicable for the first years.
And then in the contract, it is planned that there will be a true-up after a few years. So basically, when the LTO work is completed, there will be a true-up. I think it's 2028 or 2029, from the top of my head, a few years after. When we'll stop, we'll look at the actual cost. We'll look at the actual CapEx, at the actual OpEx. And there will be a new tariff that will be set for the second period. Then in the middle, of course so it's really protective. And that was the way it was structured. Now, the government was very keen that we get exposure on the upside and on the downside, which is, of course, fair, so to get some incentive as an operator to be as good as possible.
We have accepted that, but to a limited extent so that we have a strong protection of our returns, which are, of course, regulated returns. So you should not expect a double-digit IRR on that kind of asset because it is, as you know, de-risk in terms of merchant exposure, but also on the cost side. So we are really protected on the cost side by this true-up period that will come and covering the second part of the transaction. Then on the impairment in the U.S., you have, let's say, a little half of it, which is linked to one wind farm where we had technical issues with one OEM, Nordex, to quote it, where we have availability of facilities which are running around 30%, even less sometimes. So clearly, we have an issue there. We took the hit. We took the full hit.
We have been, of course, conservative. I want to highlight that there is no claims which is recorded, but clearly, we will defend our rights. And for us, that's one domain. And we don't have these turbines elsewhere. So it's a very local issue, which is indeed company-related. So that's very clear. On the second part, the bulk of on the other part, the bulk of it is linked to one market, one portfolio of assets, SPP, where we faced basis risk to a significant extent. We are not the only one. I think it's well known in the market. And this basis risk has been hurting us. As you may know, we have restructured all our PPAs which are on this portfolio. So we are now in control of operations.
So we decided to take the hit, which is related to this deterioration of the market and assumptions which were not actually fulfilled, again, on one specific portfolio. It's a project that was started a few years ago. So we had to fix it. And now, it's done and properly done. We took the lesson of it.
The next question is from Arnaud Palliez with CIC Market Solutions. Please go ahead.
Yes. Good morning. Thank you for taking my question. I would like first to go back on the impact of lower energy prices. I just would like to know what is your outlook for the rest of the year regarding gas prices. If I remember well, in your previous scenario, you were rather concerned about some potential tension on gas prices during the summer. So I would like to know if it's still the case.
So that's basically my question, the 2024 outlook for both natural gas prices and power prices.
Maybe was there only one question, Arnaud?
Yes. Yes. Only one. Sorry. Yeah.
Okay. So I think it's fair to say that the view on gas supply is today rather a positive picture in the sense that we have experienced in Europe a very mild winter. And so we will be exiting storage with a very, very high level. So the situation in gas in terms of security of supply for Europe is actually very good. And that obviously drives a lot of things. There was questions on this summer about maybe, obviously, power availability. But given the gas situation, we really don't expect at this stage too much tension in the market.
And so in terms of the rest of the year, how it will unfold, I think it's fair to say also that should translate into a winter 2024, 2025, which should also be quite smooth from a security of supply standpoint. I would say all this and caveat it very much by saying that there are a lot of things happening in the world. There are geopolitical tensions. There is the situation in the Red Sea. And while today, because of the physical presence of the molecule in abundance in our continents and the fairly depressed demand in Asia, in China notably, we have not seen so much impact from these geopolitical tensions, but that could come back. Remember that the volumes that were issued from Russia to the continent have not been replaced anywhere in the global markets. So those things have been removed.
So that means that the balance that we are able to find today also lies quite a bit on demand suppression. So we also were quite vocal to say that demand has come down. And so the fact that we have been quite well that we have fared so well in terms of physical supply on gas was also helped by demand, which for some of the industrials was down up to 20%. And so I caveat, obviously, what I've said. 2024 should be a good year, but caveating with potentially volatility that could come back quite quickly should geopolitical tensions arise. And we should also keep an eye on the demand because we are starting very early signs in January, for example, that the demand is coming back slightly. Obviously, industrials taking advantage of the prices having dropped quite a bit.
So we will be looking at the situation carefully. And then, obviously, this bit more mid-term, we should be looking to the additional energy capacity that will come in 2026. But I think until then, just bear in mind that there's been a lot of the supply on global gas market that have been removed and that we've done quite well so far. But any one event, geopolitical tensions, infrastructure breakage, or demand strong recovery could change this picture.
The next question is from James Brand with Deutsche Bank. Please go ahead.
Oh, hi. Good morning and well done on the good presentation and good release. I had a couple of questions on GEMS. Firstly, you have gradually been giving more disclosure, but I find there's still quite a lot of confusion from investors as to exactly what is in GEMS.
So you've kindly split out the more stable area of client risk management and supply and then asset management optimization. Maybe you could just give us a bit more detail, exactly what activities are in the two different parts and a bit more granularity there. I think that'd be very much appreciated. And then secondly, you've talked about underlying EBIT in 2024 close to EUR 2 billion and how the trends there are improving, if anything. And then you've guided for EUR 1.5 billion in the medium term, which is great because I know that a lot of people were worried about the EUR 1 billion going into stay. So it's great that you've increased that. But maybe you could give us a bit of detail. What are you expecting to normalize between 2024 in the medium term, between EUR 2 billion and EUR 1.5 billion? Thank you very much.
I start maybe with the normalization and what is driving indeed the step down in profits from the very high of 3.5 to the 1.5. I think that we've been very transparent that GEMS, the core driver of performance, is, of course, volatility. It's clear that now volatility is normalizing. It's still higher than it was pre-crisis. We believe that it will stabilize probably at a somewhat higher level. Still, it is coming down. So that's the key driver. So if you take the asset management part, for example, to be very concrete, the geographical spread that we have on gas on the different geographies, this is something that can help GEMS in a significant way. Now, you've seen that these spreads have been narrowing, which is normalization. That's completely fine. It doesn't mean that they disappear, but they are much smaller than they were.
