Engie SA

PAR:ENGI

Earnings Call Transcript 2021-Q1

[Aarti Singhal, Investor Relations Director]

Good morning, everyone. It's my pleasure to welcome you to our Q1 results and strategic update presentation. We have 3 speakers this morning: Catherine MacGregor, Judith Hartmann and Paulo Almirante.A quick view of the agenda for this morning. We will start with our Q1 results, with a brief presentation on Q1. This will be followed by Catherine leading us through the strategic update, putting strategy into action. And she will be joined by Paulo Almirante on Renewables. And following which, Catherine will walk us through Energy Solutions, Networks and Thermal activities and future energy systems. And then Judith will present on the capital allocation and financial outlook, and finally, concluding remarks from Catherine. And as usual, there will be a Q&A at the end of this presentation, where you will be able to ask your question directly to management.And without further ado, I'd now like to hand you over to our CEO, Catherine MacGregor. Thank you.

[Catherine MacGregor, Chief Executive Officer]

Thank you so much, Aarti, and very good morning, everyone. I am so pleased to be here with you this morning to, first, present to you quickly a strong Q1 2021 performance and then switching gear to show you how we are putting our strategy into actions.We had indeed a strong start to the year in Q1 where we delivered 10% organic growth in EBIT, and that was underpinned by solid operational performance. We have also made strong progress on our group simplification. We have set up a new organization, which I will go back to later. And our strategic reviews are on track. We actually continue the rationalization of our portfolio with the disposal of ENGIE EPS which was announced and the exit of activities in Turkey.For the full year 2021, we are reaffirming our net recurring income group share guidance in the range of EUR 2.3 billion to EUR 2.5 billion.Our first quarter was indeed underpinned by solid operational performance. We commissioned 0.5 gigawatt of renewables, including our first fixed offshore wind project, the SeaMade in Belgium, and we are on track to deliver the 3 gigawatts that we have targeted for 2021. Also in Renewables, we have successfully integrated the 1.7 gigawatts of Portuguese hydro assets that we acquired in December last year.Our Networks maintain high level of safety and reliability. And in Client Solutions, the activity level was fully in line with our expectations. Finally, our Belgian Nuclear assets which records level of availability at 95%, which is to be compared to last year Q1 2020 at 69%.With that, I will hand it over to Judith for her financial commentary of Q1 results. Thank you.

[Judith Hartmann, CFO & Executive VP]

Thank you, Catherine, and good morning, everybody. It's great to be with you today. So indeed, a very good start into the year. You can see that we had growth on both EBITDA and EBIT, and I'm pleased to, in particular, talk about the 10% EBIT organic growth. We had a negative foreign exchange impact of EUR 77 million. This was mostly due to the Brazilian real. And a positive impact on scope of EUR 49 million, which was mostly driven by the SUEZ disposal, which, in fact, SUEZ had been negative last year in the first quarter. And also a positive contribution from our hydro acquisition in Portugal helped us to drive this growth. Strong cash flow generation helped us to keep the net debt stable, and we are very pleased to reaffirm our guidance for 2021 today.On the next page, you can see how this translates into the different activities. Operationally, I would mention the following items that had a very positive impact on our financials.The renewable contribution from the additional commissionings were clearly a positive. Networks had a positive impact in Brazil from both power lines and our gas pipeline. And then, of course, the 95% nuclear availability contributed very positively to this result.On the more exogenous factors, the Texas extreme weather event had a negative impact, in particular on Renewables for about EUR 80 million. The colder temperatures in France were clearly a tailwind for Networks mostly. And then we also had a normalization of our GEM performance that you can see in Others where, of course, last year in the first quarter, with a very high volatility of commodity prices, GEM had, had a very outstanding quarter.We've also worked on SG&A during this quarter. It's one of the important topics that you will hear again later in this presentation, and that helped us also to improve the growth that you're seeing in front of you.A few words about the balance sheet. The CFFO of EUR 1.7 billion is funding our CapEx of the first quarter, and hence the debt is stable. On the CFFO, maybe 2 comments. One is on GEM, lower margin calls helped us to drive this improvement. That's about 2/3 of the amount, and 1/3, very good performance from our working capital requirements. And again, very pleased about this since this is a big focus area for us.With that, Catherine, over to you for the strategic update.

[Catherine MacGregor, Chief Executive Officer]

