Welcome, everyone. Good afternoon. I'd like to welcome you to the conference for the media, investors, and analysts regarding the TAURON Capital Group earnings for full year 2023. Today we have a full management board with you that includes Grzegorz Lot, the President of the Management Board; Piotr Gołębiowski, the Vice President of the Management Board for Trading; Michał Orłowski, Vice President of the Management Board for Asset Management and Development; Krzysztof Surma, Vice President of the Management Board for Finance. Let me break the convention today and I will ask the Presidents, since we're meeting for the first time in this group, to have a few words of introduction. Mr. President, Mr. President, let me turn to President Grzegorz Lot to say a few words by way of introduction, if I may ask. Good afternoon, ladies and gentlemen.
Dear shareholders, ladies and gentlemen representing the media, for us it's a great pleasure and honor and an enormous challenge. So thank you very much for the time that you are spending with us and for the capital you're investing in us. We will introduce ourselves in a moment, what we do, what we want to do, and since the most important thing is business, I will hand over the floor to my colleagues from the management board. Gentlemen, let's say what capital we have at our disposal. Ladies and gentlemen, welcome everyone.
My name is Michał Orłowski. I'm the Vice President of the Management Board for the Asset Management and Development. My background, educational background, is finance and management. I'm also a holder of the CFA certificate. I joined TAURON for the second time.
My last position I held at the company is the director for mergers and acquisitions and investments, as well as the head of, president of the supervisory board of the subsidiaries of the company. In the over recent years I dealt with strategic investments in Near East, Middle East, Europe, Western Europe, and Poland, working for customers in those countries in various related to the investments, transactions, capital transactions, equity transactions, and renewable energy. Thank you. I hand over the floor to my colleagues. Welcome everyone.
My name is Krzysztof Surma. Regarding education, similar as Michał, I'm also a finance guy. I graduated from the entrepreneur business management, and finance at Katowice and Kraków Academy and the CA member. Regarding cooperation with the group, I've been working for the group for more than 23 years.
I went through all the ladders of the career, starting from the junior specialist to the president. Since 2009 I've been holding the position of a financial director at TAURON Polska Energia, and since August 2021 I had the pleasure to manage the entire finance area and perform the position of Vice President for Finance. In my everyday work I manage the finance controlling and also purchasing now.
Thank you. Good afternoon. My name is Piotr Gołębiowski. I am the Vice President for Trading. By education I'm an engineer electrician, electric engineer. My experience in the power industry dates back to 1995. For 28 years I spent working for the power industry at TAURON. 12 years I, I'm a holder of the MBA degree.
I've been specializing in the hedging strategies for generation assets, supply assets, sales on the retail market, and risk management in the power industry. Thank you very much. Thank you very much for the introductions. Ladies and gentlemen, we are happy to be with you. That's the first conference, live conference, in-person conference for a number of years. So let me remind you that the presentation, of course, is conducted in Polish, but it is simultaneously interpreted into English. Outside of a broadcast you can also listen into today's meeting via the teleconference mode. In parallel, for everyone who are in the room, in parallel the questions can also be asked, via the website of this, conference. Also, the questions are already coming. If you have questions and you're listening to us and you have some inquiries, please send them to us.
Next to me I have Paweł Grzesiński, responsible for the investor relations at TPE.
My name is Łukasz Zimochaj, I'm the press spokesman of the group. So the time has come to start the presentation. After the presentation a traditional Q&A session. Let me start by providing the large scale, the overview. Let me just introduce myself yet.
My name is Grzegorz Lot. I'm holding the position of the President of the Management Board, CEO, but the ambition to be a leader of the energy transition and the transition regarding human transition. That's the signal for my colleague to move on to the next page. The energy transition, technological transition, and also tradition regarding the organization, people. This is the biggest capital of the organization is always people, their passions and competencies. And this is, I'm an MA engineer, graduate of Silesian University of Technology. I'm holding an MBA degree.
I used to work for the Vice President for Marketing and Sales in the TAURON Group. That's my domain. The marketing strategies, customers, new products, and sales. For 10 years I spent working for Vattenfall. The last five years it was Polenergia, and since March 7th myself and the team of my distinguished colleagues, we are representing TAURON Group. I do hope that's how we'd like to bring the company to the leadership position in our country. As I mentioned, our goal is to drive the competitive advantage. We have identified specific assets, people, RES assets, renewables is the assets, conventional assets. The distribution grid is the biggest value of the Group of that company. This is almost 6 million customers that we have to arm with green energy at very reasonable prices. The business core, this is an important prospect.
How we're looking at the business, how we look at this group, how we look at the future of this organization. The business core is almost 6 million customers connected to the distribution grids that are purchasing electricity from TAURON Group. An ideal solution would be for this electricity to be 100% green and to come from our sources. The business core is the place that generates the biggest value around which we want to grow our organization. On the subsequent slides I will show our point of view, our perspective, but this is the main message I wanted to convey. What is our core, how we want to develop, grow, expand, how we want to create the value of this group and for our shareholders. We've been together for 40 days. It's a fantastic time to sum up certain activities that we undertook.
We are full, still full of energy, green energy. We've managed to organize a number of things. Now we are focusing on developing the organization, the resources. We are building the team. This team will be the basis for achieving afterwards the goals related to the development, acquisitions, and creating the value for customers. Creating a value for us, these are four main perspectives that we are presenting today, but of course they'll be modified as the knowledge of the organization expands and the further business ideas. The first thing is that everything we do has to generate the sustainable economic value for the shareholders, for the investors. That's the first thing. Second thing that is to bring tangible value for customers. These are the two perspectives. Shareholder and the customer is a holy grail for us, and from that point of view that's how we view this business.
The second thing is that we have to develop an organization along with its culture, corporate culture, that will be understanding our goals, the market, the customer needs, the shareholders' needs, and this will be the sustainable value that irrespective of who's managing this organization, that this should persist and build value for a number of years ahead of time. That's our perspective. Another thing that we already know and we are committing ourselves, we are focusing on very strongly, this is the growth, expansion of the RES sources, renewable sources. Not only in the form of photovoltaic, wind, or hydroelectric plants. This is the full ecosystem because today renewables also energy storage facilities.
Renewables also include the distribution grid, the renewables storage facilities grid that's also the appropriate supply of this electricity to the final consumers and creating value, especially when you take into account the new introduction of the new balancing market model, the appropriate placement of the energy to the appropriate group of customers, and accounting for those two perspectives will be the critical success factor for developing and growing the economic value. And the last and equally important, last but not least, perspective, the employees, 20,000 people, our managers in the organization, we are responsible for creating the job, work positions for those people that we have, but the ones that we gain and bring about such a situation that every person that joins the organization works for the benefit of the shareholders and customers with passion and pleasure. These are our ambitions. Okay. Thank you very much.
For the next slide. Definitely, you will be asking us during this final session, Q&A session, and we are looking forward to that. What are the main growth prospects, expansion prospects we see now in this year and the subsequent year? The first thing that I've been mentioning all along, and this probably also comes derived from my experience. My character is a customer, customer in the middle, the center of attention. Almost 6 million customers. We have a number of ideas. I will not be selling them right away to you, but this is the first perspective. The second thing is the issue related to spinning off the core assets outside of the organization, and this is a very specific issue. Let me explain. I can see even the questions that you'll be asking in a moment.
I'm already a spoiler. I see it on the screen. I'm spoiling 2050, ladies and gentlemen, 100% of the customers in Europe will be purchasing electricity or consuming green energy from nuclear, from renewables to 2050. So 24 years ahead of us. 2040, we know what will happen on that year. It's 14 years. So please think, how many things we have to do, how little time, how important it is to start it now, here and now. So for our group to offer to our customers, the 6 million of them, the green energy, we have to be able to invest in the renewables, in the energy sources, build the ecosystem related to the energy storage facilities, invest really large amounts of money into the distribution grid. It's throughput flexibility. We want to have to make our heat supply green.
For that we need a gigantic money, with a good offering. To get such sources of financing we have to bring about the situation so that in a reasonable manner, the so-called just transition is being talked about. We take this into account fully also in from the social, financial, and technical point of view to spin off core assets, generation assets outside of the group. We have experience. We have spun off the mining assets. We have experience in that. We have prepared assets, generation assets in a specific group. So, our organization is very well prepared for that. We did a lot of homework for a number of years. We've been working on that. So we have an interesting adventure ahead of us. Of course, probably we'll be working out the details, talking about the details during your questions.
The decarbonization of the heat industry, one- of the biggest entities that is offering both the distribution service and the heat supply service is a very important thing, but also very difficult via renewable assets, energy storage facilities, and the growth of, expansion of the distribution segment. That's all interrelated to one another. If you look at the to invest in renewables to manage this energy very well, we have to be able to accumulate and place this energy somewhere. So therefore heat is a natural element, a natural storage facility for our energy. The distribution necessary to carry out the transition and also the storage. We're not talking about the large scale storage, but also the distributed, facility, storage facility. 6 million customers. Think about how big potential that creates for distributed energy storage. Financial stability. I don't have to convince anyone about that.
My colleague is very orthodox in this area. Anything we do is subordinate to those issues, and we are grateful to him for that. Ladies and gentlemen, an extremely important for us thing is we are very much focused on the shareholders, enormous respect. As I said, our goal is to de develop, to create the sustainable economic value for investors. Therefore a simple statement from me that during each meeting that we'll be holding, as if we are able to physically do it, we'll be directly communicating with you. We'll be reporting to you. So this is for us very important, a bit stressful, but very important event. We also know one more thing that we are raising now to the very strategic level is ESG. So anything that we do now in the organization, 40 days, we've been doing that.
Although if you ask about specific actions, I can already say, mention a few of them. ESG. So any investment, any change, anything, any decision has to be taken from that point of view because over the next subsequent years the company will not get financing, will not be able to expand if it doesn't meet those parameters. We are very seriously approaching that. We are not questioning the ambitious climate goals, social goals. We simply accept them. We know they need to be implemented, accomplished, and we focus on accomplishing them. So thank you very much. I hope I didn't bore you too much. I have managed to inspire you. I'm awaiting the difficult questions. Let me hand over the floor to Krzysztof. Regarding the key financial data, this data is very good this year.
