ladies and gentlemen, welcome to the Analyst and Investor Conference Call of Uniper. At all customers' requests, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After presentation, there will be an opportunity to ask questions. I now hand you over to Stefan Jules, who will start the meeting today.
Please go ahead.
Good morning, dear analysts and investors. Welcome to the Uniper call for the 2020 financial year, and thank you for participating. I'm sitting here with our CEO, Andreas Schierenbeck and our CFO, Sascha Wiebert and our headquarter in Dusseldorf. Most of you may not yet know my voice. I'm Stefan Jules, I'm the new Head of Finance and Investor Relations at Juniper.
I'm new to this position, but not at all all new to the group. I have been working for this company for more than fifteen years now, most of the time in m and a and strategy. I look forward getting in touch with you online and hopefully at one point in person. Needless to say, our experienced investor relations team remains at your disposal for all topics and questions. Looking at today's agenda, Andreas will start with the highlights of the past fiscal year and then move over to Universe's key strategic objectives going forward.
Afterwards, Sascha will dive into the details of the financial results and provide an outlook for 2021. Right after the presentation, you will have the chance to raise your questions. Having said that, Andreas, please.
Good morning, everyone, and welcome also from my side. Thank you for participating in our conference call today. 2020 was a remarkable year, not just because of the COVID-nineteen pandemic. We took great care to offer our employees the highest possible level of health precautions through extensive home office options and adjustments to our operating procedures, and that has worked very well. We will continue to develop our organizational processes in this way for the benefit of our employees' motivation and to make process even more efficient.
And 2020 was only was always and also remarkable year in terms of both business and strategic decisions within the company. Let me start with the central topics of fiscal year 2020. We can be very happy with our financial performance in 2020. Unibus Group earnings ended at the upper end of the guided ranges. Adjusted EBIT increased by 16% and reached the upper end of the range at around EUR 1,000,000,000.
Adjusted net income increased disproportionately by 26% to EUR $774,000,000. The key factor here was the improvement in economic interest income that we anticipated the lower operating tax rate. And now to the outlook. We expect another very solid operating result for fiscal year twenty twenty albeit not quite on par with the prior year. But I will go into more detail of the outlook and the key earnings drivers for 2021 in the second part.
Let's turn to the development of Uniper's portfolio and a strategic evolution. The financial and strategic update in March 2020 was the initial spark to enable us to significantly accelerate our development in the changing energy world. We have placed a much stronger focus than before on decarbonizing the portfolio. For 02/1935, we have set an ambitious target for Uniper to become carbon neutral in European power generation. It was also a message to our own organization, Empower Energy Evolution and managing the transition by setting up new sustainable sources of earnings at the top of Uniper's radar.
This year, Uniper is working to specify further targets for reducing carbon emissions. At the same time, we want to make the development steps in terms of ESG more transparent to further improve Uniper's ESG rating. In 02/2020, Uniper also took steps to align its organizational structure with the new strategy. One example is in the area of renewable energy. Here, we want to move out of the niche where we have already been operating internationally for some time in the business field of solar and wind power purchase agreement.
In the area of entering a sustainable hydrogen economy, we have set up a team which enables us more and more to utilize our competencies in a variety of different projects on the value chain. As a support of European policymakers, we hope to be able to launch the first commercially functioning flagship projects and joint ventures by twenty twenty four-twenty five. Here we are talking about electrolysis plans in the range of 25 to 100 megawatt. The year 2020 saw quite a few new project initiatives. Going forward, our task now is to put our projects and plans into practice.
Coming to the next slide. As already mentioned, 2020 saw some highly volatile commodity markets throughout year with a clear upward trend towards year end as positive news on COVID vaccines hit the headlines. For the fossil commodities, gas in particular is sensitive to swings in the economic outlook. The price rebound was supported by cold rates in Asia in December 2020 and early January twenty twenty one, followed by cold snaps in Central Europe and The U. S.
And led to strong demand peaks and massive price turbulence, especially at the gas and LNG markets. In our view, globally, natural gas will remain an important fuel for the transition to then be decarbonized over time. I think the winter season has done quite a good job to remind us of that. Moving over to carbon. Here, the European allowance unit price has increased by around 150% since its low in March 2020.
The key driver for higher prices is the commitment of the European countries to reduce their carbon emissions even more than initially planned by 02/1930. European submissions was raised from cuts of 40% in greenhouse gas emissions from 1990 levels to minus 55%. Following the gas and carbon prices, electricity prices in Europe showed also a recent uptick. In Central Europe, the price setting power plants tend to be positive, which explains the level of correlation. Nordic electricity prices have also recently recovered significantly from zeroes.
As the linkage between Nordic and German outright prices is still limited as of today, the upward trend was far more influenced by the weather situation the carbon rally. Spark and dark spreads show how fossil power plants move in the merchant market. Dark spreads remain weak. Spark spreads and our two important markets, The UK and Germany are at reasonable levels. The German peak spark spread has been at the double digit area now for quite some time.
This development was the base for bringing back the German PVGG power stations, Ilcheng Four And Five into the merchant market in October 2006. However, Uniper fossil power plant portfolio is more than just about how high the spread level is. Given the embedded optionality, the value capturing does not end by hedging, which means looking in a positive spread and then waiting on delivery. If markets are volatile, like we have been from 02/2008 to 2020, we are able to churn those positions, which means buyback spreads once they collapse and potentially re hedge again later. By doing so, you can capture significantly more value than with a static hedge approach.
Therefore, there is not a stable correlation between volumes and earnings on a spread plan. The year 2020 is a good proof point for that as you will see in better sections. Now from the underlying market and our key performance indicators on the next slide. On this slide, you can see how our operating KPIs are developing during the business year 2020 compared to 2019. Let's start with the global commodity business.
We have started 2020 with full physical gas storage facilities and unusually high level due to warm winter last season. However, entering the winter season twenty twenty-twenty twenty one, the market changed. An early quote spread in Asia diverted LNG cargoes from Europe to Asia, which has been reflected in rising gas spot price on the European markets and higher withdrawals from storage since the December. Physical storage level at the end of the year were back to a seasonal normal of 75%. With the cold waves in Central And Northern Europe, storage withdrawal further accelerated in January to mid February twenty twenty one.
At the February, European storage levels were around 37%, almost at the normal level of recent years. The recent market development enabled Uniper's gas business to get a promising start to the year, once again, one might say. Looking at our European generation segment, the power generation volumes has fallen by 40% year on year. The decline is clearly attributable to the COVID-nineteen related lockdown in the second quarter. As a reminder, at the half year stage, we saw a decline of 25% here.