Thank you very much, Judith. And indeed, I am very, very proud to be here today with you to share with you our strategy road map for ENGIE, a road map that is completely, fully aligned with the strategic orientations that were decided by the Board last year, as you will see, and I'm enjoying full support from the Board while presenting this to you today.At ENGIE, we have tremendous strengths, started by highly professional and committed teams. These teams are very mobilized around our raison d'être, a purpose, which is to accelerate the energy transition. The world is at the pivotal moment for the energy industry with tremendous opportunities which ENGIE can and will seize. But there is tough global competition, a competition that does not stand still. So to remain a leader, ENGIE is taking several steps. These include an in-depth review of our portfolio of activities, a simpler and more efficient organization and a stronger focus on execution.It is my conviction, it is my commitment that ENGIE has to be managed in a more integrated and in a more industrial approach. It is this project that I am carrying today, together with my Executive Committee, who is with me this morning, it is this project that I want to embark all ENGIE employees on and it is this project that I'm presenting to you today.We have a buoyant and transforming energy sector. It is indeed an incredible moment for us and for the industry. We are entering a new growth cycle, which is driven by increasing climate commitments and robust energy demand. Renewables development is booming, and the world is expecting to more than triple its renewable capacity over the next 20 years, which represent more than 7,000 gigawatts.In the same time, events such as the Uri storm in Texas acutely highlight the need for the transition, this energy transition, to bring affordability, reliability and security of supply. Many governments are prioritizing climate action in their recovery plans. There is such a strong momentum. Policymakers, cities and corporates have now to decide what should be the energy systems of the future. The new energy world is really at the heart of all these major developments, and we have all intention at ENGIE to play a leading role.Today, we are building a simpler, more industrial ENGIE, focused on renewable and infrastructure. We are setting 4 global business units who are all contributing to this reliable, affordable and sustainable energy transition: Renewables, to generate clean power; Energy Solutions, developing low-carbon distributed energy infrastructure; Networks, delivering affordable energy for customers; and Thermal and Supply, offering flexibility to balance this renewable intermittency.These 4 global business units have infra-like business models with largely contracted earnings and, in fact, complementary profiles. Renewables and Energy Solutions, on one hand, offer strong earnings growth opportunity. Networks, Thermal and Supply activities, on the other hand, provide stability and strong free cash flow generation.In this buoyant market, one of our priority is to simplify the group at pace. We are concentrating on core activities. We are refocusing our geographic footprint and business development effort from 70 countries in 2018 to less than 30 by 2023. And we are streamlining our organization. We are simplifying drastically from 25 multi-activity business units to 4 focused global business units. They all have clear P&L and cash accountability to drive delivery of growth and operational performance targets.Renewables are led by Paulo Almirante, who will talk very shortly after; Networks by Edouard Sauvage; Energy Solutions by Cécile Prévieu; and Thermal and Supply by Sébastien Arbola. Now this organization will continue to leverage our long-standing presence in our geographies as it is critical to maintain strong relationship with all our stakeholders, including our customers.On Client Solutions, we are progressing on the creation of 2 new leaders in their respective domain: Energy Solutions, which is a leader of low-carbon distributed energy infrastructures and related services. And I will talk more about Energy Solutions later. And then BRIGHT, which is temporarily named, which is a new leader in multi-technical services with differentiated skills around air conditioning, electrical systems and building renovation. And this very important project is being led by Jérôme Stubler. Both entities are supported by very strong tailwind to fuel their development.The project BRIGHT, it is progressing on track. The consultation with employee representative that started mid-February is expected to be completed by the end of Q2. We are therefore on track for BRIGHT to be managed as a full-fledged entity within ENGIE by July 1, and this will be followed immediately after by a marketing phase.BRIGHT is a very significant project for us. I'm very pleased with its progress. Jérôme Stubler and his team are doing a tremendous work to embark the 74,000 employees of future BRIGHT and to position this new entity as a leader in its markets.For the rest of this presentation, we will be focusing on ENGIE's future perimeter.Turning now to performance improvement. We have defined a performance plan with clear accountability of each EVP with dedicated actions. We will put focus on sharp execution to drive improved efficiency. We are leveraging our deep industrial expertise across all our businesses, and we will set clear operational performances KPI and targets to link with financial results with a renewed focus on cash management.Alongside operational excellence, we are also looking to increase the efficiency of our support functions through deployed -- increased use of shared services and standard processes and systems. Ultimately, we aim to deliver over EUR 1 billion of gross improvement, driving a net EBIT contribution of EUR 600 million during the period '21 to 2023. Our strong capabilities in data and digital will be instrumental to achieve this performance.Globally, ENGIE has 2,000 data specialists, which include 350 data scientists and 1,000 developers, software developers, who are building together a software platform. They have indeed a deep understanding of our industrial activities. And over the recent years, we have crystallized this knowledge, which has been gained over years of experience, hundreds of studies and hundreds of projects, into 7 global proprietary platforms. These software platforms, they cover the whole value chain, from origination to operation and maintenance.NEMO, for example, offers a full software suite to support the design as well as the development of complex district heating and cooling networks. It models their energy needs, and it optimizes the necessary CapEx. The platform is now deployed on all our major DHC networks and has become a true competitive advantage.A great example is our carbon and energy performance contract that we have with the Canadian government in Ottawa. Through advanced modeling, NEMO made it possible to commit to achieving up to 30% of energy savings while limiting the risk for our company. And our goal with all these tools is really to accelerate the deployment of these platforms across each of the GBUs.While our performance plan leverages our digital and data competencies, of course, none of this will be possible without the commitment of our people. ENGIE employees are truly making the difference through their professionalism, their unique expertise across the whole energy value chain and their engagement, which is rooted in the energy transition to contribute always further to the decarbonization.In a