Historically, the group topped PLN 50 billion in revenue, including PLN 8 billion in compensation payments regarding EBITDA. For the first time we managed to achieve EBITDA more than PLN 6 billion, PLN 6 billion 145 million of EBITDA for 2023. We also achieved substantial net profit at the consolidated level, about PLN 1.7 billion. The CapEx also went up substantially year-over-year, about 10%. Up here we came in at, PLN 4.4 billion approximately, and the net debt to EBITDA ratio, maybe not historic, at a historical low, but still low versus the recent earnings of the group. This net debt to EBITDA is very important. My colleague mentioned this financial stability is key for the group. Of course, each of these data items I will expand upon further on during the presentation.
Against the good financial data, the background of the good financial data, our operating data have been a little bit weaker regarding the distribution. We have a decline by almost 4% year-over-year, down to 51 TWh. Regarding good operating data, here we have an increase of renewables production. Weather was a bit helpful, but also new investment projects are helping that we are implementing by our group. Regarding the coal-fired electricity production, here unfortunately we have a decline year-over-year. I will expand on that when I discuss the macroeconomic situation. Regarding the heat situation, here a slight decline year-over-year. Unfortunately the heating seasons were a bit warmer. The outdoor temperature was a bit higher than usual. So therefore automatically the heat sales declined. Regarding the sales of electricity this year, it was quite flat, stable.
The difference is 1% year-over-year. Let me hand over the floor to my colleague who will discuss the trading situation, market situation on the electricity market, and then I'll move on again to the financial data. Ladies and gentlemen, a bit of a retrospective view because a lot has been happening on the market. In front of you we have four charts showing the electricity prices, performance of those prices, the gas prices, CO2 emission allowances prices, and the coal prices. So the four parameters that we are looking at with a lot of attention, and this is due to the fact that our trading strategy is closely correlated with an anticipation of the trends on the market, and in view of those trends, the hedging, securing our trading margins.
So afterwards when we discuss the financial results of individual segments you will find the reference there to the reasons for the given results. Ladies and gentlemen, let me remind you, and that's why those charts are over the 2021-2023 time frame, that what result will be achieved in the given year is determined by the trading strategy developed ahead of time, even three years ahead of time. That's what how it happened. Working as part of the risk management policy, especially the trading risk policy management policy, we are guided by the sustainable or balanced and stable risk appetite when we take the trading decisions. So moving on to the characteristics of what has happened to electricity prices, let me draw attention to this very unstable year 2022, the year of Russia's invasion against Ukraine.
In spite of the fact that it all began to develop in correlation with prices already in April, we had already first symptoms back in 2021. If you remember, at that time there was an issue of an extension of a Nord Stream 2 license, and this had an impact upon the gas prices and subsequently the electricity prices because of the correlation that the gas prices, European gas prices, have an impact somehow on all the indices on the Polish market, and subsequently there was this boom, this above standard increase of electricity prices. Let me remind you that the prices in the peak prices of 2,500 PLN/MWh and peak prices were even 4,000 PLN/MWh of electricity. The same thing happened on the gas market with a slight delay. The price went up to more than 1,400 PLN/MWh.
Of course, everyone was concerned about that because there was a deep energy crisis underway worldwide, and on the Polish market those indices really went sky high. However, taking into account what assets we have, what production of electricity we foresee from our generation assets, both conventional and renewables, we're trying to hedge ahead of time the margin for 2023. That's what happened. Simply, we sold volume, taking into account of course the hedging of the foundations, the CO2 and coal, and moving to 2023 we had about 80% of the volume secured. This later led to what we see on the first graph in the left upper corner. These spot prices are shown. This meant that we were a beneficiary. We were able to naturally take advantage of the electricity buybacks that generated the appropriate level of a trading margin.
Of course, the consequence of that is the fact that the inventory of coal is a natural consequence of that. As of the end of 2023 we had inventory of around 2.5 million tons, and that was a natural consequence of the fact that this coal due to the economic situation and an attempt to build a stable level of margin was left on the stockpiles. We'll be coming back to that. In the upper right-hand corner you can see the situation on the coal market, about two indices. The PSCMI index and the one which is an index that generally characterizes. This is the index that is used on the Polish market. It's a weighted average from the transactions performed on the Polish coal market, calculated ex post after the monetary system closed.
So that's why we have a situation where in July first this price level from 10 PLN per gigajoule gradually, linearly was going up, but through the negotiation of the coal contracts there was a step up. So it's 30 PLN per gigajoule. You can see the peak, and this throughout 2023 that level was maintained, whereas the other prices the Antwerp, Amsterdam, Ports, this is the quasi-financial index, and here through this information based on this information about the energy crisis this level went up very quickly. Coal price level up. So it's closely correlated to the decision. The gas markets of the consequences as follows. If the gas prices and that's what happened through the quick filling up of the storage facilities began to build, so this is followed by the level of the coal prices, and subsequently in September it became to drop.
It turned out the situation is that the gas storage facilities had been filled up. We knew that around 83% on the European market were filled up. In Polish market about 95% filling was achieved, so the prices started dropping. So now we have a situation that in 2023 we'll receive that the other prices and the index other is well below the Polish PSCMI 1 index, and now it'll become stable because it'll stabilize because we have a situation where today we can say that the coal prices are going down, and this will lead to a certain trading strategies and actions to be taken in the subsequent years. Regarding the CO2 emission allowances prices, it's in the sideways trend. It was within the range between 60 and 100 EUR per ton, and it's been moving within this range around 83-88 EUR for the December 2023 product.
Regarding the gas prices, the situation after this strong surge, dramatic surge in 2022 came back to normalcy. We had a price around EUR 220 on the spot market. On the forward market it was about EUR 300 in 2023. So the index we were delivering in 2024, one can say that we've had this first crisis behind us. Now the situation is a bit stable. To sum up, the trading results of the generation segment are related to the fact that we've been developing the hedging for the position in 2021, 2022, which resulted in the adequate results in 2023. The same applies to the supply segment, so our retail supply. We were entering the year with the hedging at the level of about 90% for the mass customers.
The business customers is hedged back to back, so in that case it was about 65% of the hedging level. A lot of customers are using now a very popular product that is indexed to the forward market price, the spot market price. That's why it was all those positions were additionally hedged during the 2023, which resulted in a relatively stable level of amount in those segments. After a brief market presentation, move on now to the macroeconomic situation very briefly, and then I'll move on to the data for the specific segments. Regarding the macroeconomic situation, last year it was adverse. It was unfavorable. PMIs never topped the magic level of 50 points. In addition, the GDP growth rate was around zero.
All that led to the decline of electricity consumption in Poland, which reached almost 3% decline, which automatically has an impact upon the distributed electricity within our assets, within our distribution segment. Additionally, it has an impact upon the production of electricity in Poland. The second factor that had an impact upon this electricity production in Poland was the exports and the imports. We remember 2022, as Piotr mentioned, when the prices were very high. Poland was an exporter of electricity to the neighboring country. 2023 all changed. Poland became an importer of electricity, and those two factors, both the decline of consumption in Poland plus imports of electricity to Poland, led to the decline of the production by the energy sources, but it was spread not uniformly.
We have privileged sources, the renewables that has a priority in the Merit Order that are used on a priority basis, and here year-over-year production went up by almost 30%. Subsequently we had a growth with the declining market of a gas source, and here the answer is quite obvious. It was also shown in the previous slide. A significant decline of the gas prices led to the situation where the margin on the gas-fired units was higher than on the coal-fired units, and automatically those units were also used more frequently than the coal-fired units. These two sources, renewables and gas sources, led to a substantial decline of the production by the coal-fired units, both lignite-fired as well as hard coal-fired, and first time in history we have a situation where the production for coal-fired units is below 70%.
It's a very significant change versus the previous years. Here we're also drawing attention to that because this has a major impact upon the production by our units at TAURON generation segment that are coal-fired, hard coal-fired. We move on to the financial data. Here we have a significant increase of revenue year-over-year. As I said, historical high, PLN 50 billion. This 50 billion, first of all, was caused by the price increases. That's why it's important to understand the slide before. We are hedging out of electricity in the preceding year. As a matter of fact, the electricity and the revenue from this electricity that we see in 2023 was contracted way back in 2022. That's why we see the increase of revenue year-over-year. That's the first major reasons. The second major reason is an increase of the distribution rate, tariff rate.
This had a positive impact upon our revenue. And the third thing, a bit incidental, one can say related to the legislation related to the issue of the compensation payment. These three factors meant that we achieved such a high level of revenue. As a matter of at the same time, the group generated a solid profit close to PLN 1.7 billion at a consolidated level. This is very important. This is not a standalone figure, but regarding EBITDA itself, this EBITDA after we strip out the one-off factors, atypical ones, it went up year-over-year by more than 50% to a value of close to PLN 8 billion. This one-off factors I will be elaborating on more in detail when discussing the individual segments. Regarding the results of specific individual segments, let we are drawing attention to the most important parameter, namely the EBITDA.
Here, invariably, our most important, most significant segment is the distribution line of business. Last year, EBITDA more than PLN 3.5 billion. For a number of years, the EBITDA of a segment represents around 60%-70% of the total EBITDA; last year, close to 60%. Last year, one may say, a bit unique, very high EBITDA generated by the generation segment, but I will expand on that when discussing the results of that segment. And one very important piece of information, EBIT in all segments was positive, which historically didn't always happen. However, from the time when we got rid of coal mines, this EBIT has been positive in all of our segments.
If we move on to the summary year-over-year of the EBITDA growth, the key two segments that contribute most to this change, to this growth from PLN 4 billion to more than PLN 6 billion of the reported EBITDA, the key segment is the generation segment. Second one second segment is distribution. Here also I will expand on that, elaborate on that when we discuss the specific segments. Moving on to our most important segment, namely the distribution line of business. Here we are dealing first of all with the one-off event. This one-off event is the upward adjustment of the cost of the grid losses. This is not intuitive as a matter of fact because the cost of purchasing electricity for the grid losses went up year-over-year.