Coming up at 40% lower volumes at the year end means the second half of fiscal year 2020 was largely stable compared to prior year, going through the individual asset classes. Hydro volumes in Sweden benefited from higher precipitation all over the year, while hydro volumes in Germany were clearly below average due to long periods of drought during last summer. Nuclear was down around 30%, mainly driven by the closure of Ringheits 2 and extended outages at OSCAR-seven-three and Ringheits 1 And 3. The low starting point for 2021 means that even with the closure of the Ringhalt 1 nuclear plant at the end of twenty twenty, we still expect overall higher nuclear generation volumes in 2021. Gas and coal fired power generation was down 12%, mostly due to a lower power demand caused by the COVID pandemic and the greater availability of renewables.
After a strong decline in H1 twenty twenty, there's a drop of 35, the second half was way better with an increase of 20%. Here, the start of Darton 4 coal power station and bringing two gas plants, Ushik Four And Five, back into the merchant market as the main positive driver. The volumes in the Russian power generation business showed a pattern very similar to the European business. Following a double digit decline in the first half of twenty twenty, it was affected by unusual warm weather in Q1 and a lower demand due to COVID-nineteen and the OPEC plus agreement that became effective for May, hydro generation production in Russia increased significantly in 2020 in both pricing zones that also resulted in lower prices. Finally, Uniper's carbon emissions for the group were further down 9% for the full year 2020.
Here, the decline in the second half of the year was slowed down by increasing deliveries of the fossil power plants. Overall, this is a move into the right direction when it comes to our decarbonization efforts target going forward as summarized on the next slide. We are constantly working to improve our ESG performance and to make our achievements more transparent to the external world. Beyond, it is important to understand ESG is not only a side topic for us, it is an integrated part of our new strategy and daily business. For example, as part of our sustainability improvement plan, most of our teams have annual ESG targets defined and most importantly, we consider various ESG criteria, including emissions for all of our new assessments.
Thus, the central part to look at this topic not only retroperceptively, but also postpectively. Starting with the retrospective view, putting decarbonization and the energy transition at the center of our new strategy, we made very significant steps ahead during the last fiscal year 02/2020. With our group wide carbon intensity target of an average of 500 grams per kilowatt from 02/2018 to 02/2020 coming to an end, before the urgent need to set ourselves new, rather mid- to long term targets, and above all, more efficient carbon reduction targets. In March, we firstly announced that we will make our European generation business carbon neutral by 02/1935. At that time, we had already reduced our direct emissions from our European generation business by 50% since 2016, the year of Uniper start.
Last December, we committed to an additional target to cover the entire Uniper Group on the one hand and extended our target to old scopes of emissions on the other hand. Our base case and overall commitment is to become carbon neutral by 02/1950 on group level, including scope one, two and three emissions. This is also in line with the long term goal of the Paris Agreement. However, the path to this goal is of crucial importance. For European generation, we have made our path clear.
As already mentioned, for this part, we will be carbon neutral by 02/1935. As a further intermediate step, we will reduce our emissions by 50% by 02/1930 starting from our 2019 emission level. For our global commodities and Russian power business, the competitive path is not yet so clear. However, driving the decarbonization for those two segments is also essential to achieve our 02/1950 carbon neutral target. For global commodities, that's most relevant to reduce Scope three emissions.
As a reminder, here we are talking primarily about those emissions that are linked to gas and coal we sell to our customers, and that once burned by our customers will ultimately turn into scope one and scope two emissions on that. As we do not have direct control over the technology and processes of our customers, we're using scope three emissions that's significantly more complex and requires even more collaboration. Nevertheless, we set our goal to come up with concrete and quantitative Scope three targets towards the course of 2021. For Russia, we have the qualitative midterm target to focus on renewable capacity schemes and to build up carbon free capacities. Uniper is known for delivering on its promises.
Therefore, it's important to point out that our decarbonization ambitions are well founded on a track record of significant progress so far. Our major improvement in terms of carbon management and disclosure is reflected on our CDP rating. In 2020, we were able to further improve our score from B- to B, which is in line with the energy utility network sectors average. Another important milestone in this regard was the announcement of UniFAS emissions coal exit plans for our eight gigawatt coal fired capacity in Europe. At the first step, we successfully submitted a bid for our eight seventy five megawatt hardcore plant, Heiden, and the first tender under the German coal phase outlaw.
As a result, the plant ceased commercial electricity production at the end of twenty twenty and will permanently be decommissioned on 07/01/2021 unless the transition system operator and the regulator, BNSR, determine that the power plant is system relevant. Looking at all expect from ESG, we also made progress on the s and g letter. This, for example, reflected in our sum assessment score, which has improved significantly from 15 to 37 points towards industry benchmark score 42. The CSE questionnaire is now issued by S and P Global and provides the base for the down drone sustainability. When it comes specifically to the S, in ESG, the topic health and safety of our people has become even more important in recent months.
Overall, we received very positive feedback from our employees expressing a high level of appreciation for the measures UniPAS adopted to safeguard their health. Also, in the area of work safety, we managed to achieve the trip of 1.17 in 2020, which is a significant improvement from 1.48 in 2019. This positive performance is due to the consistent high level of occupational safety across the entire group. To further improve in this area, Uniper is committed to achieve a drift at or below one by 02/2025. Both achievements do not go unnoticed and further add up to Uniper's overall attractiveness for new talent.
Uniper was able to attract the large number of new talents during 02/2020, leading to an overall increase of 200 employees. While not a huge increase yet, the percentage of female colleagues moved into the right direction from 24.6 to 10.50.2%. Finally, the average employee turnover rate of 3.7% has been the lowest since the inception of Uniper in 2016. This is an important indicator for us even so we are aware that this metric is to be interpreted carefully in a year like 2020. Let's now have a look at UniPath ESG priorities for 2021 and beyond.
By now, you already have two important achievements I would like to highlight. First, since the beginning of this year, ESG is a significant part of our management compensation. Specifically, that means that 20% of our long term incentives will be dependent on predefined ESG time. The LTI tranche 2021 is, for example, linked to the implementation of the TCFD framework, which Unipher committed to in December of last year. The implementation project is driven by a team of experts from different departments to fully reflect the scope and underlying idea of TCFD that for us goes beyond the simple tick to box exposure exercise.
Second, twenty twenty one is the year which will mark the end of Uniper's lignite fire power generation in Europe. Already in February 2020, Uniper signed an agreement to set a 58% stake in the lignite fire power plant in Skopar in the Eastern part of Germany, Rosale Energy, a subsidiary of EPH. The transfer of ownership will take place in October 2021. So what we are working on for the rest of the year and beyond? As already mentioned, we will define concrete midterm scope three emission targets which are particularly important for our global commodity segment, and we will intensively work on the implementation of the TCFT framework.