yearly employee survey, 90% of them, 90% of them are proud to work for ENGIE, and more than 80% are committed. Last year alone, we received 800,000 CVs. Our ability to attract the best talent is, in my view, an additional competitive advantage for ENGIE.Social improvements are an integral part of our key objectives. We have targeting -- we are targeting by 2030 a full gender parity in our management, a 10% level in apprenticeship across Europe and, of course, continuous improvement in our injury frequency rate for employees and our subcontractors. We will leverage the strengths of our human capital to enhance our culture of performance to focus on execution and increase accountability.One of the reasons I was so proud to join ENGIE is that this company is recognized as an early mover in climate commitments for years. And while we are, of course, pleased that our peers have joined this fight, we clearly intend to remain at the forefront of the race against climate change. This is at the heart of ENGIE's purpose, and it is a societal and business responsibility. This is why I am very proud to announce today our commitment to net zero by 2045 across all scopes.The combination of speed and breadth of this commitment, which includes the use of sold products, makes this more challenging than most of our peers' carbon ambitions. And our strategic update today already shows how we are ready to translate this into action. We will achieve our ambition following a well below 2-degree C trajectory with intermediate targets. We are currently working to obtain a SBT certification accordingly. Our teams have achieved tremendous work over the past year to take this challenging commitment and to translate it into a concrete road map.Some of the actions we are taking is rolling out our coal exit plan by 2027, reducing the carbon intensity of our power generation as well as the emission linked to the use of sold product, and this reduction will be drastic to 2045.We are aligning our future CapEx, and we will only invest in projects, of course, that are compatible with our carbon ambition. And we will assign -- we are assigning carbon budget to each of our GBU. We are also incentivizing our top management on carbon objectives.I announced in February our exit from coal by 2025 in Europe and 2027 globally. At the end of 2020, it's important to note that our coal in our power generation portfolio had already decreased by more than 70% since 2015. For the remaining capacity in our portfolio, which was 4.3 gigawatt at the end of 2020, we have a clear exit plan, an exit plan that implies, first, closing of the coal plants, then converting to gas or biomass the plants when it makes economic sense. And ultimately, when the decision of closing or converting is not in our hand, we will consider disposal of our participation. We will always favor just transition when considering this plan. All in all, disposals should concern only 2 plants out of 10.I would like to take some time to share with you our recent joint announcement that we did with the Chilean government where we presented ENGIE's coal exit plan by 2025 in Chile. Our ambition there is threefold. First, to develop 1.8 gigawatts of renewable capacity. We will close all these coal plants and we will convert the most recent ones to gas or biomass. Ultimately, by 2025, we will have transformed our generation portfolio in Chile from 1.9 gigawatt installed capacity with 60% coal to 3.4 gigawatt installed capacity with 60% renewable. I am very proud of our teams in Chile. They have worked really hard, and now they are contributing so positively to the country. They are setting the energy transition in motion, and I would like to take this opportunity to thank them again.Turning now to the highlights of our medium-term plan and how we are indeed putting our strategy into action. The major focus areas I just covered of simplification, strong commitment to tackling climate change, performance improvement will together help drive value creation through disciplined capital allocation. During this plan, we anticipate EUR 9 billion to EUR 10 billion of disposals to significantly simplify the group. We have moved at pace since the announcement last July.ENGIE has repositioned its strategy towards renewable and infrastructure as we see significant opportunities to allocate capital to projects with attractive returns and high predictability. Overall, during this plan, we are planning to invest EUR 15 billion to EUR 16 billion of growth CapEx, of which 40% to 45% will go to Renewables. And of course, Paulo will elaborate more on this in detail.The investment plan will enable us to increase earnings and deliver sustainable growth in shareholder returns. The Board has reaffirmed the group payout policy of 65% to 75%. Through the 3-year plan announced today, ENGIE expects the dividend per share to increase driven by earnings growth.Separately, ENGIE is also introducing a dividend floor of EUR 0.65 per share for the period '21 to 2023. And importantly, we will maintain key credit metrics with economic net debt-to-EBITDA of less than or equal to 4x.We have already adjusted our investment process as rigor in execution is critical. We have clear financial and ESG criteria, of course, and Judith will cover them later, but we will also have greater selectivity. We are already today prioritizing projects which are in line with our strategic and geographic priorities. We will also make sure that we always leverage our industrial and operational knowhow to generate value. Shortly, you will hear from Paulo on how the Renewables GBU, for example, is working and improving its competitiveness.So disciplined approach to capital allocation which is aligned with top management incentives. We are proposing for shareholder approval new short-term and long-term incentives. These incentives apply to the 500 top leaders at ENGIE. The short-term incentives focus on profitability, cash flow, balance sheet and ESG criteria. This ESG criteria includes safety, CO2 emission, growth in Renewables and gender diversity.With respect to the long-term incentive, I would like to highlight that half of the total will be measured relative to performance of our peers, namely net income growth and total shareholder return. And we have updated our benchmark to reflect our new ambition.Turning now to the financial outlook to 2023 where we expect net recurring income group share of between EUR 2.7 billion and EUR 2.9 billion in 2023. Net income is expected to grow throughout the period driven by investments and performance improvements. It's important to note that 2023 figures reflect the future ENGIE perimeter, assuming no contribution from BRIGHT. And as I said, the Board has reaffirmed the group's payout policy of 65% to 75%, and we are maintaining our commitment to a strong investment-grade rating.Turning now to a snapshot of how we expect our business mix to evolve beyond 2023 now. By 2025, we expect our capital employed to fully reflect our strategic priorities, with more than 90% of capital invested in renewables and infrastructure. In particular, capital employed in renewables is expected to double compared to the 2019 levels. Overall, through this transformation plan, post BRIGHT, we have the ambition to deliver high single-digit earnings growth.And now we are going to review each of our GBUs to share the opportunities we see, our competitive advantage, clear priorities for delivery of this medium-term plan. And we will start with Renewables, which is a very strong key growth pillar for us at ENGIE, and Paulo is going to take over from me. Thank you. Paulo?