However, the fact that this cost went up year-over-year, we have a model that is applied by the president of the energy regulatory office, and that's how it is reflected in our reports that we are adjusting up the actual electricity in two points in time, December and January, and since not all, the sum of the revenue is recorded according to the actual consumption and some of it is estimated. Then when we make a re-estimation, revaluation in January and this re-adjustment of this electricity leads to the reduction of grid losses. The December grid losses are calculated according to the price of the previous year, and the subsequent year they are calculated according to the prices of 2023, and December we assess the prices of 2022.
This recalculation leads to booking out of some of the losses, some of the balancing difference because it's booked at a higher price. It means that it leads to the actual positive effect on the EBITDA. This positive effect I'm drawing attention to this because when the significant change of this takes place it will stay with us for a year or two unless we develop jointly with the president of the energy regulatory office and the auditor a new model. Just as in 2023 it effectively improved the EBITDA results in the distribution segment, but due to the decline of electricity price in 2024 it will be having a deteriorating effect upon those results. So we've stripped out that effect from the distribution results, then the distribution segment results would be comparable year-over-year.
Although we have also there are one-off events, those one-off events is the Regulatory Account settlement. The settlement of the Regulatory Account is the settlement from two years back. So when the volume of electricity distributed is higher than the one that was assumed in the tariff, then the surplus of the revenue from that is deposited with the Regulatory Account, and then plus two years it will be accounted for on a positive or negative manner. And that point in time it was so that we distributed more electricity than envisaged under the tariff, so it had a negative impact upon the Regulatory Account. The second bar as we looked, the volume of sales, PLN 210 million now charged or charged to the result of for 2023 because the volume of electricity distributed by our grid was lower than the one assumed under the tariff.
Effectively it will improve the result of 2025. The key however for the entire segment part of result is the margin on the distribution service. Here we were dealing with a growth of WACC year-over-year. It went up to 8.5% in 2023, and as a matter of fact it generated a substantial significant increase of the result. 2024 this effect will also be visible. Regarding the key parameters, quality parameters in the distribution segment, here similar as in previous years the parameters were fully met either at the level equal to the target or within the permissible deviation from the target. An important piece of information is due to the quality parameters there will be no reduction in the subsequent years of the tariff because all the quality parameters were met.
Moving on to the renewable segment, here we were dealing with an impact, statutory legal legislation impact. As I remember in 2023 the electricity prices were blocked at the renewables at a certain level, which meant that year-over-year we were dealing with significant decline of EBITDA for that reason. However, on the other hand we have a very positive effect. Year-over-year we are having an increase of electricity volume, electricity produced by renewables. This increase of volume is both due to the good hydrological conditions, namely we had a higher production output by the hydropower plant. At the same time we had a higher production from our wind farms. The impact of the newly commissioned capacity and the good fourth quarter regarding the wind strength, the windy conditions. The negative impact comes from the decline of the prices of the green certificates.
This is first of all due to the fact that the redemption obligation of the supply companies was reduced due to the reduction of the demand. Automatically the prices of those certificates went down. If we move on now to the generation segment here, quite a complicated bridge. However, I'll try to explain it. In 2022 we were dealing with very atypical events. Our unit at Nowe Jaworzno instead of generating and generating positive electricity, generating positive results for the group unfortunately underwent a failure, and due to that failure we had to repurchase electricity that was contracted from that unit. We were repurchasing that electricity at a relatively either a very high price. It was 2022, a year of a war as Piotr showed on the previous slides. Therefore we generated a substantial loss on those buybacks. It reached almost PLN 1.2 billion.
However, that loss was partly mitigated by offset by the sales of carbon credits. Since the unit wasn't operating and the carbon credits were purchased, we resold those carbon credits because they were bought at a lower price than in 2022 their price was on the market. And as a matter of fact, if we stripped out those two, one-off events, we could say that the starting EBITDA to compare against the 2023 was the EBITDA in the region of zero, a bit above zero. But in 2023 we had a number of positive events and a number of one-off events that also to a large extent, substantial extent had a positive impact upon the results. Let's start with the one-off events.
One-off events, the strengthening of the PLN exchange rate, which meant that the valuation of a provision for the purchase of carbon credits that's related to electricity production was effectively valued at an operational level lower. So the reverse result was, since we are hedging it fully with forward transactions on the functional level, the result was reverse, opposite. And finally, we signed a settlement agreement with RAFACO. We got damages, payment of damages. We mentioned that during the previous earnings conferences both as part of the settlement agreement with RAFACO but was the damages from the good performance bond and damages from to in a smaller part from the insurers. The second negative one-off event was the write-down related to the assets at TAMEH subsidiary. We were informing you in the current reports at the end of 2023.
Liberty Ostrava stopped paying to TAMEH Czech subsidiary with the daughter company of TAMEH, our joint venture with ArcelorMittal. Then as a result of that the TAMEH Czech subsidiary announced its insolvency. Therefore we wrote off practically all assets in that company, both receivables and the substantial part of the fixed assets, which led to a negative impact year over year on the EBITDA of more than PLN 300 million. That's all regarding the one-off events. However, the key part, the margin of electricity, this comes from what Piotr mentioned. In 2022 we hedged a substantial portion of electricity from that unit and subsequently that margin as a result of electricity sold at a high price market was generated in 2023.
It was generated both in the form of electricity produced as well as in the form of buybacks on electricity market as well as in the form of forcing by all the TSO introduced on the balancing market. That's why such a good result year-over-year. Of course we talk about outlook for 2024, so the situation will not happen again. Moving on to the supply segment, here the result year-over-year at a very similar level, two small one-off events. As a matter of fact the transfer of the entire, well, the substantial portion of purchase of coal for TAURON generation, directly to the TAURON generation related to the NABE process. Therefore in this segment we eliminated the margin on coal. The second one-off event is the impairment charge, a substantial increase of the nominal electricity prices meant that the increase of receivables also went up.
Therefore, the write down that we book also due to the model that we apply also went up. In addition, there's a litigation dispute with one of the counterparties led to one-off events. Regarding the marginal electricity, this you can see small increase year-over-year but inside of that there was a lot of happening, much smaller return on the SME segment where the law blocked a certain capped the electricity price at a certain level, a bit higher increase in the G tariff last year. The costs were fully passed on, fully covered last year. At the same time year-over-year an increase of margin on business customers in the region of PLN 100 million. Moving on to the slide related to the debt and financing, here a good piece of information I mentioned at the very beginning.
The net debt to EBITDA ratio went down to 2.1 level. The main driver behind the decline of the ratio was EBITDA that led to a situation where we have this net leverage rate at this level. So more than PLN 6 billion of EBITDA meant that we had the leverage ratio close to 2 but the negative impact came from the debt issue. First of all we are dealing with an increase of working capital and this was brought about both by the increased coal inventories that Piotr mentioned already as well as the matter of recording the revenue from compensation payments versus the actually paid out compensation payments. Some of those compensation payments for 2023 was paid out until April this year. That's why this cash flow was shifted and led to the increase of the debt level. Now let me hand over the floor regarding the CapEx.
Hand over the floor to my colleague Michał, who will present the CapEx of the group. Ladies and gentlemen, let me start with an overall summary of the CapEx and declaration of the CapEx. Following that, I will move on to the renewables and give you more details regarding the renewables investments that we are currently implementing. Regarding our total CapEx, it went up year-over-year by 10% and it reached PLN 4.4 billion level. The biggest segment regarding the CapEx was the distribution line of business, which, according to the share and the structure of EBITDA, we allocated 63% of CapEx to distribution last year. The majority of that CapEx was spent on the construction of new grid connections, about PLN 1.5 billion. The second largest part was the modernization and replacements of the grid assets.
However, the PLN 163 million was allocated to the installation of the smart meters that we have more than 19% in our distribution grid and we are on the good path to fulfill the regulatory requirements related to that. The second biggest segment regarding the allocation of outlays was the renewables. I will move on to the details regarding the implementation of specific projects in this segment. The majority of the allocation went for PV farms and wind farms, small allocation PLN 19 billion to hydroelectric power plants. In the generation segment the CapEx was PLN 568 million. Here PLN 303 million was allocated to TAURON generation. Subsidiary rate was allocated for replacements and refurbishments but also components used in overhaul projects and completion of a 110 MW unit in Jaworzno. This construction of this unit from the physical point of view was completed on March 21st this year.
We completed all the acceptance tests with the TSO and so from the point of view of investment project point of view we consider this project to have been completed. Then we have a number of investment projects related to the heat industry, namely connecting very new facilities to the grid, to the network, expanding the heat market Katowice by adding Ligota, the low emission elimination program that also included connecting to the TAURON district heating network. Also the construction of resources at Bielsko-Biała, Katowice and Energetyka Cieszyńska. Expenditures on other segments came in at PLN 441 million. Here the biggest CapEx was allocated to be IT investment, PLN 278 million and then PLN 97 million to maintain and expand the lighting, street lighting as part of a Nowe Technologie. Subsidiary gained PLN 14 million for the business service center.
First of all, spending on the fiber optic network co-finance as part of a Polish digital operational program. Now moving on to the renewables segment, let me start with the overall timeline of expansion of our capacity and move on to the specific projects that are underway. One can say that the green turn of TAURON has accelerated and we are implementing a number of investment projects. At the end of 2023, we had 696 MW of installed capacity in renewables. In 2023, among others, we completed the construction of the Mysłowice photovoltaic farm, 37 MW. We are working on preparing the second stage of this project. We acquired and we started the construction of within the special purpose vehicles that hold the PV and wind farms capacity of 235 MW.