The same applies for the EU taxonomy routes, which basically obligatory for reporting starting with the fiscal year 2021. As a last point, we will push forward existing and initiative new projects aiming at reducing our scope one emissions of our fleet. However, the year 2021 will most certainly be a challenge when it comes to achieving a further short term decrease in direct division compared to 2020. If the commissioning of the German coal power plant Duttgart Four in mid twenty twenty and the planned commissioning of the Russian lignite plant barrier to three in the first half of twenty twenty one, our direct emissions will most likely increase assuming all generation else equal. This showcase not only the importance and the mission level to our decarbonization targets, it also highlights that the scope of our decarbonization measures needs to go far beyond the shutdown of older coal step.
This is very much summarized on the next slide. It gives a impressive overview of Uniper's strategic milestones that we can see already. There was strategic and financial update March 2020. We sent a clear signal to the market to support the path to a more sustainable and decarbonized world and to make a significant contribution to the energy transition. On this slide, you can see the three layers of our strategy.
First, decarbonization via the phase out of coal, we already covered this today. Second, in the short to midterm, we have significant growth investments in the non wholesale area that are focused on security of supply for regulators and other customers. Third, the area of investment in decarbonization of gas, gas and other agreed technologies and businesses, which is today already in our focus, but we gain more weight in terms of financial figures in the mid to long term. Our investment budget for organic growth investments for the year 2021 to 2023 amounts to about €1,500,000,000 in total. Uniper has always been a reliable partner to provide security diversification of energy supply to its customers.
On the short to midterm, this area play a key role from a CapEx perspective. Due to the increasing share of volatile feed in from renewables, transmission system operators face the challenge of ensuring stability in the power grid. In The UK, Uniper was awarded four six year contracts to provide innovative grid stability services as Killinghome and Grain starting in 2021. In Germany, Uniper is building a new 300 megawatt gas fired power plant, Erskine 6, for the TSO in order to prevent system outages. It is expected to enter service in the last quarter of twenty twenty two.
Unipro, Uniper's subsidiary in Russia, will make significant investments in the modernization of our four large units at the Gutskoyer power site totaling 3.3 gigawatt. After refurbishment, the unit will be back to the grid between 2022 and 2026 that will provide greater security of supply. But it's not only regulators that Uniper is supplying with secure and affordable energy. For example, the conversion of the Schorzen site and the Roa region from coal to gas that really driving forward is in full swing. Here, Uniper will be offering its industrial customers individual energy solutions with supply of electricity, heat and other services.
The resulting return from those projects will be another catalyst for the third layer, for instance, investments into the areas of renewable energies and hydrogen. Uniper's goal is to organically develop a portfolio of photovoltaic and entrovent assets of over one gigawatt in its core European markets by 02/2025. This portfolio is to be expanded to three gigawatts in the years thereafter. We see additional growth options in the renewables and the Russian markets as a new investment venue will be opening in 02/2021 under technically renewable capacity program. Uniper will focus on developing options to enter renewable energy.
In the longer term, we see even more potential entering the hydrogen economy, where Europe aims to play pioneering ore. Uniper already has extensive experience in operating hydrogen plants, as Uniper was one of the first German utilities to produce green hydrogen based on electrolysis process. Uniper is in the process of developing an extensive range of projects and will focus on realizing the first flagship project in the next few years. In Eastern Germany, at the chemical type and Leipzig, a joint venture with Uniper called NADpark Bartlaufstedt is underway and awaiting approval. This is a fully integrated project with a 30 megawatt electrolyzer.
The plan is to supply green hydrogen to companies in that industrial cluster by 02/2024. Another flexible project is a collaboration with speciality chemical company Perfstock in order to produce sustainable methanol by 02/2025. In cooperation with Fortum, a project has been developed to supply green hydrogen by means of a 25 megawatt electrolyzer plant and renewable energy cell. To do the very good infrastructure conditions and sales potential, UniPlasma's plug the power plant site in the Port Of Rotterdam is suitable for hydrogen production. Here, in a joint venture with the Port Of Rotterdam, we're examining the option of building a hundred megawatt electrolyzer, which could be realized by 2,025.
Just last week, we joined forces with h two e I g, newly founded farm farm work. Siemens Energy and other partners to develop the generation and supply of green hydrogen as well as green process and district heating at the Hamburg work site. The game changer lies in the interaction of three future technologies for the production storage of green hydrogen, green heat, and peak electricity from renewable energy. We also want to join, establish a hydrogen trading platform. The vision is to expand the concept commercially by 02/1930.
We have said it before, Europe will by no means be able to cover its entire energy requirement for green hydrogen by itself. Therefore, Uniper is also working intensively on solutions to be able to cover this gaps with imports, the option of blue hydrogen, for instance, produced from conventional gas with CCS In this environment, Uniper is very well positioned in the growing hydrogen market with excess procurement, optimization, trading and risk management. Having said that, I would now like to hand over to Sascha for the financial part. Sascha and I will be ready to take your questions. Thank you.
Thank you, Andreas, and good morning, everybody. I can tell you that we are very satisfied with the set of numbers that I'm about to go through. What we are especially proud of is that 2020 and the first weeks of '2 thousand '20 '1 challenged us with all kinds of extremes from COVID nineteen to weather and very volatile markets. And finally, our teams have turned many of those into opportunities with no disruptions also on how we communicate our outlooks. With an adjusted EBIT of $998,000,000, we're 16% above last year's result and just a notch below the upper end of our 2020 guidance range.
The outcome above the envisaged midpoint was the result of a strong ending to the year, especially in the Gas Midstream business. Adjusted net income increased even stronger year on year as it additionally benefited from a higher net interest result and a lower operating tax rate. Operating cash flow is significantly up to CHF1.24 billion. Compared with adjusted EBIT, the increase is even more pronounced due to higher cash effective EBITDA. And finally, economic net debt is up CHF $460,000,000 to now CHF 3,100,000,000.0, purely driven by lower interest rates, pushing pension obligations and asset retirement obligations up, while at the same time we could reduce our financial net debt by more than 100,000,000.
The economic net debt over adjusted EBITDA is still comfortably within our previously guided range. I will share more thoughts on the debt factor going forward in the outlook section. To sum it up, strong results and our credit metrics remain very solid. Looking at the year on year drivers for the adjusted EBIT, the picture is broadly in line with what you have seen in the past quarters. Please keep in mind that the effects on this slide do not perfectly match the segmental split in the appendix as there are some further shifts in consolidation effects between the segments.
As those net out on a group level, we omit them here for the sake of a clearer view on the underlying business drivers. Let's start with a well known commodity effect that predominantly reflects the outstanding results in our gas midstream business, which is about €360,000,000 above prior year. Looking at the full year, 2020 is a good example for how our gas team is capable to capture value in different market situations. Even though Q1 and Q4 were fundamentally different when it comes to dynamics and the development of gas prices, both quarters saw very strong earnings contributions. For me, this showcases the potential of having a portfolio based on optionality managed by an experienced team.