So that is part of the normalization. Then same goes for bid-ask. I mean, if you have a bid-ask which is very wide, that's more on the customer side. Clearly, when you have a higher bid-ask, you can make more profit if you are selling and if you are dealing on this quantity. So you have these very concrete drivers. And I clearly encourage you to look at these two, for example, these two indicators because they are indeed quite important for us. So that's part of the sum of the market data points which are normalizing over the period. So that's the kind that you can think of. And on the activities,
On the activity, let me try again. So on the client and risk management, I think that's fairly clear. We have clients, and we sell them energy. It can be power. It can be gas.
It can be products. And it's also risk management, which means we help them cover their flexibility, their power exposure, gas exposure, etc. So we have a range of services. And so drivers of that, of course, is our own market share, which obviously, through the crisis, has increased because flight to quality, but also clients being much more strategic about how they procure energy, both in terms of quality. They want to understand carbon emissions. So they want decarbonized products. They want sourcing also guaranteed. They want to understand where it's coming from. They want sometimes biomethane. They want all kind of stuff. And so obviously, not many providers can give them that. So they turn to the big players like ENGIE. And so that is also securing this market share.
And then what I've described earlier, which is very structural trends that are happening in the market where we are present and where we are more and more present, such as in the United States, where we are obviously strengthening our presence in GEMS, and we are taking advantage of this growth. So that's on the client supply and risk management. I think on the asset management, think of it as we have a portfolio of assets. And then there is a market with volatilities. And we are playing in this market, optimizing and leveraging the flexibility that we have within our portfolio to maximum value. So that's very generic.
But think about in the power side, we have, for example, CCGTs that we can decide to put in line or not or decide to buy in the wholesale market if, for example, it makes more sense to be able to go to the market. So that's the sort of decisions that the GEMS teams are making. And of course, the wider portfolio we have and the more flexibility we have within this portfolio, the more value we can extract. So what is also important is that what we have shown you in the slides where you see the intraday volatility, obviously, that means that if you are present to the market with flexible assets, you can go and capture this volatility. This volatility is structural. It's here to stay.
It is a direct consequence of the deployment of renewables in the key markets because renewables, they are fantastic, but they do increase very much the intraday volatility. So that gives also a range of opportunities for GEMS, particularly on the power side. And then we also have on the gas side and I think there was one question about this is that we have in our portfolio gas contracts. And while there is not so much we can do on the price because we do tend to hedge on inception, we have flexibility in those gas contracts, for example, delivery points. And depending on the spread, for example, we can have geographical spread. Obviously, we can extract more or less value from these gas contracts. Again, we are not the gas producers, as you know, apart from biomethane.
But those gas contracts, we consider them as assets that help us derive value. So I hope that helps, GEMS. But these are really the two legs of GEMS. And as we're trying to explain, fundamental structural trends that makes us very comfortable on the EUR 1.5 billion.
And I realize maybe I wasn't completely clear on when the normalization will occur. We expect basically in 2026, we should be very close to this normalized amount.
Great. Thank you very much. That's really helpful.
The last question is from Piotr Dzieciolowski with Citi. Please go ahead.
Hi. Good morning, everybody. Thank you for letting us come in the questions. I have two, please. So the first one, I wanted to ask you about your performance plan. You exceeded the EUR 600 million target. And Pierre-François mentioned that ENGIE has some room to further decrease the cost base.
Do you think about putting a more formal new efficiency program in the company? And yeah, so that's the number one. And the second question I had on, there was an article that ENGIE could potentially sell its 30% stake in the Senoko Energy. So I just wanted to have your comment on it, whether you think that would make strategic sense for you or why would you want to do this type of a transaction. Thank you.
Thank you. On the Senoko, we don't comment on rumor. So there will be no comment on this operation. I think it was already mentioned by Senoko themselves. So we'd stick to that. And then on the performance plan, yes, we achieved EUR 600 million. You may remember that during the market update we had a year ago, we mentioned that we expect a contribution of performance for about EUR 200 million a year.
And we plan to deliver that. You remember we started with a performance plan in 2021. And clearly, there was a need to put pressure on the cost and efficiency. I think, as I mentioned, releasing the numbers on the full year, today, the GBU organization is really working very hard on that and very well with strong delivery. So we see the benefit. Now, we are moving more to a continued improvement. But in our numbers, we have embedded the contribution of about EUR 200 million efficiency every year, which is very close, actually, bang in line with the EUR 600 million plan on three years. So we expect this effort to keep going. And there is room for that because when you are growing, you are actually increasing your asset base. You get maturity of assets. And then you can do more.
Of course, the more you learn, the more you can do. So we see the organization being more fit for this performance and very confident that we can deliver these EUR 200 million, which are contributing to the EBIT growth. So that's a net cost. I mentioned also that if indeed the market was going to be lower for longer, we need to take action. It means also that we will probably indeed go further on these EUR 200 million and find some further savings. And it's clear that in operation, but also in the cost structure of ENGIE, which is, as you know, a large organization, there is room to find more efficiency, leveraging, for example, new technology, which are there and which we are working now on a regular basis. And we see further potential.
Anyway, we'll go for this potential, but not with the same level, not the same sense of urgency depending on market environment.
Thank you very much.
This is this call. Thank you very much for your participation and for your questions. Looking forward to seeing you on the road. Thank you. Thank you.