We also have a certain joint undertaking with PGE that will be aiming to prepare an offshore approximately 1 MW wind farm on the Baltic Sea. Now in 2024 we have 8 renewables projects with 364 MW capacity underway and we are planning to complete the construction of a project that will add to our generation mix 176 MW. Therefore, looking at what is being underway now the planned capacity at the end of the year is 873 MW in renewables. What's important as President Lot mentioned we'll be working on accelerating this direction. We have a number of projects in the pipeline at various stages of our development related to the wind energy, PV farms.
We have both the clean projects, projects as cable pooling projects in connection with our existing sources as well as assuming the construction of both the photovoltaic as well as wind sources using the new CapEx as well as the energy storage facilities and renewables projects related to the storage facilities. So on one hand we'll be working on increasing that number, introducing new projects for implementation. But also on the other hand we'll be looking at further acquisitions, both at the ready-to-build level projects or the level of the assets that are already in operation. But here the magnitude of our involvement and potential involvement will be first of all dependent upon the evaluation of the profitability of those investment projects and the due diligence results, examination of such assets.
Moving on to the projects that are currently underway, now our biggest project is the wind farm Mierzyn for which the planned completion date is Q3, Q4 this year. The farm is moving ahead in line with the timeline, with the schedule for other projects also in the pipeline. Nowa Brzeźnica will be commissioned to Q2, Q3 2025. Sieradz Q4 2025 Gamów Sieradz Warblewo this year still. So in total now in wind we have underway 165 MW in implementation regarding photovoltaic farms. We have 199 MW underway. Bałtków and Postomino 144 MW will be commissioned 2024 whereas Proszówek Q2 2024 is at the end of the construction process. It's worth mentioning that the Postomino PV farm is implemented as part of a cable pooling project along with our Malczewo PV farm.
It's an interesting direction that will be also taken into account looking at our further size. So much for the CapEx and let me hand over the floor to Krzysztof regarding the outlook for 2024. Regarding the 2024 outlook we have two segments that we expect a higher EBITDA year-over-year and two segments we're expecting the reported EBITDA lower year-over-year. Why reported? Let me start with the distribution segment because in the distribution segment as I mentioned we are dealing with a one-off event. This one-off event is the negative impact of a change of balance of the adjustment of balancing difference as its impact was positive in 2023 on EBITDA. Now in contrast it'll be having a negative impact on EBITDA and this change year-over-year will be significant.
However, if we were to skip this balance aspect, these costs covered, costs for the balancing difference, then as a matter of fact the EBITDA year-over-year in the distribution segment will be positive. The positive impact will come from the WACC increase. Here we have a substantial, significant increase and again now from 8.5 roughly to 10.5 percentage points and this will have a very positive impact upon the results of the distribution line of business. A positive impact on the distribution line of business should also come from the revenue from other services, resolution of the collisions. This should have a negative positive impact, neutral, slightly positive impact should come from the volume. Volume I assume should be roughly flat year-over-year. So this is the outlook for the distribution segment.
Regarding the second segment that will be that the reported EBITDA will be lower year-over-year, well, the generation segment and here indications why the EBITDA will be lower we already provided in our presentation. But Piotr and me indicated the significant decline of the price on the market. The margin went down significantly, went down, CO2 went down and electricity prices went down even much more. So therefore the margin electricity will go down significantly year-over-year in the generation segment. And the second negative factor that we mentioned at the very beginning, more and more coal-fired units are being pushed out, especially our 200 MW units from the merit order that are pushed out from the merit order. Therefore we can only count mainly upon the forced operation on those units. So therefore volume year-over-year is also weaker which means a lower revenue in this segment.
Besides, one more factor will have a negative implication. It's already been having effect for some time last year, but first of all this year new conditions, grid conditions came up and as a matter of fact they mean that any forceful operation of units that also operate in the co-generation, generating also heat are accounted for by the TSO in a much less beneficial way than the previous year which means that this will have also a negative impact upon the results of the generation segment. As a matter of fact the only positive factor in this line of business year-over-year is the increase of the revenue from the capacity market. Here in this case we are dealing with simple mechanisms, an inflation-based mechanism. Increase of the revenue is the result of multiplying the up to now revenue by the inflation rate for the previous year.
That's all regarding the generation segment. Moving on to the second generation namely from the renewables because before I've been talking about the conventional generation. Regarding the renewable segment here we see good outlook and so in 2024 we have no price cap so this should have a positive impact upon the results of the segment. The second thing that should have a positive impact is the volume. Here we are expecting that the subsequently commissioned investment projects in that area will lead to a greater volume and higher revenue and higher EBITDA of that segment. The negative impact on the segment will be caused by as it happened in 2023 will be brought about by the prices of the property rights prices. We expect the green certificates on average year-over-year the prices will be lower than in 2023.
As I said, this is caused by the reduced level of redemption obligation by the supply companies. Now moving on to the supply segment, here we're expecting an increase year-over-year. Of course we assume the current regulatory environment, and this increase year-over-year should be brought about first of all by the decline of electricity prices on the market. This decline of electricity prices on a not fully hedged position in previous years should generate a positive results on EBITDA. Regarding the CapEx level, here we assume an increase year-over-year. First of all we assume an increase in the distribution segment and the renewable segment, especially in the last one; the CapEx year-over-year should significantly go up. Overall EBITDA, reported EBITDA of our group will be lower year-over-year.
At least that's how we see as of today the earnings of the group in 2024. That's all as far as our presentation is concerned. Let's move on to the most interesting part, namely we'll be awaiting your questions and we'll be happy to answer them. Ladies and gentlemen, we'll do as follows. One question will come from the audience. The second question that was sent over the web, a few questions have already arrived. Let me remind you that you can send those questions via the webcast website. The first question of course from the audience. You came. Please introduce yourselves and then and not more than three questions because we have a lot of questions then you can easily forget one of those.
Thank you very much. Bartłomiej Sawicki from Rzeczpospolita and Parkiet dailies. I have three questions.
The issue of the timeline for decommissioning the 200 MW coal-fired units, that's the question with sub-questions. Let me put it this way. I wanted to ask about the number of such units that you forecast or envisage at the end of last year I think once the capacity market has expired that you foresee them to be decommissioned. How many employees, how many people are employed by those power plant, by those units that you plan to decommission? How many jobs that implies? That's the first question. Second question I mean the renewables expansion plan because here from the presentation we can see that you have close to 700 MW of installed capacity and based on what I've read in the reports this is almost not less than 50% of the target of TAURON for 2050.
The question is whether the target for 2050 regarding the larger capacity if it's only 50% will you be able to implement that, achieve that, accomplish that target for next year. I wanted to ask also regarding the CEZ assets because supposedly they are available for sale. Yesterday a representative of the corporation mentioned that of the Czech one that those assets are available for sale but the point is mainly of the attractiveness of a sale was supposedly based to be on the location namely the Chorzów and Skawina. Those locations are attractive for you from the point of view of expanding venue or developing new generation sources. Thank you.
Let me start if you allow me. If I were to phrase that Chorzów and Skawina are very attractive, very unattractive so I position myself in the potential negotiations but my colleague will expand on that.
That would not be good from the point of view of building value for the shareholders. My colleague Michał will answer in detail to your question, but let me phrase it this way. We communicated a certain piece of information when, in line with the formal legal situation, a process has commenced to reduce, to shut down the 200 MW unit. This is due to the capacity market issues, profitability, and so on. So theoretically, if we do not get appropriate financing for those units, then in January 2026 those units should not operate, at least majority of them. However, we have one declaration and one goal that says the following: that any changes that we do are done with respect for the environment, both the regional one as well as the social aspect.
At this point in time we are not discussing the number of people, the reduction of the number of jobs. This is not being discussed. I'll not be referring to the number of people that are working there because the topic regarding the hiring, the jobs is not on the table now. We have so many investment projects to handle and so many topics to handle, deal with that now any person at TAURON Group that wants to work works and is engaged and wants to be involved with us definitely has a job. There's no such topic on the table. Let me emphasize it for shareholders, for you, for my employees and my colleagues at work. This is the situation. What we are communicating, we are aware of the fact that we are brave. We are bold.
We are talking about that situation that says that on one hand the energy market, electricity market in Poland during the transition period. I don't want to talk about the full transition but there is a kind of like a transitory period where we don't have a sufficient number of green energy sources. We know that we have to exit coal. We have units that are required at a specific time and we know that they will not earn money from electricity generation. We have a solution for that. So this way we are communicating the situation and we're looking for a solution so that handle the situation both from the economic and technical point of view.
So the time now is there is no 0 or 1, yes or no decision about the shutdown, decommissioning but I'm even convinced about that that maybe in this transition period, transitory period of developing the new model those units will be required in order to ensure that there is capacity at the time when there is no wind, there is no sunshine, the matter of finding a solution which the matter of finding a financing for that project to maintain this capacity. That's also important for me to for you to know that we are communicating that. We are bold but on the other hand we are saying with determination that we are looking for a commercial solution for this project but let me emphasize that it's not possible to discuss now any employee or labor issues. Okay.
So, not getting into the labor issues, but let me add information about those units. As of today, we have 10 200-MW units in Jaworzno and Łagisza. Two of them have a capacity market until the end of 2028, whereas in the other units this capacity market as part of the current contracts expires at the end as of the end of 2025. Apart from that, we have 250-MW sources in Siersza, two fluidized bed place-based smaller coal units at Jaworzno, two power plants that we are also using the hard coal. As President Lot mentioned, we'll be guided by the financial calculations.
We'll be looking for sensible solutions to make those units profitable but also be getting ready for the potential difficult solutions if no economic solutions have been found that will allow to extend the life cycle from the economic point of view. So that's so much regarding item one.
If it's okay with you, let me answer the plans for expansion of renewables and the CEZ asset regarding the renewables as we mentioned we'll be trying to accelerate the renewables projects. So we have a pipeline that is significantly higher by volume versus what we have now underway and we have to think about business planning to plan them in such a way that they are profitable. There are certain challenges regarding profitability especially regarding the PV. The transaction prices were still relatively high for ready to build project last year.