However, aside from gas midstream, the first effect also includes a negative effect of about EUR 120,000,000 from the otherinternational commodity business, formerly known as COFLD. This negative effect stems mainly from our U. S. LNG and our trading activities. One major driver were negative contributions from our LNG Freeport deal, which suffered from the realization of lower Henry Hub TTF spreads.
Additionally, we saw negative effects in our U. S. Gas and power trading business. I suspect that 2021 could be quite different. Well, let's come back to this later.
The next effect is a negative one within commodity power optimization. You might remember that we saw a very strong power optimization contribution in Q4 of twenty nineteen. Accordingly, we expect a swing back to normal at year end 2020. The overall year on year effect amounts roughly to 130,000,000 and is also influenced by non operational items like the disposal of our French business. Next one is the positive outright power price and volume effect, which amounts to about EUR 40,000,000 in total and primarily reflects higher achieved prices.
This effect is somewhat diluted by excess hydro volumes, which were not hedged in advance and therefore sold at comparatively low spot prices, especially during Q2. Additionally, nuclear volumes were down due to the closure of Greenhouse 2 End Of 20 19 and extended outages in Oskar Sand 3, Greenhouse 1 And 3. UK capacity market income amounted to a negative CHF30 million. Even though capacity market payments have generally been on the same level in both years, we had accrued in 2019 the outstanding Q4 twenty eighteen capacity market payments, which explains the negative year on year delta. Aside from The UK capacity markets, the European foresight fleet optimization showed a very good performance year on year as reflected in the next element.
One major driver was the broader asset base that benefited from the return of Gersheng four and five into the merchant market from the COD of Dutton four and also from higher availability of Maastricht Three, which had prolonged outages in 2019. The optimization and operations team then very successfully utilized this broader asset base by capturing a sizable positive contribution in volatile markets. Russia's adjusted EBIT is down by about EUR 80,000,000 compared to prior year. The main reasons are significantly lower electricity prices in the day ahead market driven by an unusually warm weather in Q1 and a lower demand due to COVID-nineteen and the OPEC plus agreement that became effective from May. Hydro generation production in Russia increased significantly in 2020 in both pricing zones that also resulted in lower prices.
Subsequently, slightly stronger operational performance in the second half was compensated by a weaker ruble. The category other amounts to about minus €30,000,000 and consists mainly of unallocated consolidation effects, lower results in the engineering business due to COVID and partly offsetting the lapse of a prior year one off nuclear provision effect. To sum it up, significantly stronger results in our gas midstream and European fossil generation business are partly compensated by lower performance in our power, LNG and U. S. Commodity business and weaker results from Russia.
One remark when it comes to EBIT effects that you might have expected on this chart, but that aren't there, specifically effects from the first German coal exit auction round, where we participated successfully with our Heiden plant. Please note that we will book the consequences of this tender as non operating. This is in line with the industry standard in Germany and applies for all elements of the auction, including the auction premium that we are entitled to, as well as the offsetting effects on provision and book values. You can expect the same treatment in case we should also succeed in future auction rounds. Now over to operating cash flow on the next slide.
At
year end 2020,
operating cash flow amounts to 1,200,000,000.0, which translates into a cash conversion of roughly 82%, which is as expected, but at the same time, significantly above prior year's 65%. Cash effective EBITDA, I. The EBITDA adjusted for noncash items is $363,000,000 higher than the reported EBITDA. This is another proof point for the quality of our results. Secondly, the cash effective utilization of provisions summed up to €436,000,000 Roughly 40% of the provision utilization is for decommissioning, mainly nuclear decommissioning.
30% is for pension and personnel related provisions. And finally, another 30% is related to the gas business and its infrastructure. Thirdly, working capital has mainly been influenced by how we utilize the different gas assets. The fourth category summarizes all other mainly CO2 related effects. Next is adjusted net income.
The economic interest, which is an income for Uniper, has increased from CHF 33,000,000 after the first nine months to now CHF 39,000,000 and is driven by interest income from Nord Stream two as well as capitalized interest from our legacy growth projects. The applicable tax rate ended up at about 22%, therefore, the middle of our guided 20% to 25% range. The minority interests are largely driven by Uniper, where minority shareholders hold roughly 16%. This item further decreased from minus CHF 34,000,000 at the nine month stage to now CHF 37,000,000. On the next page, the waterfall shows the development of economic net debt from 'nineteen to 2020.
The increase is driven by higher pension and asset retirement obligations, reflecting a lower interest rate environment. The net financial position on the other hand are either part of the economic net debt that is based upon cash flows actually improved. The related items are in the dotted box. Main driver here is, as discussed, the strong operating cash flow. Investments has been CHF 86,000,000 higher than last year with a total of EUR $743,000,000.
The increase is purely driven by higher growth investments. Overall, more than half of our investments, specifically EUR $4.00 6,000,000 has been growth investments evenly split into legacy projects like Dutton 4 and Berio 3 and new growth projects like Scholven and Ishin 6. The remaining maintenance and replacement CapEx amounted to $336,000,000 Pension provisions, which are the light blue boxes in our reconciliation, increased by EUR $340,000,000 as German interest rates came down from 1.5% at end of twenty nineteen to 0.8% at year end 2020. The same applies to UK interest rates being down from 2.1% to now 1.5%. Finally, the asset retirement obligations in orange, those are up by EUR $231,000,000 to now EUR 1,200,000,000.0, mainly driven by the asset retirement obligations for Swedish Nuclear.
The corresponding interest rate applied decreased here from 2% at end twenty nineteen to now 1.25. In the appendix of our presentation, you'll find a slide that gives you further details on the interest rate sensitivities when it comes to our pension and asset retirement obligations. Looking at the debt factor defined as net debt to EBITDA multiple, we ended up at 1.9 times. This is fully in line with the target range that we need to secure our BBB credit rating. While this target range used to be 1.8 to two point zero, this would change in the future as shown on the next slide.
Looking at the three pillars of our finance strategy, solid investment grade rating has always been a key prerequisite, especially for our commodity business. Given our business risk, we need to demonstrate a minimum 55% on the FFO net debt KPI as defined by S and P. To facilitate communication, we usually express this requirement via the Uniper debt factor. In the past, the FFO to net debt threshold translated into a debt factor target range of 1.8 to two point zero times adjusted EBITDA over economic net debt. Going forward, and honestly, this just didn't start yesterday, this link will be somewhat different.
Over the next years, a growing part of earnings will be materializing within the interest result, I. E, outside of EBITDA. This was actually one of the main reasons for us to introduce the adjusted net income last year. Examples are Nord Stream two, as a lending agreement or Icheng six that will classify the finance lease under IFRS guidance. Those, let's call them non EBITDA earnings components, support the S and P KPIs and ultimately our rating.