[Paulo Jorge Tavares Almirante, Executive VP & In]

Thank you, Catherine. Good morning, everyone. As mentioned earlier by Catherine, we want to make Renewables a strong growth platform for ENGIE. I will present today the road map to achieve that, focused on profitable growth and supported by a clear investment plan.Let me start with a brief view of the market. Strong support from government and from large consumers are driving a fast transition to clean energy. Let's remind that in 2020, wind and solar generation accounted for only 10% of the global power generation mix. This is expected to increase to 30% by 2030, which creates a massive market opportunity for Renewables.At the same time, the increase in the market size are driving significant price reductions. You can see in the slide that LCOE is expected to reduce at least by 30%. This is driven by technology and more efficient manufacturing processes, making renewables a competitive option and the most cost-efficient solution for many regions in the world.As you can see on the right side of the slide, Europe is leading the way on new capacity in wind, onshore and offshore, and the U.S. on solar PV. 330 gigawatts of newbuild capacity is expected in our key regions by as soon as 2025, which provides us a great position to benefit from our existing asset base. So we are in front of a massive market that is growing fast driven by a very competitive power price and even better in the regions where we have a strong presence.Our existing assets have a total installed capacity of 31 gigawatts at the end of 2020. These figures are at 100% and are consistent with the role of ENGIE. We develop, we build and we farm down at commercial operation. In many cases, we continue to do the O&M as well as the energy management on behalf of our partners. In the annex, you have more detailed information per technology and consolidated share.France accounts for 60% of our capacity in Europe with 7.5 gigawatts, half of which is hydro. And we are the #1 in wind and solar capacity in the country. In Latin America, Brazil accounts for 13 gigawatts, and we are the largest private generator. In the U.S., we have a fast-growing position. Only in 2020, we built 1.8 gigawatts of new wind and solar assets.Globally, our portfolio is highly contracted, including hydro, wind and solar at an average level of 70% for the period to 2030. This provides resilience to the portfolio and stability of earnings.Our wind and solar assets are really new, with an average life of around 6 years for onshore wind and 4 years for solar. This opens significant opportunities to optimize operations, for example, by internalizing O&M or by reducing the filler rate, which is normally high at the beginning of an asset life.We have a leading position on hydro generation, which remains the foundation of our Renewables portfolio, with around 57% of the total capacity. In Europe, these are flexible assets, providing services to the grid and benefit nowadays from a market where security of supply are driving prices up quite significantly.In Brazil, our portfolio of 11.8 gigawatts is largely contracted. Overall, our hydro assets are highly contributive and provide a strong level of cash flow. Our strategy here is to look at opportunistic acquisitions in markets where it can complement our position. We are not developing hydro assets organically.On this slide, you can see that we have stepped up growth since 2019. We are delivering on previous commitments with 3 gigawatts organic growth, and this is 3x the average capacity additions of the previous period.As you can see on the slide, in 2020, so during COVID, we did 3 gigawatts of newbuild assets and 2 gigawatts of M&A. For 2021, as Catherine said before, we are on track to deliver 3 gigawatts. So I think we can say that we are able to step up growth and we are delivering on previous commitments even in the circumstances that we all faced last year.We present on this slide for the first time a detailed view of our Renewables pipeline. The total pipeline is 56 gigawatts, supported by 1,200 specifically identified projects at different levels of maturity. This is a solid pipeline. 26 gigawatts are under construction, are secured or are at an advanced stage of development, and advanced stage here means permitting is almost finalized.In terms of technology, our pipeline is well balanced between onshore wind, offshore wind and solar PV. In terms of geography, our development is also prioritized, with 2/3 of the pipeline located in Europe and North America. And in Europe, our focus is in France; in North America, in the U.S.; and for Latin America, we are focusing in Brazil and Chile.Let me walk you through this slide to see how the pipeline will be converted into new installed capacity. We start with the 56 gigawatt total pipeline. Then we have 32 gigawatts on the second bar, which corresponds to the pipeline that will deliver projects between 2022 and 2025. This pipeline compares with 16 gigawatts of additional capacity to be commissioned on that same period of 4 years. And this results in a cover ratio of 2x. Around 70% of that 16 gigawatts will be built in the 4 priority countries that I've mentioned before, which are countries where we are well established.So the size, the margin and the location of our pipeline confirms that we have a nice level of confidence to target an average of 4 gigawatts per year of additional capacity in the period 2022 to 2025.So the market is massive, and we are well positioned with a solid pipeline. The question now is, how can we differentiate from competition? In Renewables today, there are 2 critical success factors: first, the permitting process during the development stage; second, the route to market. The permitting is more and more complex, we all know that, with bottlenecks related to administrative processes, sometimes at local level, sometimes at both the local and the national level.I think the ramp-up that I have shown in the previous slides demonstrate that we have built a strong and delivering development machine. We are deeply attached to our local stakeholders for many years with a global team of 4,000 employees fully dedicated to renewables. So this gives us a clear competitive advantage in our key markets.Our energy management platform is also a competitive advantage and allow us to link renewable assets upstream with different downstream options, being them the corporate PPAs, our B2B supply portfolio or our unique position in the most sophisticated merchant markets.As an example, in the last 2 years, we have been able to capture important market shares with clients such as Amazon, Air Liquide or L'Oreal, and this has positioned us #2 in the U.S., in Europe and in Latin America.In addition, we are activating other industrial levers. You can see in this slide an illustration of our industrial road map to increase competitiveness. The circle on the left shows the components of LCOE in a French wind farm. As you can expect, CapEx and O&M account for almost 80%. And these are the 2 areas where we want to focus.Our industrial road map is also supported on the new global organization dedicated to renewables, as presented before by Catherine. This will improve the standardization of engineering and construction practices as well as the bundling of procurement volumes, which we already do, for example, for solar PV panels, but that we want to extend to other equipment and services.On the O&M side, our assets are at the phase of life where original services contracts are coming to an end, which opens opportunities to internalize operations and maintenance. Again, another example in France. We have shifted 400 megawatts of wind farms to what we call the self-perform model. And we are switching another 300 megawatts from the original supplier to independent service providers with the obvious cost savings in O&M. We also have now enough information to review maintenance schedules using data analytics, reducing downtime and increasing availability.So overall, we are targeting a reduction of LCOE of 2% to 4%, mainly from better availability and lower CapEx. This is equivalent to a reduction in the average cost of capital of around 50 basis points and can be translated into either additional value creation or improved competitiveness.On this slide, we present a clear investment strategy to accelerate profitable growth. This strategy is built on 4 pillars. A strong focus on a limited number of development priorities. 80% of our CapEx will be invested in 4 countries and wind offshore. A significant increase of the CapEx allocated to Renewables, from an annual average of around EUR 2 billion to at least EUR 3 billion from 2024. A clear investment criteria centered on [ 1 plus 2 ], but with the flexibility to vary plus or minus 50 basis points. And Judith will come back to that later on during the presentation.And finally, a shift of the business model to increase the share of consolidated assets. By 2025, 70% of our new wind onshore and solar capacities will be on a develop-to-own model, and this change will increase visibility of earnings.So our objective is to reach a portfolio of 50 gigawatts of renewables capacity by 2025 and 80 gigawatts by 2030. Considering the starting point of 31 gigawatts, this represents an increase of 2.6x our current capacity. Those objectives are a step change in our average annual capacity.If we compare with our current 3 gigawatts per year, we will increase by 1/3 on the first period, 2022 to '25, going to 4 gigawatts. And we will double on the second period, 2026 to 2030, going to 6 gigawatts per year. So from 3 to 4 to 6. These are significant increases on the growth rate for wind and solar projects. At the same time, they are realistic objectives geared towards value creation.So in summary, we have a solid portfolio of renewable assets, supported by a long-term contracted position of around 70% to 2030, which provides a good level of earnings visibility. Our core competencies on operations and energy management are key competitive differentiators for ENGIE, and we are convinced that the new global organization can increase value creation.With a high quality pipeline, a track record on delivering additional capacity and the clear investment strategy, we have established ambitious and realistic objectives to achieve 50 gigawatts of installed capacity by 2025 and 80 gigawatts by 2030 with an increase of consolidated assets.With that, I hand over back to Catherine.