So therefore we are looking for options but we'll not be implementing non-profitable solutions in the renewable segment at all costs. So we are working on solutions to find solutions to do projects that will be profitable and accelerate the implementation of our goals. However, not at all costs and not in a way that wouldn't be building the value for our shareholders. So regarding the renewables and commenting on the last question namely the CEZ, let me put it this way. We'll be analyzing various options, acquisition options as part of our operations. Each time such an action has to have a business justification. There must be a business case. We must believe that such an acquisition will generate value for us, will be positive for the shareholders.
I think that one of the elements of those considerations is also an option whether or an opportunity can operate under the zero or low carbon or zero carbon formula such product could operate. From each case we'll be looking at the added value to TAURON Group whether potential diligence results will be positive and that will allow us to grow in a low or zero carbon way.
I think that's it as an answer to the first question. So now questions from the web that you have sent to us. Questions, two questions regarding Polenergia. Whether the company will be aiming to find the amicable solution of court litigations with Polenergia S.A. and another question regarding the same issue starting from 2015. The company TAURON has been in court litigation with Polenergia Group subsidiaries.
When does the company assume that the disputes will come to an end and the damages will be resolved? Up to now judgments, rulings were not beneficial for the group. Now the group doesn't set up provisions related to that. Why? Let's start myself. Krzysztof will handle and explain to you the financial issues, what the situation is. Well, ladies and gentlemen as I'm referring to a previous project investment, the matter of buying some assets will be is analyzed by us in such a way how will this impact upon the value of capital invested in that company. So in the value on the value of our company regarding the issues related to Polenergia company and the disputes that we have will find a solution that will be best for the shareholders and the company.
I will not answer a question how it will be done in detail because I said we've been 40 days on board here. This topic is important. We are analyzing it. You can see how we operate. Partnership, mutual respect and finding a joint solution is always best, a common solution. Therefore if we're able to find a solution that will satisfy both parties this is good for the company and for the owners that is the best solution. So we're always looking for a solution in a partnership manner. In the majority of cases it is possible to be achieved but there are situations that it's not possible to be achieved. And we do believe that we are able to finalize it successfully but the details are still ahead of us.
This process underway, I don't want to give you a yes or no answer especially that in the question as you wrote that this is a dispute. Therefore any declarations regarding the negotiating tactics should be a part, a confidential element at least. Krzysztof, yes? I will probably refer to the second question regarding the dispute. First of all which would clarify that the dispute is at two places. The dispute is between Polenergia daughter company as a matter of fact versus TAURON Polska Energia and the PKE so the TAURON subsidiary. It is important because the judgments, the rulings that were issued were issued versus regarding the daughter company, not TAURON Polska Energia itself. Here the dispute is still at the first instance level. An important piece of information is the fact that these rulings are regarding the principle not the amount.
So the legal point of view is of substantial import, substantively important, but even more important thing is that the dispute is very highly complicated because also our daughter company also sued Polenergia, brought a lawsuit against Polenergia due to non-performance, failure to perform over contracts that Polenergia was supposed to implement for the benefit of our daughter company. The contracts that the court told them to perform. So the issue is very complicated. So any solution that will generate value for the company will be taken into consideration by us. Why the provisions have not been set up? We set up provisions when we are convinced that such an outflow of funds will occur or the high probability of such an outflow of funds will occur.
Based on what our opinion is and what our law firm thinks the probability is, the judgment is that the probability of winning is higher than losing. So as long as we have the judgment and the law firm that has this opinion, let us remember that the certified auditor is also looking at those opinions and also getting an opinion from its own law firms. And as of now everyone shares this opinion, this position. So as long as this is our opinion, their position is and there's no negative ruling, final binding ruling is not issued that would obligate the company to make payments, so long there will be no provision set up for that. Question from the room, from the audience please. At the end of the room, yes?
Can you hear me? Paweł Puchalski from Santander. I have, let's start with three questions.
What are the company's plans regarding energy storage or what capacity will be placed on the first auction this year maybe? Second question. What about TAURON's plans that were once announced regarding the construction of 2,000 MW in gas-fired capacity? And the third question, everyone is now emotional regarding what is going to happen to the G tariff, price of electricity but taking precedence I'd like to ask a question. If the bill paid by the consumers to go up by several more than a dozen PLN I'm curious what will happen to the tariff, distribution tariff. I understand the tariff electricity is to change somehow. Don't you see a risk that the distribution tariff will be reduced so that the overall invoice should go just up just by more than a dozen or so PLN?
Let me start answering a question regarding the energy storage facilities.
Now we are in the process of developing our own energy facilities, storage facilities. We have a number of locations in the group regarding the detailed capacity per auction. Final decision will still need to be made. We are more about hundreds, tens, hundreds not tens megawatts. This is a project that we plan to certify for the capacity market but independent of that we are working on the product that will be added to the potential renewables product that will be part of our acquisitions. This is the order of magnitude we are talking about. We had some general certification for some of the size but regarding details they probably still depend upon certain decisions that we'll be making over the next few months. Regarding the second topic if I understood correctly the question is about the gas investments.
Historically we had a project to build a large-scale unit in Łagisza. Now we are analyzing the options for this site. We are analyzing various volumes or magnitudes of sources that could be placed there. We are in the process of analyzing whether such investment project we should implement but let's say that there are also variants with smaller sources that we are seriously looking at in this site, at this site. So as of today we don't have large-scale project that would be at the implementation stage regarding gas-fired project and also we are considering various directions that would allow us to produce electricity in the cogeneration mode but as I said a large-scale, utility-scale gas-fired power generation is not being implemented now. Regarding the third question about the tariff, I would hand over the floor to Grzegorz and Piotr.
Proszę państwa, ladies and gentlemen, before I comment on what can be ahead of us, let me mention two things. First of all, in our understanding, the regulator is trying to find a compromise for the interests of stakeholders—in this case, the companies and the trading companies or the distribution companies. The point is that the electricity tariff should always reflect the cost of the operations of the utility companies and their economic position, financial position.
The second topic you probably know very well what I'm driving at is the fact that irrespective of what the level of electricity now is on the market, on the spot market or in the intra year the so-called, the majority of electricity, the overwhelming majority of electricity for the customers we have hedged already therefore there's a relatively small impact over declining price on our profit and loss account and not leads to any windfall profits, excessive profits. So regarding the procedure well of course this is a piece of information is a public secret but this process underway. All the time we are strongly involved, engaged in this process along with the Ministry of State Assets.
We are thinking about the best potential solution, a compromise solution that would give us an opportunity for us to exist, to operate in an economic manner, to sell electricity and at the same time will give the customers with the level of assets that leads to instability regarding their meeting of obligations, paying in of invoices. So that there's no situation that due to too high level of electricity prices that the stability of obtaining the products such as electricity is affected. So the important thing is that we are talking about the fact that by the middle of this year we have the prices frozen. So we have a 39 PLN tariff in the part related to the trading operations and the price is frozen to around 414 PLN. And this balance we get as part of settlements management, as compensation payment.
The second half of the year we are talking about now that freezing can be limited. There are various options still on the table and that would mean that the supply subsidiary will not be able to have access to such a level of compensation payments. That has an impact of course upon our financial result, financial earnings. Both the standalone TAURON Sprzedaż and TAURON GZE as well as consolidated earnings. This is an element now of our considerations, our discussions. Definitely we expect that some changes will take place regarding the tariffing.
Regarding the distribution tariff, you are right to observe that this tariff there was no freezing of prices but requires an increase, calls for an increase of the level of price and the level of cost that would not be covered at this point in time. But should we treat it with obligation towards the customers that the average level of electricity prices including the distribution tariff should not go up by more than a certain amount, then in my opinion you should look at it in conjunction with reducing of electricity prices for the trading part, increasing the price for electricity in the distribution part.
Another question that was sent to us. What is the net debt of the company? The net debt is roughly PLN 12.9 billion. Let's go back to the questions from the audience.
Good afternoon, Rafał Zasuń from portal WysokieNapiecie.pl.
I would like to ask three questions. The first question is regarding the G tariff and the draft law. Don't you think that it may happen so but the prices keep falling then next year the president of the Energy Regulatory Office will ask you to reduce the tariff and then in such a situation this contracting, optimistic contracting may turn out to be too optimistic because the draft act gives such an option for the president of the Energy Regulatory Office just to say in modify I mean this contracting is applicable to 2024, 2025 also the measure it was contracted already. Yes? Correct? And the second question regarding the 200 MW units. So recently Enea I think demonstrated that the time of operating 200 MW units below 4,000 hours. Can you disclose how much time your 200 MW were operating? Within some range because the load varies.
Is it below 4,000 hours or maybe below 3,500 hours? And the third question is regarding the potential changes to the distribution. It's common knowledge what the coalition parties said before the elections about the spinning off of the distribution assets. This topic is not really talked about anymore. In your opinion what impact upon the operations of the companies would have the potential change of the model of financing the group by the distribution segment simply limiting the ability to pay out the dividend by the distribution segment to the parent company and stripping out the, taking out the distribution segment from the cash pooling mechanism?
Thank you very much. I'll start but as you can see we are discussing in the meantime who's able to give the biggest value for you answering the questions. First thing: do not argue with the regulator and the owner.
But the first principle, therefore, ladies and gentlemen, since I will not be commenting and discussing the law but has not been signed into law yet. Let me say one thing. Of course once this law is signed in, act is signed into law and I can declare here that once it becomes law we'll get the best out of it for our shareholders. Of course with respect for the customers because this is the most important thing. So on one hand it's a matter related to the fact to follow the law and be in line with the law and respect the law and do business on the other hand. So definitely waiting for this final decision.
However, it is also important that our view is that we, our opinion that the free market is the best regulator, the best solution and in the medium and long term it will be profitable for all of us. I'm talking about the customers and investors. Free market namely market price, namely the real margin, namely that means also competition, stimulating competitions, the biggest bargaining position, biggest opportunities for customers. So looking in the long term I think I'm of the opinion that the free market based solutions are best especially that we understand also this issue related to the regulations. We had so many years of freezing of the price it would be difficult to allow that it all is out of control for all of us and the customers would have very high invoices.