Accordingly, from a technical point of view, we can have a higher debt factor and still secure our target rating as those additional positive factors contribute below the EBITDA line. More specifically, going forward, our target is to have a debt factor not higher than 2.5x EBITDA over economic net debt. Other than this rather optical change, I can reiterate that we feel very comfortable with our capital position indeed. Ensuring a cost efficient access to capital is the first pillar. The two other pillars deal with the question on how to best allocate those financial means.
CapEx, the second pillar, reflects our ambition to transform and grow the company, which requires investments. We're talking about 1,500,000,000 of growth investments for the years 'twenty one to 'twenty three, which is fully in line with the ambition that I presented a year ago. Please note that this assumes normal activities and no acquisitions are included. In terms of maintenance CapEx, you can expect us to stay on the historic level of roughly EUR 400,000,000 per year on average. However, just like in 2020, there will always be years when some measures shift into other periods, resulting in a somewhat different number now and then.
With respect to dividend, the management and supervisory board of Uniphar can confirm the dividend proposal for the year 2020, which due to rounding is $5.00 €1,000,000 in absolute terms, translating into €1.37 per share. As always, the final decision will be made by the shareholders during the AGM on May 19. Assuming approval, Uniper will show a 19% higher dividend year on year. A dividend policy for the fiscal year 2021 will be given at a later point in time as announced yesterday in the ad hoc. When it comes to our earnings outlook for 2021, our guidance on adjusted EBIT and net income is summarized on the following slides.
Starting with the adjusted EBIT, we expect the result in the range of CHF 700,000,000 to CHF $950,000,000. This assumes a normal operating environment and also reflects that 2020 had extraordinary elements. I will come back to this in a second. For our European generation segment, we expect a positive development. However, the other two segments, global commodities and Russian power, are expected to come out lower in '21, which explains the overall picture on a group level.
On top of that, when it comes to administration and consolidation, you may expect administrative costs to stay in the range of 200,000,000 to €220,000,000 The consolidation line will not be zero. However, from a group and modeling perspective, it will then have an offset in one of the operating segments. Looking at our guidance on adjusted net income, we see a range of CHF $550,000,000 to CHF $750,000,000. The year on year change corresponds to the adjusted EBIT development that is, if one takes into account, a tax rate of somewhere between 2025%. Accordingly, let's go over the last slide, which breaks down the major expected EBIT drivers year on year.
Starting with the outright portfolio in European generation, we expect in some a positive effect in a higher double digit area despite lower achieved prices in our Nordic markets. The main driver are higher nuclear volumes as in 2020, we saw prolonged outages in our nuclear fleet. Therefore, we expect an overall increase in nuclear volumes year on year despite the shutdown of Ringhalt 2 at year end 2020. The positive development in the outright portfolio is partly compensated by a mid double digit effect in the European fossil generation business. While we see more of DATLIN-four contributing in 2021, we will, on the other hand, lose the contribution from our lignite power plant, SCOPAL, after Q3.
Another main driver is that we do not expect the strong 2020 Fossil optimization result to repeat in 2021. Moving towards normal is also the description for the next effect of about minus €150,000,000 which summarizes the development in our gas as well as our internationalother commodity business. In gas, we expect a significantly lower contribution year on year simply due to the very strong comparison base last year. This is partly compensated by the international commodity business, where the swing towards normalization is a positive one. We expect that the negative effects in our U.
S. LNG and power trading that we saw in 2020 to not repeat in 2021. Russian generation will have a lower contribution in 2021 as most of our plants receiving CSA payments have transferred to COM payments at the end of the year 2020 or will transfer to COM payments over the course of 2021. Taking additional negative effects like FX and lower day ahead volumes into consideration, BERIO-three CSA payments will not be able to fully compensate for this once online in Q2. Therefore, in total, we see a mid double digit million negative effect here year on year.
Please note that if communicated via EBITDA in ruble, as our friends from Unit four will do, the picture looks more promising. In sum, all those effects bring us into the guided range of CHF700 million to CHF950 million adjusted EBIT. If one would be trying to summarize the year on year development with one word, normalization would not be entirely off. The fact that we do not expect any significant one offs such underlines this theme. Finally, I usually give you an indication for how to think about the next quarter.
This is this time especially challenging. Overall, I can say that we operationally had a strong start to the year. And I would like to believe that as of today, and it is very early in the year, the midpoint of our outlook may prove somewhat conservative. Among others, our LNG business used the global cold spell very well and also our U. S.
Business did their very best to use our assets in the extreme environment that we experienced there. We're also more optimistic that BareUS3 can be commissioned already in April. Therefore, I currently expect the first quarter EBIT to come out at around a very strong level we have seen last year, probably €650,000,000 with even some chances to the upside. Obviously, given the full year outlook, we expect the remaining quarters to come in at a lower level than last year in the base case. I will give you a firmer update with the publication of the first quarter figures.
Now before we start the Q and A section, I briefly hand over to Stefan.
Thank you, Andreas. Thank you, Sascha. We now come to the Q and A section. And as always, please restrict yourself to two questions each, And I hand over to the operator to start the Q and A, please.
So we will begin our question and answer session Once your name has been announced, you can ask the question. If you find your question is answered before it is your turn to speak, you can dial 02 to cancel your question. If you are using speaker equipment today, please press the handset before making your selection. The first question is from Sam Arie of UBS. Your line is now open.
Hi. Good morning, Andreas, Sasha, Stefan and all the team. Thanks again for a great presentation, very clear and some really positive messages there. I wanted to ask just about the dividend and, of course, about Russia as I always do. So on the dividend, can I start by just, you know, following up on this comment in your release last night that discussions about the 21 dividend was still pending?
And I just it would be helpful to understand what kind of discussions those are and if essentially forward communication about the dividend depends what Fulton does with the domination agreement and so on. I suppose also on dividend, is it fair to assume you wouldn't be proposing the $5.00 €1,000,000 for 2020 if you didn't have some sense of awesome plan to approve that at the AGM. That would be very helpful on the dividend. Thank you. And on Russia, well, look, I'm sorry I always come back to this, but I remember we had a conversation at full year results last year and asked if you would be you would consider selling Unipro.
And the answer at the time was no, that Russia was an important part of the three legged strategy at Uniper. But I think since then, it's been reported that you're more open minded you would consider offers on Unipro. So I just wondered how the thinking has evolved there and if we, should we expecting some kind of a, change on Unipro this year? Thank you very much, and thanks again for a great presentation this morning.
Yeah. Hey, Sam. Good morning. Hope you're well. Thanks for your question.