[Catherine MacGregor, Chief Executive Officer]

And thank you very much, Paulo. So 3, 4, 6, unprecedented growth in Renewables, indeed, for which ENGIE is so well positioned.I am now going to cover the other 3 GBUs, and I will start by ENGIE Energy Solutions. In this new GBU, 75% of the operating profit comes from distributed energy infrastructure. The business model which is associated to this activity typically includes long-term infrastructure-light contracts with stable and recurring revenues as well as long-term contracted cash flows. So it has proved very resilient over the health crisis, providing double-digit returns. We are a frontrunner in this market, and we already have a strong leadership position in each of our businesses, notably in district cooling worldwide where we are #1. We are also very strongly positioned in district heating, on-site utilities, distributed solar or low-carbon mobility.The energy transition is at the heart of most government recovery plans, and more than 700 cities, 2,000 corporates have joined the race to net zero initiative. And this, in summary, translate to solid growth perspective for this global business unit.In emerging activities such as distributed solar or low-carbon mobility, you will see that we are anticipating double-digit CAGR. While in the more established ones such as district heating and cooling and on-site utilities, we are envisaging about 4% to 5% CAGR over the next decade.In this growing market, we have clear competitive advantages. We are a pioneer in this integrated decarbonization projects. We have a unique expertise, unique depth, highly experienced operations team, and we also have a proven development platform. We have strong relationship with the key energy transition promoters, whether they are cities or corporates, with recognized long-term commitment and investment capabilities. We have in place a stringent performance plan, rationalizing activities, improving our EBIT margin through commercial effectiveness and also industrialization of our processes, enforcing strict cash management as well.Through leveraging on strong tailwinds, our competitive advantages and this performance improvement, we aim to add 8 gigawatts of low-carbon distributed energy infrastructure by 2025. These goals translate to around EUR 3 billion investment, fueled by a very strong organic pipeline of EUR 11 billion of opportunities, which allows us to be very selective.And through these activities, we are supporting client decarbonization. In fact, we have developed dedicated decarbonization metrics in collaboration with peers and industry experts. And we have set a target of 45 million tons of CO2 equivalent of avoided CO2 emission per year for our clients by 2030.To illustrate our ambition in this business, I'm just going to cover one example where very recently, we have signed an agreement with JTC Corporation to develop, to build, own and operate the district cooling system for Punggol Digital District of Singapore over a period of 30 years. This project is obviously part of the district decarbonization road map. By 2024, we will develop a cooling production plant of more than 100 thermal megawatts supplying the business park, its community, its retail, the university campus and the transport users within the district. This agreement is valued at over EUR 600 million, with a recurring EBIT of double digit and offers significant growth perspective as the district develops, driving up the cooling demand.This type of contract also gives us the perfect positioning in the local ecosystem to develop other activities such as on-site PV or green mobility. The district cooling market is obviously a massive growth opportunity for ENGIE as it is expected to be doubling by 2030.While we welcome electrification as an important enabler to reach net zero, a balanced energy mix is essential. It's essential for affordability, flexibility and overall system resilience. For example, in terms of affordability in Europe and in the U.K., if decarbonization was to be met only through electrification, our own internal estimate that it would generate additional cost of around 30% by 2050. And this would translate around EUR 150 per year on the household energy bill for the next 30 years.Gas will continue to contribute to decarbonization as the world switches away from coal and oil. And as you can see on the chart on this slide, there is also a huge potential for biomethane and green hydrogen, which I will cover a little bit after. For all of these reasons, gas is expected to remain at around 25% of the primary energy mix in 2050 as it is today.In this overall context for gas, our Networks infrastructure is well positioned for the long-term evolution of this sector. We are a leading player in gas in France with around EUR 28 billion in regulated asset base. Our Networks benefit from stable regulatory framework with visibility. Our profitability is largely immune to inflation and volume risk as there are clawback mechanisms. And our Networks have consistently demonstrated strong operational performance and the highest safety standards. And we continue to invest to maintain the safety and the reliability of our Networks, to enhance energy efficiency through the rollout of smart meters and to adapt for the integration of renewable gases. Overall, our RAB is expected to increase by around 2% per year over to 2023.We are building on our deep knowledge and experience in managing regulated assets in France and our geographical presence in certain countries to establish leadership position in gas and power networks, mainly in Latin America. These international assets represent a capital employed of quasi RAB of EUR 3.7 billion. They benefit from stable regulatory or long-term contractual frameworks. They earn attractive double-digit equity returns, and the EBIT of our international networks actually has more than doubled since 2016.We have major projects in operation and under construction. In Brazil, for example, we operate the largest gas transmission network through TAG, and we are constructing 2,800 kilometers of power lines that will be commissioned at the end of the year.Our strategy for international network, it is focused. We're working mainly on gas and power transmission, primarily in Latin America where we can leverage our strong existing position.Similar to Networks, our Thermal activities contribute to affordability and resilience by bringing valuable security and also flexibility to the system. Europe is a very strong example of this where 70 gigawatts of dispatchable activity is expected to be retired or closed by 2030, 70, 7-0 gigawatt, while power demand continues to grow. This is expected to lead to a greater need for dispatchable gas capacity. And in this context, our gas fleet is very well positioned. It's well positioned to support this system, which will face a tighter demand/supply balance.One of the key pillars of ENGIE's heritage in operational excellence actually comes from our Thermal GBU where we manage around 64 gigawatts primarily of gas assets mainly located in Europe and in the Middle East. In terms of profitability, 69% of our EBIT comes from long-term contracts. And we have attractive double-digit equity returns and strong cash generation. If I look at the remainder of the EBIT, it comes from short-term contracted and merchant positions. And in a market which faces the potential for rising spreads, we are indeed very well positioned for a greater role of capacity remuneration mechanism and ancillary services. In fact, our fleet is second to none to capture these opportunities.In 2020, for example, our Thermal business in Europe delivered over 20% EBIT organic growth year-on-year. Our teams are very good working on maximizing performance, efficiency, agile asset management and also optimizing our O&M operation. In fact, in this GBU, we have a very highly experienced workforce, a valuable talent pool for our renewable ambition and a wider group in an evolving energy sector.Looking ahead, as we deliver on the coal phaseout, overall thermal capacity will slightly decrease over time, we will invest selectively in new opportunities such as the Belgium CRM auctions or in large water desalination plants in the Middle East where we have significant experience and industrial knowhow.So alongside putting our strategy into action for the medium term, we are, of course, also positioning ENGIE for the long term. And I am convinced that ENGIE is a frontrunner to do that. I'm going to start with biomethane, which has a strong growth potential, in fact, is already a reality here in France. Biomethane production last year reached 4 terawatt hours and is to be multiplied by 10 in the next 10 years.So ENGIE is going to benefit from biomethane on 2 fronts: on the production side, as we intend to build an existing leading position in France with the ambition to reach 4 terawatt hours of our own production by 2030 and to develop some of these activities in key countries such as U.S. and in Brazil; of course, on infrastructure, as the development of biomethane ensures long-term sustainability of gas grids, triggering EUR 2 billion investment in networks by 2030.Moving now to hydrogen, which is probably the most important, the most exciting technical evolution of the coming decades in the energy field. This breakthrough will indeed enable the energy system to benefit from renewable power while taking full advantage of the existing gas infrastructure with flexibility, security of supply, short-term and long-term durability. Now having said that, I am fully aware that the promise of H2 has been on the radar for quite some time, but we do believe that with today's very strong political support, increasing demand, decreasing cost of production, hydrogen ecosystem is being kickstarted.With both our gas and our power expertise, ENGIE is simply uniquely positioned to capture this opportunity. All activities will benefit: Renewables, which will provide green energy as a feedstock; Energy Solutions and Thermal will produce and supply our clients with new offers to enable their decarbonization; and of course, Networks, which will support the development of hydrogen at scale through transport and storage.We have actually been a frontrunner in hydrogen with a dedicated business unit since 2018. We have credentials, with some projects already commissioned. In Australia, we are building with Yara Pilbara one of the world's first industrial-scale renewable hydrogen production facilities to decarbonize ammonia production.Over the long term, one can imagine that the hydrogen market will progressively evolve, evolve from local hubs gathering production and demand to an integrated market. In Europe, this translates into this vision fully aligned with the EU ambition to build a hydrogen backbone connecting production, storage and demand sites across Europe by 2040. ENGIE, through GRTgaz in France, has a pivotal position here, and the group already has several projects to test and to adapt our networks and also has storage to the future hydrogen ecosystem.So we have set some ambitious target for our businesses. To pick only a few, we are targeting green hydrogen production by 2025 to reach 600 megawatts and 4 gigawatts in 2030. And we have a strong pipeline today of 70, 7-0, projects to support this ambition. We will also develop a pure hydrogen network, consistent with the European backbone initiative, targeting 700 kilometers in the next 10 years; enhanced storage adaptation, where we'll commercialize hydrogen capacity of nearly 1 terawatt hours in 2030. And we also aim to develop more than 100 refueling stations by 2030.And with that review of the GBUs, I will now hand you over to Judith for the capital allocation plan and for the financial outlook. Judith?