That's not the point, but looking ahead, we should be getting closer to the market-based price and free this segment as much, liberalize this segment as much as possible, especially taking into account the fact that at the moment the balancing market model will change. The portion of renewables in the energy mix will be getting higher and higher, and therefore the price differences between the individual seasons and the times of day will be getting bigger, and there'll be more and more need for the so-called impulses and engaging customers in the energy demand optimization. As an energy sector, we'd like to, we'll be trying to convince the customers to shift that consumption to the time when the wind is strongest and the energy that is cheapest renewables is available.
The dynamic tariffs are strictly connected to the price of electricity and the success of implementing the dynamic or time based tariffs is not just the technique but the prices that are diversified will incentivize the customers to respond to the needs. That's one thing. I don't know if I answered the question. Maybe not in a way that could be put in the headlines. The matter of contracting for 2025 that Piotr will answer that. Well here the answer is simple. I prepared myself for this question. We have 23% of electricity purchased for 2025 now. We have started hedging this portfolio in January and we have a linear roughly assumption regarding the hedging.
However, definitely what will happen as part of the entry into law of this act will have an impact upon the pace of this contract because, you know, there's a version that being considered of setting the tariff level for the time frame longer than the end of 2024. So, depending upon what will happen there, definitely we are considering and probably such an option will be on the table. We evaluate or consider the acceleration of the contracting so as to hedge ourselves against the market risk ahead of time before, by the end of, by the middle of the year. But don't you think that if everyone accelerates now, accelerates now the prices will go up? That's a real risk. Let me note that we still have a situation where since December 2022 the Polish public service obligation has been abolished.
The companies can hedge their positions outside of the exchange market. So I think it's a formula that will, that may mean I am not saying that this is definitely gonna happen. It may mean that the level of its price will be at the right level. But provocatively I can say that it's probably good. But if the prices were to decline then all the trading companies will be able to hedge this product cheaper for final consumers and the tariff price will be lower simply for 2025. Yes but it can go up too if everyone starts now buying. So the demand will go up in any direction we want to optimize this purchase.
Definitely, if we are talking about the issue of accelerating the tariffing for 2025, as I mentioned before, our strategy of a balanced approach to risk management will be trying to a large extent to hedge this position this year despite the fact that we are expecting that the spot prices will be lower than 2024. To add to that, what's your strategy? How much on the power exchange, how much over OTC? Yes, we have a strategy, but we will not answer this question. With all due respect for the shareholders who would reduce our competitive advantage. We can't, we don't want to do that. That was shown on the first slide. Let me put it this way if I may join the discussion.
This is one of the basic of the most important elements now that we are working on is the fact that any interference into the model that is in place leads to this type of impulses or threats. It is so that the situation is at this. We have to face it. I think that this law and its final version will be published as soon as possible and approved. We have to get into the details regarding that, go through the entire process of negotiations with the Energy Regulatory Office, with the president of the Energy Regulatory Office and we'll see. So this is all underway. It's difficult to declare now anything. We have to be, we have to be a reasonable manager and that's it.
We believe in the wisdom of the regulator, the wisdom of the market and the wisdom of the owner and this is the direction we are taking, we are following. 200 MW units. Let me put it this way.
Yes go ahead.
I can put it this way. First thing we are observing that the load over 200 MW units is dropping. If year-over-year 2023 was giving a decline over the load of our 200, 100 MW units I don't want to give you any details but 4,000 hours I would say is a relatively high number looking at realistically at what the load of this unit is. So vis-a-vis looking at the full of the equivalent our figures are lower and we can see that the process is moving forward, is progressing.
This year, the more renewables we have in the system, the more 200 MW units are being pulled out. Therefore, it's a phenomenon that will be more visible in the coming years, and that's why the discussion and our opinion about the potential decommissioning in case of the lack of support, because without the Capacity Market support those units will not be able to save themselves from the market. Distribution, as you have seen on our slides, is our jewel and the crown of our company. Distribution is necessary to operate. On the other hand, it is indispensable to create a strong business model based on the customer distribution, renewables, energy storage facilities, and so on. So, we are not analyzing or planning to spin off distribution supply.
We are strongly tied to our colleagues from the distribution line of business, the entire distribution assets, and our plans in the vision is strong growth, strong expansion. We want to do everything, but the profit, the value, the capital that is generated by the distribution segment is allocated in development and expansion and growth. This is the best solution and that's it. What is the dividend from the distribution segment in visit for last year? Regarding the dividend from the distribution last year, it wasn't paid out. That's one piece of information. I want to kind of explain this issue of payout or non-payout of dividend from the segment. So we have a central financing model. Distribution doesn't get financing on its own. Distribution is financing the group. As a matter of fact, the most important thing is the level of the CapEx in the distribution line of business.
Of course it could be financed internally through a lack of a payout of a dividend or through a potential additional financing from the point of view of a group. It can be fully financed from the, by the group assuming that the dividend's paid out. So the very model that's didn't it's paid out or not paid out doesn't have such a big importance that you, the market, may think. As I said, last year it wasn't paid out. Here, let me say that this cash flow in the distribution segment, I am basing myself on the data that's available, that's publicly available. So data for 2023. This cash flow in the distribution segment, one can say, was close to zero. So the level of generated cash versus the cash invested was fluctuating around zero.
So it's difficult to speak, to say whether somehow we made it more difficult or less difficult to maintain, to maintain the level of CapEx in the distribution. This level is dependent upon the CapEx program that we agree upon and the expectations not based on the payout of a dividend itself. And referring to a question about the model of financing for the group as the CEO mentioned our model entire model is based on the consolidated bidder of the group. It's not so it's based on the individual subsidiaries. However it's based on the consolidated bidder. So irrespective whether the dividend is paid out by the distribution or not it is in fact included in the model and from the financing model by the banks it is treated as it is as part of one group.
Like, banks are not asking us whether dividend in the given year was paid out and based on that give us financing or not. Similar to the question about the cash pool. Let's remember cash pool is an operational tool. As a matter of fact, it optimizes the flow, daily flow of cash within the group, but it's not a source for financing in the medium or long term in the group. Therefore, when the given day there's a shortage in one subsidiary and the second subsidiary has a surplus, so we effectively balance it, offset it within the group and this way we optimize the financial costs. However, the cash pool tool is not a formula to be used for feeding cash in the medium or long term one segment based on the money from this other segment. Have I answered your question fully?
Yes. Thank you.
What project will you apply BGK for? Let me answer this question. We are of the opinion that National Recovery Plan can be a big opportunity for TAURON Group. We are getting ready for using a financing . Do you have any projects to be implemented using the funds from the National Recovery Plan? from that plan in various areas. The energy support fund that the biggest part of money is to be allocated to EUR 17 billion that is to be used for loans. Definitely for us a great opportunity regarding the distribution segment. The details are not known regarding the way these funds will be allocated. We know that BGK Bank is to be the operator.
We'll be closely watching it, and our intention is that we should finance the biggest possible portion of the CapEx in the distribution using the aid funds, using the funds that could be allocated as part of a National Recovery Plan. Also we are working and partly still working on that. We have some of them is ready. Number of projects in the heat area, energy storage facilities, renewables and modernization of the lighting or management, lighting management systems. We also use finance, use the funds from the National Recovery Plan. We hope that the detailed rules for allocating these funds will be developed in the post as soon as possible and the biggest area with respect to the use of the aid funds we assume that the distribution will be that area. But also we want to support other segments as well using those funds. Question from the audience.
Yes, excuse me. Okay. Good afternoon, Andrzej Kubacki, brokerage office of BPS. I have three questions. The first one is, don't you think that it would be good to revise the model of reporting in the distribution because your result after individual quarters was very variable. The first one was around PLN 1 billion and the fourth one it dropped down, dropped to PLN 100 million. Other utility companies didn't report it this way so one can see that this model could be more stable. But question one. Recently we had a lot of confusion regarding the core assets and maybe instead of again asking about some speculations let me ask realistically what is happening in your daily work today. I don't know whether you're preparing a strategy only for your assets or in cooperation with other energy groups.
We are preparing a joint strategy, a common strategy, or the owner of that process is more of a ministry, or you just supply data. That's the second question. And the third question also in the context and inspired by the discussion about the G Tariff and generally electricity sales. Don't you think that a bigger, bigger problem for you is becoming the short position on electricity supply? Definitely a high one with emphasis on the G Tariff because you can see that this segment is really under fire recently. So that's my three questions. Thank you.
Let me answer the first question. That's true. You're right. This quarterly distribution is not uniform in our segment. We of course also are looking at that. To a large extent it stems from the prices that the company or the cost of the balancing difference that the company has to incur now.
Of course we are dealing with very strong fluctuations year-over-year. On one point I already mentioned during my presentation, part of the presentation is due. It stems from the model of the Energy Regulatory Office, president of the Energy Regulatory Office model. At least other companies at least the biggest one has a similar model in place. I'm talking about the changing the balance of the upward adjustment regarding the second issue of this non-uniform distribution quarter-to-quarter. We have uniformly distributed revenue and non-uniformly distributed the cost of the balancing difference. The cost of the balancing difference is much higher in winter quarters than one can say. So in Q1 and Q4 especially you can see that it's visible in Q4 and much lower the cost of the balancing difference happens during the summer season.
We are discussing jointly with the company how to spread it more evenly and potentially it's possible but in the subsequent years will be showing a more uniform distribution. But as I mentioned this is stable, uniformly distributed revenue over the year and non-uniformly distributed the cost of the balancing difference. That as a matter of fact meant that we had weak result in Q4 and much better result especially in summer quarters.
It's okay? Another question. Core assets. A favorite topic. We are focusing on TAURON, on TAURON Group. So anything we do is related to this company and on one hand we are looking at how to implement the growth strategy, renewables, grid and customers orientation. That's one perspective and this is short-, medium-, and long-term perspective.