I'm taking the first one, and then Andreas will take over the second. And I'm grateful that you actually almost gave me the answer in the latter part of your first question, and that is, indeed, we would not propose something where we are not sufficiently aligned with Fortum as this could simply be misleading from a market perspective. Fortum holds 75% of our shares, as you know, And therefore, an alignment is necessary. This alignment is currently pending, and therefore Ben, you're quite loud. You need to mute.
Thank you. And since this alignment is currently pending, the decision is proposed, and we will follow-up on that as soon as we can. And now for Russia, I'm handing over to Andreas.
Yeah. Hi, Sam. Good morning, and thanks for the question. I think Russia is an ongoing discussion. We get this message.
There's a question again and again, but I don't think it's true. Russia is a very important part of our our earnings. Sometimes we have more impact from them and sometimes less. It really depends more on the ruble and the situation we described. At the moment, really focusing on the commissioning of barriers three and then to transform the business as well to a more CO2 friendly generation portfolio to renewables.
So from that point of view, we have a lot of things to do. It remains an important part of us. But of course, we are always looking into other options as well. We will not exclude that neither.
Okay. Thank you very much.
The next question is from Peter Bischke of Bank of America. Your line is now open.
Yes, good morning. Thanks for taking my questions. So could you update us on the latest status of the Nord Stream two projects, please, and your views on the risks there that the project isn't completed and the status of your loan? And my second question is about The UK capacity market. There was a T1 auction earlier this week that cleared at forty five.
Just wondering about your thoughts on that. And also, what are your thoughts about the dynamics of the T minus four auction next week and how that might play out compared
to to last year?
Yeah, Peter. Good morning from my side. Thanks for the question. Let's start with Nord Stream two. As you know, we are a financial investor, and we are not really running the show there.
But, of course, we are following the completion of that pipeline very closely. I think pipeline is going on as far as we know. But from that point of view, we are quite okay that the Russians will finish the pipeline as promised. But I don't see any big technical risks since the pipeline is starting. It seems to be under control, but it's only speculation on our side.
On the political side, we are very much following the ongoing discussion in Europe and in The US. The issue is that, of course, this is still volatile, but I'm quite sure we will find a solution there. So we are quite positive about it. As you know, we believe in the rationale why we need Nord Stream two for the security of supply of gas for Europe. It is a business project which is to 98% finished, we're looking forward that it will be finished.
Coming to The UK, I think the results of the TR1 auction needs to be confirmed in The UK by the political regulators. I think it has cleared a very good result from my point of view, from we were a little bit surprised how good the result was. So from that point of view, we see it quite positively. And please exclude that, of course, for the t minus four auction. We cannot give any any guidance about the strategy at the moment if we participate with what we participate and so on.
Okay. Thanks very much.
The next question is from James Brand of Deutsche Bank. Your line is now open.
Hello. Good morning. Thanks for the presentation. Two questions from me. The first is, well, I
thought I'd just ask a
question on Russia given that it keeps on coming up, but with a with a different angle. And if if, you know, people are asking regularly whether it would make sense for you to sell it, can I just ask why it wouldn't make sense to merge your Russian business with with Fortums? I'm not expecting you to to announce that on
the call today if I the minority is
in the merger, but if you you talk a lot about areas with with Fortum where you can have, as you say, joint value pools. And when I think about the two entities, it just seems like, you know, Russia's the area where there's almost the most overlap on scope for synergies. So that's question number one. And then secondly, you obviously had an increase in pensions and provision charges due to the lower bond yields at year end, then subsequently, bond yields have soared. So I was wondering whether you could tell us how much, if we did a mark to market today, how much that would lower your net debt?
So would imagine that could be quite material. Yes.
James, thank you for the question. Of course, if we don't expect an answer, the question is why you asked the question. But let me try to give you at least some insight. I think for Russia, it was so far more than the focus of our one team approaches. I think there will be limited synergies, maybe in some fuel purchases and joint procurements.
But otherwise, as you know, all the assets, our own assets and the assets of Fortum are quite as birth in the geographical area as by nature of power plants. So there are not so many synergies as maybe would be expected. At the moment, we are focusing with our collaboration with four to one to one team approach in the area of Nordic hydro hydrogen and renewables. We're making good progress on that. And I think it's from my point of view, it's essential to really harvest here the synergies and deliver value that we will take on the other things a little bit more later.
Yeah. James, I I I would hope that the the slides in the appendix helps somewhat to think about the the balance sheet position when it comes to interest rate sensitivities. Surely, every of those illustrations is is a bit simplified, but at least it gives you an order of magnitude at slide 18 of the presentation.
Great. Thank you very much.
The next question is from Vincent Ayral of JPMorgan. Your line is now open.
Yes. Good morning. So we already had quite a few times questions on Russia and potentially the dividend. I'll come back to it. So on the dividend, beyond talking about the $5.00 €1,000,000 dividend for 2020, it's more a question regarding, the outlook.
When looking at Uniper, it would seem that further growth either from an earnings point of view or a balance sheet point of view, further growth of the dividend may be difficult, so maybe it's time for a breather. What's your view on that? I'm sure you cannot comment on the Horton's view, but maybe you can comment on Uniper's view there. And then on Russia, I'll talk a bit ESG here. That's another angle to look at it.
You say that, basically, you can go neutral in European generation, still have some CCGTs, so not fully understanding exactly, if they will all cease operation or be, switched to hydrogen in meantime. But on Russia, you said there is, no clear path on on p o two. So, the question is, would there We actually have solution just selling the Russian assets in order to to get on track. I know it's not helping the environment, but it's helping meeting the carbonization target at Geneva level. Thank you.
Vincent, maybe I'll start with the dividend and you have indeed given it a different perspective, and I would say the following. I think already in March of last year, we were yeah. That the the dividend policy of the past that included a 25 CAGR, it is not a sustainable thing. It's simply not to be expected that we increase earnings or cash flow by 25% every year. However, that aside, I can just reiterate, we have a very comfortable capital position.
We just talked about great 2020 results, including very strong cash flow. I think I kind of indicated that also 2021 may have some upside potential. I mean, it's certainly the case that we can afford a dividend. Also considering the investment plans that I've talked about before, I. E, euros 1,500,000,000.0 growth over next years, about 1,200,000,000.0 Nevertheless, the alignment with Fortum needs to be there.
And before that is not in place, we will not communicate.
Yeah. Vincent, thanks for the questions. Coming coming back to Russia, think we we have mentioned already a couple of times that Russia earnings are quite an important part of our earnings profile. They are non merchants because they are mainly capacity payments, so they have a fixed nature. So they're not that volatile.
As from that point of view, it's an important part of the business. Nevertheless, we got to announce that we are working on ESG and the CO2 intensiveness of our assets in Russia as well. We are investing into improvement programs to reduce the CO2 intensiveness of these older assets to convert into more than one. Capacity scheme in Russia is turning more and more into renewable capacity markets, and we are going to participate there as well. It has a charm that, of course, it will be fixed payment for capacity as before, though from that point of view, it's the same thing what we have now.