[Judith Hartmann, CFO & Executive VP]

Thank you, Catherine. I will go through the financial levers and show you how this plan is creating value.Driving simplification is one of our major levers here. And of course, the new organization will help us to do so with clear accountability. We're exiting nonstrategic activities and geographies. We're also improving the business mix by investing more into renewables and through a disciplined capital allocation. And we're enhancing our performance through operational excellence but also support function excellence. This will help us to drive value creation and indeed increase our earnings and the dividend over the next few years.To give some more colors on the financials behind this. So EUR 9 billion to EUR 10 billion of disposals to drive simplification; EUR 15 billion to EUR 16 billion of growth investments, improving the business mix; and EUR 600 million of net EBIT coming through performance. Again, this will get us to an earnings growth that you've already heard about from Catherine and will enable us to commit -- is enabling us to commit to a sustainable dividend policy.Let's go through each of these levers now. Let's start with the disposals and how we are driving the simplification. EUR 9 billion to EUR 10 billion of disposals, this already includes the EUR 2 billion for 2021 that we talked about earlier this year. Of course, it also includes the BRIGHT disposals. All of this is driven by strategic rationale, so exiting noncore activities like we have done -- like we've exited SUEZ to really then reallocate our funds to where we can make a real difference. Exiting some of the geographies. In fact, as you know, we have already exited 20 countries in the last 2 years, and reducing our footprint to roughly 30 countries. We are accelerating our carbon neutrality, meaning we are reviewing our thermal footprint as we are exiting coal progressively. And we're also rebalancing from French networks to renewables and infrastructure. All of this will lead to a simpler investor proposition. ENGIE will be easier to understand and easier to value. As we work through this plan, of course, we are going to run rigorous competitive processes around each of these disposals to make sure that we maximize value.If you look now to our investments, a clear acceleration, of course, on Renewables. Renewables will now be close to 45% of our entire growth investments with EUR 6 billion to EUR 7 billion. This is an increase of 20% versus the period of 2018 to 2020. If you look at Thermal and Supply, you can really see the capital reallocation at work here. It's now less than 10%, which is a reduction of 40% versus 2018 and 2020 period.100% of this growth CapEx is aligned with our ambition on CO2 reduction. Roughly 80% of this growth CapEx is expected to be compatible with the EU taxonomy, and 55% of this investment is already committed in concrete projects. And as you have heard from Paulo's and Catherine's presentation, a lot of opportunity and a very strong pipeline to be able to select from the best projects.These are very significant amounts, so it's very important to have a very rigorous investment approach with disciplined capital allocation. And we have been working to improving our investment processes. We now have not just a CapEx budget by GBU but also a carbon budget. We have started to put in place a much earlier selectivity process where we look at projects much earlier and have a go, no-go decision. We're monitoring our CapEx delivery, and we've just heard plenty of examples on how we are moving and improving our industrial track record. Paulo has mentioned a few examples on reducing failure rate, improving availability or the savings on O&M.We have very clear financial criteria: 200 basis points value creation over WACC in each of the projects, NPV to CapEx of 20% to 25%. We have a strong focus also on short-term cash generation and P&L contribution. And with all of this, the target is to have a 7.5% ROCE at the end of the period.Financial criteria, of course, very important, but we are also very committed to our ESG ambition. So we are also looking at each of the projects through an ESG lens. It is our conviction that our climate ambition is not just the right thing to do, but it's also creating value. It is this conviction on ESG that has made us a green financing frontrunner. We have so far issued EUR 12 billion of green bonds. And in each of these emissions of -- in each of these issuances of green bonds, we've had a higher rate of oversubscription, and it helps us, of course, with the pricing of our bonds.There are an enormous amount of -- there's an enormous amount of money, of funds that going into ESG investing, and we really believe that this is an opportunity, both on the equity but also on the credit side.Of course, performance is going to also be very important to be able to drive this growth. And we are driving a very sharp execution focus here with a performance plan of EUR 1 billion-plus gross improvement that will translate into EUR 600 million additional net EBIT over '21 to '23. The difference between the 2 is, quite frankly, we're targeting high to really make sure that we have the net contribution of EUR 600 million. The difference also helps us to be competitive. And again, we've heard many examples earlier. And then we're also offsetting inflation in this period.The new organization that Catherine has talked about in our reduction to 30 countries really can help us on 2 elements. It will give us a global view by activity. It's going to drive industrial depth. It's going to help us to do peer reviews and best practice sharing, and that really will be a lever of improvement. And secondly, our consolidation into 30 countries is really going to drive depth in each of the markets, very deep market knowledge, senior leaders in each of these countries that, again, are going to help us to execute to the best level that we can.We've heard some great examples earlier from Paulo on procurement optimization already. And we are also working on our cash management. In fact, we believe that this is so important that you've seen it in the -- in our KPIs that we are suggesting for the management incentives because, of course, every euro saved can be then invested into the value creation.Let's look at the next page on how this will deliver into our EBIT growth, and we've split it into 2 steps to give you, of course, the middle here with 2021, our confirmed guidance.So already from 2020 to '21, we will have EUR 200 million of contribution from investments. Performance already will contribute with EUR 100 million. And both of them, of course, largely offsetting the scope-out effect. In this basis year of 2020, which was, of course, very unusual, we have a big block on Others, which is mostly COVID but also foreign exchange and the Texas severe weather event.And then you can see how it will continue. Investments contributing by EUR 800 million in the next 2 years, a performance of EUR 500 million and, again, offsetting the scope-out, meaning, really, we have a growth throughout the period. And you can see on the right-hand side the EUR 1 billion contribution coming over the 3 years, not surprisingly, with a large element of Renewables given the very strong investments there.So on a simplified view on the next page, EBIT by -- EBIT growth by activity. The growth is, of course, mostly driven by Renewables. Significant growth there from the contribution of EUR 6 billion to EUR 7 billion of CapEx. Higher power prices in France will also be a positive. Networks will remain largely stable with lower remuneration rates in France and then growth coming from international networks.We see growth in Energy Solutions with, yes, a COVID recovery but also contribution from the growth investments and partially offset by the disposals driving simplification. Of course, BRIGHT is in this bucket. Thermal will decrease in line of lowering capacity through the coal exit, and we will see growth in Supply mostly driven by the COVID recovery. Nuclear, the growth will be driven from higher achieved power prices. And over time, we're going to start to see lower volumes due to the Belgian nuclear phaseout.So to give some more detail on the guidance, we've heard already the net income from Catherine. Here, you can see our EBITDA indication of EUR 10.3 billion to EUR 10.7 billion and an EBIT indication of EUR 5.7 billion to EUR 6.1 billion. We remain strongly committed to our strong investment-grade rating. And again, the starting point of 2021 still includes BRIGHT. And the new ENGIE in 2023, we have assumed 100% of BRIGHT gone. And of course, all of the other disposals are also excluded from there.To conclude, I am very pleased to reiterate our dividend policy. The Board has reaffirmed our commitment to a payout policy of 65% to 75%. You have heard the -- how we are planning to increase our net income. And with that, the dividend is expected to be driven by this earnings growth. We've also introduced a floor of EUR 0.65 per share for the period of '21 to '23 to offer greater visibility through this period.With that, Catherine, back over to you.

[Catherine MacGregor, Chief Executive Officer]

And thank you very much, Judith. So ladies and gentlemen, concluding remarks. ENGIE has a very, very strong position. The key message that I would like to leave you with is that we are very committed to embrace our role as a leader of the energy transition. We are building a simpler, more industrial ENGIE with complementary activities, which are very well aligned with industry mega trend.We have a strong commitment to net zero and ESG performance. We have a new organization which is very motivated, which has higher accountability, strong performance focus. And we are driving growth in renewables and infrastructure through disciplined capital allocation. ENGIE is also uniquely positioned for the energy system of the future.We have shared with you a lot of targets today, and I wanted to share or pick up the ones that I felt was the most significant. Key operational targets, net zero, 2045, all 3 scopes; 3 to 4 to 6, wind and solar capacity growth through the period to 2030; our distributed infrastructure, plus 8 gigawatt by 2025; simplification of the group from 25 business units to 4 GBUs; performance plan, EUR 600 million of EBIT impact over the 3-year period; and finally, green hydrogen production, 4 gigawatts in 2030.I would like to conclude this presentation with a clear message on what is ENGIE and what we do. We are a large energy utility. We are focusing on renewable and infrastructure. And by doing that, we are supporting our customers' decarbonization. We are building today the low-carbon energy system of the future.Ladies and gentlemen, thank you so much for your attention, and we are now going to open the Q&A session. Thank you very much. Aarti?

[Operator]

We will take our first question from Ajay Patel with Goldman Sachs.

[Ajay Patel, Executive Director]

Excellent presentation today, so thanks for that. I had 2 questions, please. Firstly, just on the bridge that you offer on Page 60. Could you just give us an indication that, is all the dilution from the disposals, and I guess all the accretion from the investments, come through the numbers by 2023? Would there be any residual dilution that you would, for example, expect in '24, for example? I just wanted to understand what was factored in there.And then just to give us a better sort of feel for how much the business is transitioning. I think you said that Networks would be broadly flat. Could you give us an idea of what proportion of -- in rough numbers, but for 2021, of, say, COI is Renewables and Energy Solutions? And then what percentage would you expect that to be by 2023? So we can really sort of appreciate how much changes occur.

[Catherine MacGregor, Chief Executive Officer]

Yes. So thank you, Ajay, for your question. And I will let Judith comment a little bit. But just in terms of dilution, I think one can assume that most of the impact of the dilution of the EUR 9 billion to EUR 10 billion disposal program that we are announcing today will be captured through the period '21 to '23. So there might be some marginal effect left to 2024 and beyond, but I would say typically would be quite marginal.And then your second question on the business transition. I'm not sure I actually got all -- you got that, Judith?

[Judith Hartmann, CFO & Executive VP]

Yes. Thank you, Catherine, and indeed, Ajay. I think on the -- maybe just to add on the first question on the dilution, to add what Catherine just said, you also have to think, of course, that there will be additional contribution from the investments and the performance. And you can assume that those effects, again, will outweigh any leftover or marginal dilution that is still there.In terms of your question on how are we shifting the portfolio, we are not giving precise numbers for '21, as you know. So it's a little hard to give you a precise percentage. But I think if you look at Page 69, you will get a good idea of just how important this additional Renewable EBIT will be. And so that should help you to really show how, indeed, we are really moving this company towards a much higher content of Renewables.