The short-term perspective is the 200 MW units that we have to find a solution how to finance the maintenance, the operation, or to find other solutions such as decommissioning. But we are analyzing it, and we are fighting to sell this capacity on the market for the economy because we know it's needed. That's one point. Regarding the overall worldwide, global model, the Poland-wide. We are reading in the newspapers, and the Ministry of Climate or Ministry of State Assets is the owner of that process. I would rather not speak about this topic because I can read it in your newspapers. All this information, we are focusing on our company.
Okay? Thank you. Okay. The final question. Have intention, you had the intention regarding two issues. Let me, I suppose what you're referring to. Let me expand on that.
Regarding our operational business we are hedging the positions based on the risk minimum, risk neutral position. So we're trying to hedge any supply subsegment separately but assuming that this is the most probable item to be hedged. And regarding the mass customer segment this is a formula of a gradual follow the market formula but regarding the business customer segment this is a back to back. So any contract on the sales market, on the supply market has an equivalent contract on the purchase market. Of course we've got a certain risk mandate. There is some mismatch between these issues. What products are tradable?
For instance, quarters, months and so on. Then there is some open position but we are trying to take advantage of a correlation effect and hedge it with other products.
I'm staying unequivocally here but we are applying the not a short position policy but a neutral position policy. You're probably referring to our simplified balance of production from the TAURON generation assets versus our sales supply portfolio. But true that our stable and we expect that over the next some time stable production will be roughly between 10 and 12 terawatt hours. If the volume, renewables volume goes up will be increasing but as of today I know that over the next three years the 12 terawatt hour level is the production output that we'll be able to generate and the demand as you know very well based on the portfolio is 30 terawatt hours. So we have to buy, buy a lot on the market. A preferable trading place is for us the Polish Power Exchange, generally the anonymous platform.
So we think that this is a place where safe trading can take place. Of course the entire, the margin economy is burdensome, it's cumbersome but it's a good platform because of the security of the transactions. And of course inspiring the market participant to trade on this platform gives us something that cannot be overappreciated in the stable market index. So this is something that we use as a reference in cooperation with the customers to develop products, to apply pricing models to negotiations. A very important in our opinion thing. So I mentioned before about the Power Exchange obligation regarding the direction. We are of the opinion that the Power Exchange obligation could make sense if there's no other way to stimulate to market participant to trade on the Polish Power Exchange. That's how I would put it in an arbitrary manner.
However, it doesn't mean that we'll not be willing to take advantage of a bilateral market for hedging our positions. Definitely we'll be applying various forms of long-term contracts. Those are called PPAs. So this is how we'll be stabilizing this market. But I agree with you that having a trading position regarding the short structure is a certain challenge. There are entities that have a long formula in place. It's clear that we'll be forced to purchase more electricity from outside the group. Now the question from the web. Net debt increased quarter-over-quarter isn't driven by the working capital. Can you comment? Is it related mainly to state compensation? Where will this movement reverse? And net debt went up quarter-over-quarter. It seems that the reason was a change of the working capital. Working capital. Can you confirm it?
Is it related mainly to the compensation payments received from the settlement manager? When will this situation reverse and normalize? Well, already during the presentation I said that the deterioration of ratio is due to the worsening of the working capital position. That's true. That's related to the settlement of the compensation payments. They are applicable to last year. They are being settled this year. We expect that due to the planned expiration of compensation payments a lot is dependent upon regulations. It's a matter of it being reversed on the net capital. This should take place this year. This should be reversed.
A question from the audience.
Good afternoon, Marek Strzelecki, Reuters. I wanted to refer again to the statement of President Orłowski about the renewables and the pipeline of the project. Understood that the pipeline is greater than what is being implemented.
So therefore two questions if I may. What's the order of magnitude of product that you're looking at regarding acquisitions? And does it mean that you have a chance to have a level of green capacity at the end of the year to be higher than what we are showing and what that level could be? Thank you.
Well let me put it this way. Our pipeline is made up of several segments. The first segment is the own in-house development and this is we have communicated historically. The PV farm in Mysłowice have an operation to do the second stage with a capacity of more than 50 MW. We'll be doing such a development commercially outside of the land owned by TAURON Group as part of the TAURON Zielona Energia. Subsidiaries so this is part of the pipeline. We also have the so-called hybrid development.
So the contracts with developers that are related to the purchase of product once they get ready to build status. We have a connection earlier. We wait for product to pass all the milestones and then such projects we acquire. But we are also looking at the acquisitions of products under the ready to build formula. So with a full permitting process behind and the acquisition of the projects that are already in operation or under construction. I don't want to refer to detailed figures because this pipeline is live every day taking advantage of the Power BI. So I can, let me put it this way. There are different stages of development. Some of them have no good connection permit yet in place. So looking at the vertical portfolio is several times higher than what we are implementing. So this is the order of.
Doesn't mean that all those projects will reach their implementation level because as part of the planning process, especially with respect to the grid connection permits, obtaining of those permits, some of those projects will be disqualified. So what could be included this year is the ready in operation farm. So we are looking at the acquisition. We have different stages of progress but we don't want to make declaration because we have to have a good relationship between the purchase price and the profitability ratio assumed by TAURON. So it's difficult to if we can manage to win those processes. What we declared is the result of today's pipeline. We'll try to increase it but the three parts of the portfolio we are growing will not be contributing to the capacity this year because the construction process that will start this year will materialize next year or in 2026.
However, we managed to do an acquisition. We'll be trying to do it, but it has to be profitable. It has to make sense from the point of view of building value, creating value.
Let me just add another question. I'll try to ready to build and ready. What is the pool of projects that you're looking at?
Let me put it this way. With ready projects, the situation is such that there are certain transactions that are being initiated. Then there's an offer of non-binding offers, the diligence, binding offers. So usually that's a relatively short period of time. Usually it's single project that are as part of a transaction and this pool is alive all the time. The transactions start and fall out of the pool. So it's alive. It's not a longer pipeline.
However, the ready-to-build projects at early stages are the projects that are maturing for longer time at different stages. So therefore we're talking about much higher values. There are at least at various stages of development hundreds of megawatts or maybe even more that are being prepared for the potential ready-to-build transactions. However they could materialize at various points in time depending upon the permitting process evolution or trajectory.
Okay. Another question from the web then. How is TAURON preparing for the change of the ESRS disclosures? Of course and we understand that starting from next year we'll be obliged to report in this regard. So we'll be reporting for 2024. We'll set up a special team for that as a group. Also wherever we have doubts we'll be using the knowledge of external advisors.
However, the most important thing is that the entire team is working on to make that report be able to publish this report next year. Another question from the audience.
Paweł Puchalski once again. I'd like to add another question. What level of working capital are we talking about this year? And the second question. TAURON has its share in the offshore project. Is it planning to develop it on its own, take part in the auction or will it be as part of a consortium of PGE and some other partner? Or third thing, your question was raised here about the net debt. However, I would be a bit curious here because I would be very happy to see in your presentation that overall the total net debt including the green bonds but also the unpaid invoices for CO2.
Here, I don't want to glorify another company here, but another energy company presented this way. The economic net debt if we open to the customer and our customer is also a fund and so on. So it would be worth to show it towards the true debt. Well, the working capital we expect the reverse of this working capital. We'll not be spelling out the detailed values. We just provide estimates. So here I will not give you the precise figure, but definitely it'll be done better than last year. Let me answer right away. The economic net debt. We know the presentation of another large energy group. I understand that they are showing it. In that case, let us remember issue over CO2 emission allowances and the provision for it has a much different weight than at TAURON Group. Of course we could consider the presentation.
We'll discuss it in the context of this customer open attitude regarding the hybrid bond. Well, I can give you in the report it is stated, it's provided but that's true. One would have to walk through a number of pages of a note to get to that. The level is about PLN 2 billion. So this is that would be the difference between net debt if it were to be increased by the hybrid bonds. Of course with some error for margin because some of that bond, some of the debt is in euro depending upon the FX rate as of the end of the year that's at least the order of magnitude.
I would respond to the question regarding the offshore. As of now we are 45% partner in the Baltica 7 resort. It used to be PGE Baltica 4 Ltd.
So we are in a partnership in that venture jointly with PGE. One could say that the development alone by TAURON under today's ownership structure would be difficult, but we are in the process of discussing the structuring this project along with PGE. Our intention is that jointly as part of a shareholder group to bring about the project to be ready for auctioning and ready for development, for construction and carry out this project. But as I said, we are in the process of working out the details of a model for the implementation of this project.
Okay. And a question from the web. Does TAURON want to increase its role on the heat market? Let me answer this question as well. I would look at the heat market from several points of view.
The first question is that we are the owner of a heat district heating networks including the Silesia and Dąbrowa Metropolitan Area which feeds a large portion of this area. So the cities of Chorzów, Katowice, Dąbrowa Górnicza, Sosnowiec. So this is a large district heating network system that we want to organically increase the number of customers connected to the network. The district heating network is a good competitive solution. Also important from the environmental point of view we'd like to organically increase the number of connections to the network. The second element is our generation assets for this district heating network. Now a large portion of customers as part of Silesia and Dąbrowa Metropolitan Area is supplied from external sources.
We know that the heat market must be decarbonized, transition, transform and we are working on various concepts regarding the product in this area depending upon the profitability of those investments. Profitability may happen but it'll be more effective, more profitable to increase the number of our in-house sources in this district heating network but it all will be the result of economic calculations and this way our share in our district heating network where we have a network could go up. So we want the district heating net heat market to grow organically. We'll be looking for alternative solutions but as far as generation sources are concerned that also have an impact upon increase of our heat generation. Another question from the audience. I'd like to ask refer to. Answer on the issue related to electricity prices, the draft act, draft law.
Both, you've seen this draft that's already published, and if I may get an answer from you. Confirm or deny. I understand you'll be paying some charge, some allowance due to the fact that the maximum price, the price cap is in place but there are compensation payments. If there are compensation payments, there'll be some right of some charge, some allowance because, frankly speaking, I wasn't able to find out based on the draft. Maybe you can confirm or deny that. Also regarding the same issue. I understand that you are 23% contracted for next year for the delivery in 2025, 23% contracted. I understand that by the middle of May, at the time when you'll have to submit your tariff applications, to have a majority of this volume contracted for 2025.