And of course, we are working with Russian partners like Novotec and and trying to use hydrogen, blue hydrogen for our assets there. From that point, this is a good outlook. So we we work in our AUT profile there. That's definitely ideal case.
The
next question is from Lueder Schumacher of Societe Generale.
Two questions from my side. The first one is on something Andreas said quite early on in the presentation. You mentioned that you see significant upside potential for Nordic power prices. Can you maybe elaborate a bit on that? Is this mainly driven by a normalization of weather patterns winter?
I mean, this winter was quite normal compared to the previous winter, which was record breaking in terms of mild temperatures? Or is that something structural at play? What should be the drivers to get Nordic power prices higher? And how fast could this happen? The second question is on the quite phenomenal start to the year you had.
What was the main driver behind it? Was it again weather demand driven? Or was it more gas optimization and trading? And this is partially coming back to Sascha's comment on COFEL, the old COFEL that 2021 could be quite different. This sounded a bit more optimistic than the not negative.
Could we actually see a positive surprise there as well?
Let me maybe start, Hoora, about Nordic power prices. I think that's the kind of recovery we see and we acknowledge because they were quite depressed in the last year, Nordic power prices, mainly based on a very warm winter with a lot of rain instead of snow where the dams were very much full. Now I think we have seen a kind of normal thing. It was winter, it was cold, there was snow, something more normal. So from that point of view, I think this is just the recovery.
And, of course, maybe as well a kind of small COVID effect that the health care coming out of the pandemic, that will have maybe a hopefully an impact there as well. Roger? Yep.
I'm taking your second question, Luda. Yeah. If the tonality was more optimistic than this was indeed on on on purpose. Now where is the good start coming from? Actually, more than one source, not every source being of of equal equal magnitude, but let's also acknowledge that our communication when it comes to the commissioning of BERIO three is now becoming firmer and firmer.
That's a good thing. Someone already asked asked a question about The UK capacity market where we participated with our Red Cliff power station. And and, yes, certainly, our I would call it US platform. When I when I when I talk about US platform, I'm speaking specifically our about our business line, North America, where we're active with about 80 colleagues there. We are holding storage positions, and we're trading power and gas.
And in those very extreme circumstances, that also affected people, including our own that were working without having power. But those extreme circumstances also provided some opportunities, and that also accounts for the LNG business, which was additionally supported by that US platform. So Lueda, for now I wouldn't point to gas midstream in the sense that we were talking about it all along in 2020, but there are other parts of the business that are also working quite well right now.
Okay. Very clear. Just one follow-up question, if I may. I think at the January, when we saw you on our field trip, stored gas storage levels were about 6% full. Do you have a number where they are now?
I think Andreas mentioned in his speech for Europe, 30 7 Percent, if I'm not mistaken. A colleague just quoted the other day 34. I think that then depends on the region. But apparently, somewhere in the thirties from a physical perspective.
Excellent. Thank you very much.
The next question is from Deepa Venkateshwaran of Bernstein. Your line is now open.
Thank you. I have two questions. One on the CapEx. So it seems like 2020 CapEx is a bit below where you had guided last year. So I just wanted to understand where the difference is and is it phasing?
And then for the growth CapEx that you've guided from 2021 to 2023, '2 point '7 billion, can you provide a bit of transparency on how much of this new growth is the renewable projects that you discussed on the Fortum CMD? And maybe some color around around that would be quite interesting. And secondly, on the medical commissioning, I think you've mentioned a couple of times on the call already. Maybe if you could just update on what should be our modeling assumption on when we should assume a full ramp up? Is it already at the beginning of Q2?
Or how should we think about that? Thank you.
Yes, Diva, thanks for the question. Maybe I give Sacha a little bit more time to prepare for the two questions you got on CapEx and growth, CapEx and so on, give you some color on Veriskoftware three. I think we have made good progress in the last weeks. We have had the first trim run, so the turbine was reaching 3,000 RPM for the first time that we have seen that. Maybe a few of us remember that that's the first time we have not reached that status and commissioning.
So we are quite positive that we will get all the necessary updates, technical documentation and permissions to start the unit and have a COD at the beginning of Q2. So we always mention this when we do I think maybe early in q two, I think it's it's a good time to to mention that. So we are quite positive about it. And then, of course, you will see, of course, the payment for the capacities coming in as well.
Good. Thanks, Andreas. And now I'm taking over with respect to the CapEx question. Indeed, 2020 actual CapEx in the end was lower than we have expected at the beginning of the year, I guess also lower than we have indicated back in March 2020 when we are at our CMD then. This is predominantly a shift shift of payments.
No fundamental rethink of of projects. So 2020, a bit less, and then some of that has has gone into into the following years. Now when we principally think about CapEx, when we communicate CapEx, we think of a total number, either say the 1,500,000,000.0 or the 1,200,000,000.0 that I mentioned early on, that we can comfortably afford given our other planning assumptions. And then if we stick with the growth CapEx, part of that growth max CapEx is then already earmarked for specific projects that is usually more in the shorter term, and this includes projects that you know and that Andrea talked about from Icheng six, the gas plant to the grid stability projects to Scholven. But then it also has quite a substantial part that in the second half of the period of growth CapEx, which is not yet allocated to specific projects, but where we certainly have a strategic view.
And then this gets us back to your link into the renewables, also into the Uniper Fortum renewable team. And we are optimistic that as we then go into the second phase of this time period, more and more will then actually be dedicated to specific renewable projects. And in the longer run, also then more and more into the hydrogen space.
The next question is from Alberto Gandolfi of Goldman Sachs.
The first one is I wanted to ask you, about your expectations on what we might hear from the European Union, in the summer with respect to any potential changes to the emission trading scheme, any tightening and what that might do to the carbon price and how you're preparing for it? And the second question is, again, you you you talked about some of that, so forgive me to go back to to the topic. But, you know, your idea to go to net zero by 02/1935, you're talking about something like three gigawatts of renewables by 2,030. You still have gas plants. So could you maybe elaborate a little bit more the main milestones in the next three to five years on how you intend to develop a renewable pipeline?
Are you thinking externally? Are you starting to hire people? Are you ramping up organically? And are you looking into hydrogen ready turbines or hydrogen turbines to fully repower your gas plants? And maybe if you can give us a bit more of a trajectory of when this new phase might begin or may it's already started, I guess, but when we should expect an acceleration of all of this?
Thank you so much.
Yeah. Thanks, Alberto. Let me start with the second part about hydrogen and the CO2 emissions. I think our our promise to be CO2 neutral in 02/1935 is is based on a couple of assumptions and plans. Of course, we will take out our coal assets and ramp down, as we have already said, not only in Germany, but as well as The UK and The Netherlands.