[Operator]

We will take our next question from Vincent Ayral with JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

Indeed, a very clear presentation. I'd like to start with the first question on the numbers. I can see your guidance midpoint is about 4% above the consensus. You already include the dilution from the BRIGHT disposal, which is clean and clear for every one. Yes, it's based on the commodity price on 31st of December. So if I do a back-of-the-envelope and mark-to-market as of yesterday, there would be an extra EUR 200 million also of net income or 7% additional upside. Could you be kind to just confirm on your mark-to-market what will be the upside as of today? Would be very useful.And then a question regarding the reinvestments. So on the Renewables, again, presentation was very clear, very useful to get to 2030 targets. We [indiscernible]. I'm sure there will be plenty of questions indeed from colleagues or investors on the margin pressure and all of that. So my question will be more of a strategic one. As you move from the asset light to the asset heavy, have you reassessed the product proposal to your corporate client? I'm thinking here on -- of the energy on demand, which enables better margin, it's more structural, more complex. But we could see in the example of Texas that you can leave renewable players more exposed to extreme weather variation. So how do you look at this as of today? Could you elaborate a bit more on your strategy product-wise so we better understand how you protect the margin there and basically the risk associated?

[Catherine MacGregor, Chief Executive Officer]

Okay. Very good. So maybe I will start by taking your first questions. You're right to point out that, obviously, power price have indeed increased. Remember that power price is one thing. We also have the effect of spark spreads. We also have less volume exposed to power because of nuclear phaseout. So you really have to look at all the factors when you think about 2023 mix and the impact of the forwards on our guidance. So ballpark figure, we feel at this stage that our guidance includes the power price fluctuation that you are talking about.Maybe second point -- second question, which is around the way we structured our commercial offers and how we protect ourselves in terms of risk. And of course, I'll give a bit the floor for Paulo to comment on the specific, but I have been extremely impressed with the way we are able to, in a very sophisticated manner, package our PPAs agreement and have a very adapted, adequate terms and conditions to make sure that we are not just exposed to things like Texas.So Texas, we had the impact, but in general, the [ decencies ] that we are trying to build in our PPA agreements are really looking at protecting, in particularly, features such as, as produced, some of the things that we're really looking to include in our PPAs to make sure that it's not just a contracted volume but also we have the right level of risk, and we feel we are extremely well set up to manage those.I don't know, Paulo, if you want to add.

[Paulo Jorge Tavares Almirante, Executive VP & In]

Yes, of course. Thank you for your question. I think your question is absolutely right. I mean renewables today are not anymore feed-in tariff indexed to something for 25 years. We are going into the core of energy management, the core of managing risks. Even when we do a corporate PPA, which hedges price somehow, we have to deal with unbalancing risk, we have to deal with profile risk, and you mentioned the S consumer profile. So that's where we have significant competitive advantages. We can combine that different corporate PPAs, which are, with a certain client, maybe sometimes as consumed, other times as generated, and we manage that risk together with our B2B supply portfolio or a different mix of hedging products.For us, this is a very clear competitive advantage. There is no unique recipe. Depending on the client, depending on the location of the clients, we apply a different combination of products. And again, this is different from what was renewables in the very recent past.

[Vincent Jean Michel Ayral, Analyst]

Catherine, I just would like to come back on your answer on the commodities because your guidance is exclusively the 31st of December. So clean spark may even be a positive, however tightening, but the upright should clearly mean upside versus 31st of December. Oil price for '23 have increased by EUR 10 and you hedge only 40%.So clearly, we have a bit more color. I'm not sure I understood your answer was -- we already have that in the guidance and I see 31st of December. So I just want to be sure that my understanding that they could be upside to the guidance if oil price stay where they are is the right one. Sorry for coming back on this question.

[Catherine MacGregor, Chief Executive Officer]

No, no, that's fine. I think one of the point that I wanted to make is that you also have to remember that we have much less volume and we'll have less volume exposed to powers as we are also phasing out nuclear assets starting at the end of 2022. So that was the point. We also have, remember, progressive hedging. So the effect, obviously, is not fully in -- you can't translate it completely in our 2023 numbers.

[Judith Hartmann, CFO & Executive VP]

And maybe just to add, obviously, the mark-to-market is moving. We cannot take it to the bank every time it's higher. It's clearly a positive topic like we've just heard. But indeed, if I look just between last week and this week, there was quite a big variation. Definitely, power price is going to the right direction, which is a good confirmation of the numbers that we've just given.

[Operator]

And we will take our next question from Peter Bisztyga with Bank of America Securities.

[Peter Andrew Bisztyga, Head of Pan]

So really 2 questions from me. Firstly, on your 80 gigawatts Renewables target, I'm presuming that is a gross target. So can you clarify what your sort of net targets are and what your general approach to asset rotation is going to be? And linked to that, does your EUR 10 billion disposal target include proceeds from asset rotation?And then my second question, just a further clarification on guidance. I was wondering if you could give us a sense of what EBIT contribution from your Belgian nuclear plants is in 2023, please.

[Catherine MacGregor, Chief Executive Officer]

Okay. So Paulo, you want to comment a little bit on the conso share, just keeping in mind, of course, that our ambition in Renewables, as I think Paulo has made a very strong point, is that, in general and particularly on onshore wind and solar assets, we will be looking at keeping more on our balance sheet. So the split between our conso share and growth should reduce on those assets over time. I think, Paulo, you want to give the specific on conso share?

[Paulo Jorge Tavares Almirante, Executive VP & In]

Yes. So what we have presented, and our intention is to increase the level of consolidated assets on our balance sheet. So today, we are doing around 40% of the capacity. That will evolve to around 70% from 2025 onwards to wind onshore and solar PV.On wind offshore, you know that we have a partnership with EDPR, Ocean Winds, and that will continue deconsolidated. The other development in our main geographies will be consolidated. Still, in some other countries where we don't have an industrial platform, we will continue to apply our DBSO. We expect that the 80 gigawatts in terms of consolidation, when we mix all the different technologies, will be between 50 and 60 gigawatts in 2030.

[Catherine MacGregor, Chief Executive Officer]

Okay. And then there was a question on the contribution of nuclear to 2023. So really 2 effects. Obviously, power price, as we talked about, is a plus. And then in terms of lower volume given, again, that we are starting phasing out 2 reactors, the first one end of 2022, and the other one at the beginning of February, so you'll have these 2 effects. But I think you can expect a slight increase from 2020 from COI contribution from our nuclear activities.

[Operator]

And we will take the next question from Rob Pulleyn with Morgan Stanley.

[Robert John Pulleyn, Equity Analyst & Commodity Strategist]

Yes, Rob Pulleyn from Morgan Stanley. Congratulations on the comprehensive outlook. It's great to see some 2030 capacity targets there. Obviously, a lot for us all to digest. So if I can ask some more clarifications on the 2023 guidance.First of all, can we just clarify for the avoidance of doubt, the dilution from disposals you've included, is that 100% of BRIGHT, I think I heard you say? Or is it a percentage less assuming you may keep some? And what about the dilution from the remaining disposal plan? Is that also included in guidance? Or is that yet to be seen?Secondly, on asset rotation, may we ask how much asset rotation gains would be included in that 2023 guidance? And just to clarify, on your previous answer, it sounds like the consolidating of 70% of capacity is therefore pre minorities and not post. I just wanted to check that.And lastly, before I ask too many questions, can I just ask on the EUR 15 billion to EUR 16 billion of organic -- sorry, of CapEx, is that all organic? Or does it include any assumed bolt-on acquisitions?