Regarding this comment on the draft act of law, I'm not able to answer your question. There are several unknowns yet. We ourselves do not know the details, operational details how to conduct, to implement this intention that's in the law, the act of law. Definitely it'll happen this way, but a new price cap, freezing price of 500 PLN comes up and in reference to that and the freezing between the 500 PLN and some Y price will take place, but the Y price is not known yet. So we don't know what level it is. If it wasn't for the partial departure from freezing, price freezing, then we'll say that difference should be naturally between 500 PLN and 739 PLN simply. Simple as that.
I suppose it's not going to be that way, but regarding the issue of what you touched upon the second question, what we are planning to do regarding the level of hedging, now, for now, the 23% level that gave us the comfort that if we hedge until the end of the year we'll reach around 80%-90% hedging contracted. Expecting that on the spot market we'll have to optimize this position in 2025. This is this level of hedging the market risk that works for us. Any form of accelerating that means through the process of approving the tariff for 2025 already introduced certain pain to the system and to the model itself.
Then we'll have to accelerate very quickly with hedging both on the forward market as well as taking advantage of this opportunity of ability to offset the net position from the generation position because that's probably what we'll be doing because we want to avoid this being exposed to risk. We don't want to find ourselves in a position where we latch on a sales price and due to some uncontrollable impulse on the ETS the electricity price will go up and we'll not be able to make it with quick actions to stay within that position that we are exposed to.
Okay. So another. I do hope I haven't made a question from the web. Can you give an estimate of distribution one of related to grid losses and cash or non-cash elements?
So in Polish can you give an estimate for this year regarding a negative impact related to the grid losses in the distribution segment? Is this a cash element or a non-cash element? As I understand this is applicable to the one-off event generated around PLN 600 million EBITDA in 2023. So with pricing effect regarding the balancing difference balance I expect that this year is going to be around PLN 400 million. This is what should be the estimate effect. However it is a non-cash impact. Okay. Another if there are any questions from the audience I can see. So another question. Excuse me. One more question if you allow me a bit philosophical. The electricity price freezing system as a principle as of the end of 2022 was to be self-balancing. That was the argument.
And your profit of PLN 8 billion from the compensation payments and more than PLN 800 million of the charge of the write-off didn't balance, didn't offset. So I wanted to ask about the reason why didn't this system self-balance itself and the budget had to add PLN 12 billion for last year to this system that was supposed to self-balance itself. Well, let me answer, touching a number of issues related to that. First of all, PLN 8 billion was not profit. PLN 8 billion was revenue. So that's a major difference regarding the difference between PLN 800 million charged to the fund and PLN 8 billion in our group. Let us remember that as a principle the charge was done in the trading and the generation segment, whereas the compensation payments were applicable mainly to the G Tariff and to a small extent SMEs and JST.
I think in accordance with the generation line of business versus the supply segment position as you noted earlier, we have a big disproportion between the generation segment and the supply segment. That's why the difference. However, the system, the question is not to us as a matter of fact, the system was supposed someone who made these calculations at the central level was supposed to self-balance itself. So it was to balance itself from all generating units plus the payout of compensation payments and the profits from all the trading companies. It's not a question only to TAURON whether it was calculated correctly. The question of this PLN 8 billion because it's confused often. It was as a matter of fact a difference.
I'm talking about the G Tariff, the difference between what the customer at the end of the day had invoice over 400+ PLN and what was agreed upon in the presence of the energy regulatory office tariff. The tariff was based on the cost of electricity purchase and the justified cost of the supply segment. So it's not so that we got PLN 8 billion in revenue. We got the compensation payments between the difference between what the customer had on his invoice and what we agreed upon in the tariff from the president of the energy regulatory office. That's what the amount came from. As I mentioned we are one of the largest players on the supply market and a little bit small player in comparison to our largest generation company on the generation market.
That's why the disproportion between the amount charged to the fund and the compensation payments received. Another question from the web. What about the plans regarding the dividend from the profits for 2023 and what dividend policy in the future? Let me also answer this question. Well, regarding 2023, that's why I was emphasizing that we have a profit at the consolidated level, but the dividend is paid out from the standalone profit. We had a loss on the standalone level. So this year we'll be asking the general meeting of shareholders to cover the loss incurred at the standalone level from the supplementary capital. Regarding the dividend policy in the subsequent years, of course here we have a clearly laid out dividend policy and we'll be doing our best that in the future the shareholders get the dividend. Of course we have to do it sensibly.
So up to now the company has been relatively highly indebted, but I do hope that thanks to implementation of our CapEx projects we'll have an increase of the value for shareholders from a point of added value of the group and a potential increase of the share price on the exchange and ultimately the group would like to pay out dividend for the shareholders.
Okay. Another distribution segment a bit that was only PLN in quarter 4 23. The balancing difference, revaluation seems to be positive. So in Polish why the EBITDA of distribution segment Q4 24 was only PLN 100 million? Why the balancing difference seems to have a positive impact in Q4 last year include when you deduct the value for the entire 23, the value for the nine months of 23?
Well, it's difficult to have an unequivocal response to this question, but I understand that the assumption of showing the quarter results is to show it quarter-over-quarter. So we are showing, as a matter of fact, Q4 2022 versus Q4 2023, and the main element that differs, that the difference between the two quarters is truly the cost of the balancing difference. I said before there was no uniform distribution of that over the year but also a high price of purchasing electricity for the balancing difference. So for the grid losses to be precise and this difference year-over-year is 800 PLN. So in Q4 last year the cost of purchasing electricity was 800 PLN lower and in addition it's compounded by an increase because this year quarter-over-quarter there was way higher, the grid losses were higher.
So if you add to that the volume multiplied by the price increase quarter-over-quarter, it led to such a big difference. And as I said, why between quarters the difference? Because we have a uniformly spread distributed revenue. So revenue in 2023 was significantly higher due to an increase of the tariff rate. However, we have a non-uniform distribution of the balancing difference. So the grid losses are non-uniform over the year, and we are reporting not also not in a non-uniform way. And as I said, adding to that and a significant increase of the price year-over-year. That's why the difference, big differences between the quarters. Okay. I declare that the last three questions we have.
So I'll inform you that this is the longest conference we had over the last five years that we have so that you know that you're taking part in a historic event for TAURON. You're declaring gentlemen that's the first of the last three questions. You're declaring think shareholder interest for years TAURON has been implementing CapEx projects well below the cost of capital. Well will this change? Let me answer this question. I will partly disagree with this question because the biggest CapEx we are allocating to the distribution segment that is based on the regulatory WACC that in our point of view compensates, offsets the cost of capital regarding the other CapEx project investments in the renewables. Here also there were no write-downs. We are of the opinion that these investments at the appropriate level of profitability.
Of course the group had certain investments in coal asset that was partly written down. Definitely that was related to some of the projects. Let me answer that we as a management board first of all are guided by the economic ratios. We have an investment committee that has 3 or 4 members of the management board and the key directors. At each time we are evaluating the profitability of a given project based on the discounted cash flow formula. Also that's related to the implementation of the project. What's important we're trying to optimize this project potentially regarding the technical creation and the selection of the best projects that are then implemented.
Of course, the entire economic evaluation of those projects is dependent upon the assumptions, and here we are trying to work intensely to have a realistic approach to the assumptions, especially regarding the price trajectories, which are a key element of elements related to the generation. Also, other operational elements into benchmark them versus the assumptions provided by the external providers. Assumptions based on our current investment projects, the assumptions based on the construction contracts and number of other agreements, contracts that are concluded at the stage of preparing a project. First of all, I don't think this is a true statement is true regarding the majority of the CapEx projects historically implemented by the group. Secondly, we are declaring that each time we are guided by the economic calculations when choosing the investment projects for capital allocation. The penultimate question.
How do you evaluate what would be the compensation payments for you in 2024, 2024 for the GTRF? Will you be on the positive side versus the frozen 500 tariff of 500 PLN per MWh versus your hedged price?
Yes. That's our opinion. That's what we think. Now the development is such that it seems that the cost that we incur to hedge the 2024 tariff will be included in the compensation payment, covered by the compensation payments. That's what we hope but it's not our own judgment that this is what will actually happen. Ladies and gentlemen, the final question this year: will the sustainable development report was partly prepared or partially prepared for the ESRS guidelines? Well, listen to man. We have an assurance that all the reports that we have prepared meet all the legal and formal requirements.
So if this is a requirement this year, that I guarantee that's how it was. However, if it wasn't 100% required, so definitely we are preparing those reports. We only took into account all the requirements that will be done for this and the subsequent year. Either it's one-to-one implemented or maybe it's prepared based on the future convention, convention of the future requirements. I hope this is sufficient explanation. Let me add. As I mentioned before, for 2025 we'll be fully publicizing in compliance. According to the report, we have to audit it. We have a pre-report. This team is preparing this fully, this report for next year. So next year we'll be fully compliant with the ESRS guidelines. Okay. Ladies and gentlemen, you asked all the questions. We answered all the answers. Thank you very much for this meeting. We wish you a pleasant weekend.
Let me just remind you that I'm inviting you to the next meeting directly after publishing the Q1 2024 report. We'll notify you of the date of the conference in a matter of days. We wish you a good weekend, pleasant weekend. Before the pleasant weekend, finally, in the beginning I told you one thing that people are the power. So let me put it this way that the team that's sitting in front of you here will do our best that you as shareholders are happy and proud that you hold our shares. Briefly, just to know how we operate: the summary of this guy is building and looking for new assets and making sure that our grid is operational. This guy is collecting money for it and reporting how we are doing, what he's doing.
Piotr is packaging it all, hedging it all and delivering to the final customers. So combining assets, combining customer and doing reasonable return on that. This is the free. I am trying to provide support for my colleagues and not to be an obstacle for their operations but I declare once again that we'll be in this group, this team for the subsequent meetings and I invite you to the next meetings. I am looking forward to further difficult, challenging questions. Thank you very much. Thank you.
Thank you.