So there are timelines behind that when we are exiting in GFR today as well. Our plant in Schopo will change the ownership and will be not in our responsibility starting from October. So that will take a big part of these CO2 emissions away. On the other hand, yes, we're looking into H2 turbines. We have agreements with Siemens and with GE to check if our existing assets can be converted and how they can convert it.
I The good news is that all our turbines are able to take a higher percentage of hydrogen. I think rule of thumb is if you have a turbine with a high capacity, very efficient, then of course it's harder to convert them to completely hydrogen as the smaller assets are normally easily converted. The turbine, of course, all the instrumentation around that regulations have to be adopted. On the other hand, one of our Ipsaite projects, the one in Hamburg, the H2E project, There's a hydrogen turbine of 300 megawatts in cooperation with Siemens Energy included in that. So that could probably be the first complete hydrogen turbine being implemented in Germany.
Of course, this reduces all our CO2 intensity using blue hydrogen in the meantime as well. That's something what we're assuming. But of course, you're right, the wrap up of hydrogen completely as a big business will take some time because the framework is not there yet in Europe and in Germany. It's still too expensive. But I think everything is pointing in the right direction.
And I think we are one of the front one. I'd say there's a lot of projects. So a very very promising science that I'm very comfortable in in that position with Uniper.
Does it mean you'll leave the c o two question to me?
Well, I can try to answer the c o two question It's such a really me alone on that one.
We'll do it together. I guess none of us will provide a c o two price outlook that we take from the market. But our fundamental belief is that the the trading system will be a key steering instrument for the overall decarbonization in Europe. And if anything, yeah, year by year and month by month that political, but also the economic, the societal belief seems to be firming up, so you get the sense that there is structural support for for a certain level of c o two prices.
Let me maybe add to that, because we cannot make a forecast of what CU will do. But one thing is clear, politically I think probably they want to tighten the CO2 price to drive it up because it drives the conversion and the transition. And actually, from where I'm sitting, a higher CO2 price combined with higher coal prices and moderate or low gas prices is something which plays definitely into our portfolio.
Thank you.
The next question is from Bjorgio Jinkowski of Citibank. Your line is now open.
Hi. Good morning, everybody. Two questions from me, please. The first one is we've seen that we're suing the Dutch government for early foreclosure. You are you also have the same similar assets.
Do you think there is a grounds for such legal action? And would you consider the same steps? And can you comment on such possibility? And second, can you please explain you announced the cooperation with Novavtek around the hydrogen in Russia? What what is exactly the nature of this agreement?
What are you trying to achieve there?
Yeah. Well, thanks for the question. Let's start with Makslakte and other, but you get these things. We had discussion with the Dutch government about Makslakte. I think we are good at constructive talks.
And of course, we prefer mutual agreement and the admin win situation to that. Of course, we reverse the right for legal steps as we have to in terms of all shareholders. We believe that there's there's a legal ground for that. We are not that proactive and some competition. So we we are looking for a negotiated solution, but of course, we cannot exclude any other things as you can understand.
And regardless of NovoTech agreement, we signed an agreement with NovoTech to look into blue and green hydrogen or ammonia to be transported, shipped, whatever, into into Germany. NovoTech is looking into these things. We are collaborating with Gazprom on the on the same area as well. So I think that's something where I believe could be one of the intermediate steps for hydrogen economy in Germany and Europe. We know that we have to import quite a lot.
And coming from Russia, it's blue hydrogen is definitely Luamunya is definitely a a very elegant solutions at the moment.
Thank you. And just just a follow-up. And can you maybe say about how much the early closure do you think is damaging your NPV of mass factor? You know, it's we've seen the RW figure what they are claiming, but any damage on your side, you know, whether you are forced to do a write down write down on this asset and so on, it could be quite helpful.
That's all good. I I think we we will not comment on that. I think that that's something we have to decide. From that point of view, I will try to avoid that question for the moment. I'm hoping and quite positive that we probably find a negotiator solution, and then, of course, we will see.
Understand. Thank you very much.
Thank you.
The next question is from Adrian Mamadov of Bloomberg Intelligence. Your line is now open.
Hi there. I have a couple of questions too. The first one is sorry if I missed it, but you mentioned scope three emissions. You were planning to reveal them at some point this year. What shall we expect?
And and the second one is what's your outlook for evolution of power, carbon, and and spark spreads, for the coming year or two, if you can give some light to it? And where do the load factors for CCGT stand now in relation to spark spread? That would be great. Thank you.
Yeah. Thanks, Egon, for the question. Let's start with Scope three. The Scope three chapter 11 emissions are indirect emissions. So they are the emissions our customers creating if they are taking our products and then use them, run them or whatever.
As we as as it already sounds a little bit more complicated in nature, it's not direct emissions, it's indirect emissions. And, of course, the first step from our point would be to create transparency about that, how high is it. And then, of course, we want to drive a target out of that. And just to give you some foot for thought, why scope three emissions are so tricky, except we would get for LNG to India, which has some carbon intensity. But Indians would replace coal burns with our LNG.
That would mean our scope three emissions are going up because we are selling now gas to them, and we haven't sold coal to them. On the other hand, for the Indians itself, their two emissions are going down because they are placing efficient LNG. We have former they have burned coal. So you couldn't do good things and still having a higher target. That's why we're looking into that in a first grade transparency, then how to deal with that.
Of course, if we are dealing with hydrogen, there would be no scope three emissions be involved as a at the moment.
Yeah. And maybe my my my approach on on on your other questions is is the following. You you have seen that already in 02/2020, and it was October, we have put two of our German gas facilities, Ishin four and five back into the market, into the merchant market. I think that is a certain that signals a certain expectation. I can additionally say that over the next years, we expect the running hours of our gas fired power plants to increase, and I would say increase meaningfully.
And if we go even one step higher in in the discussion, I think one of the the the questions that we have come across also in in 2020 is what actually happens and and and will happen in in in in in and weeks where we have a certain weather constellation in combination maybe with outages or or not fully working working interconnectors or similar. I think then already today, we see that things are getting very, very tight. And I think the more we then expand on on renewables in Europe as we should, as also, UNIFI will, the more we will then also face those kind of questions, with very practical events, reminding us of the importance of security of supply. I think with that, I guess we would say we have tackled most of the questions. I'm sure there are some remaining.
Please then approach the IR team during the day, but we would now come to a close as also our press conference will start in due course. From my side, big thank you to all of the participants.
Andreas? Yeah. Thanks from my side as well. Thanks. Thank you for participating.
Thanks for your questions. Stay tuned, and stay safe and healthy, and have a good day. Thank you. Bye bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.