[Catherine MacGregor, Chief Executive Officer]

Okay. So I will start maybe by taking your last questions, and then I will have my colleagues chipping in. So EUR 15 billion to EUR 16 billion of CapEx. Frankly, our main scenario is indeed mostly organic growth. We have discussed and presented to you a very rich set of opportunities, obviously, on the Renewables side but also on Energy Solutions side. I've talked about EUR 11 billion of pipeline of projects. So we feel that we are very opportunity-rich.Of course, we could be opportunistic in small M&A type of activities, but you can think of this EUR 15 billion, EUR 16 billion of mainly organic growth, continuing to deploy them in a very selective manner, priorities, disciplined capital allocation, very much targeted towards our growth priorities which we presented to you today.I'm going now to pass it on to Judith, I think, if you want to comment a little bit on the 2023 guidance question.

[Judith Hartmann, CFO & Executive VP]

Yes. Thank you, Catherine. Rob, indeed, the 2023 guidance does assume 100% BRIGHT out and all the other disposals that I've just talked about. So I think the best page to look at again is the Page 69 where you can see the bridge. And it's very consistent with the EUR 10 billion or the EUR 9 billion to EUR 10 billion of disposals, the investments that are going in are translating into the bricks that you're seeing in 69, meaning -- on Page 69, meaning that all the disposals have been included in there but also, obviously, the contribution.I want to point out again that this is a 3-year view. So on investments, use example, it adds up to EUR 1 billion over the 3 years. We will have, on a full year pro forma, a higher contribution from investments. We're targeting the 7.5% ROCE. So I think it's easy to do the math on where this might take us.And then like I said earlier, there will be very little -- very marginal leftover scope-out for the '24 year from the plan that we've just presented. So I hope that clarifies. But yes, the '23 guidance, like Catherine and I have said, does exclude the disposals. And so the scope-out is already included in that guidance.

[Catherine MacGregor, Chief Executive Officer]

Yes. And I think there is a question on the DBSO margin, correct? And just to say that we anticipate a stable level of DBSO margin in absolute terms. But of course, as our capacity is increasing a lot, in proportion, it's much smaller, resulting being the outcome of what Paulo has described, to take and to do much more DBO than -- DBSO in the past, okay? Just going through -- I think we've...

[Robert John Pulleyn, Equity Analyst & Commodity Strategist]

That's all...

[Catherine MacGregor, Chief Executive Officer]

Yes. Go ahead.

[Robert John Pulleyn, Equity Analyst & Commodity Strategist]

Sorry, that's all very clear. And sorry, just the remaining aspect, the consolidated capacity you'll retain being 70%, I presume, both -- the word is consolidated, that is before the minority share as we -- as pertains to Latin America.

[Paulo Jorge Tavares Almirante, Executive VP & In]

So maybe I can take that question. So 70% is 100% of our additional capacities when the new assets are consolidated. So plus the ENGIE share in SPVs when new assets are deconsolidated.

[Operator]

And we will take our next question from Emmanuel Turpin with Societe Generale.

[Emmanuel Philippe Turpin, Equity Analyst]

My first question will be on the bridge for COI between 2020 and 2023. Taking a closer look at the 2 gray bars, the others, and first, on the one on the right, bridging '21 to '23, I guess you show minus EUR 200 million considering that there will be a rebound from Texas of EUR 80 million. So altogether, there is a negative of around EUR 300 million. I was wondering if you could help us understand that number. Does it include the buffer you mentioned regarding Belgium nuclear that you mentioned in your press release? Is this a little bit more, I would say, cautious approach to your guidance? Or can you actually pinpoint to some of these nonrecurring elements of 2021 that would -- positive in '21 that would disappear between '22 and '23?And I would say, equally on the gray bar for 2021, I guess, again, that includes Texas, so the underlying is more positive. Is there anything beyond the COVID rebound in that gray bar?Then I would like to rebound on the comment you just made on growth CapEx, on the contribution at COI. It's very helpful that you clarified that, indeed, the full 12-month contribution of COI from the growth program will be more than EUR 1 billion as you target 7.5% ROCE. Assuming a 25% tax rate, in order to get to your return, I estimate that you need to derive a COI of around EUR 1.5 billion. Do you agree with that calculation?And lastly, on dividends. You maintain your dividend policy and you put a floor at EUR 0.65. That will be seen as reassuring. Could we be a little bit more maybe granular and understand how you try to drive your dividend? Should we expect that you will try to grow it year-on-year, avoiding the volatility of maybe disposal impact? So do you have an overlay of growth in your policy?

[Catherine MacGregor, Chief Executive Officer]

So maybe let me start by your last questions, which is our dividend policy. So obviously, the key here is that our dividend policy is being reaffirmed by the Board, 65% to 75% of our recurring net income. And the key central piece of our dividend policy is indeed the earnings trajectory that we are committing to. And this is throughout the period. This is across the disposal process that we are presenting to you. So the key message here is that, yes, we are driving dividend growth from consistency in our policy and earnings growth. That's really, really the key message, Emmanuel, on your questions.And indeed, we've introduced a floor, understanding and hearing, listening to the investors' feedback, also integrating market practices among the peers. We have redefined our peer benchmark group, which is, I think, an important step with the way we define performance within ENGIE. And so taking all this into account, we have introduced a floor at EUR 0.65.A bit of an insurance policy. We don't intend to [ change ] this floor at EUR 0.65 because we are on this growing earnings trajectory, which will drive dividend and dividend growth, but having this stability in our dividend policy, Emmanuel. So I hope that answers the dividend question.And I think I'm going to pass it now maybe to -- on the other bricks of the bridge EBIT, the gray boxes. Judith, do you want to comment?

[Judith Hartmann, CFO & Executive VP]

Yes. So on your question on the bridge and what is in the other topics. So again, it's obviously simplified to bridge to show you the contributions of the plan. And so yes, we did lump quite a lot of things into Others to, again, have a simplified version.On '20 to '21, you've mentioned it yourself, COVID is, of course, a tailwind. There will -- there's some remaining COVID this year but very limited in comparison to last year. Foreign exchange and the Texas severe weather event, if you add those together, then you can -- you will get to the EUR 400 million to EUR 800 million number.And on the EUR 200 million on the '23 bridge, the topics that I would mention are really basically on the page afterwards also, which is the infrastructure remuneration and the thermal reduction. Nuclear volumes are, of course, coming down. You mix that with some of the positive effects that you have mentioned, and you get to the EUR 200 million. So that is really how you can look at it. And again, the important message that we want to get across is the plan that we are presenting today is really moving this company, and you can see it on this bridge.I think you had a question on the contribution of the 3-year. So EUR 1 billion is what falls into this 3-year period. I think you mentioned EUR 1.5 billion, which seems very optimistic for the pro forma view. But again, you can assume that, obviously, the first 2 years of investment already contributing to the third, and then it's only in the third year that you have some overlap over the future periods.

[Emmanuel Philippe Turpin, Equity Analyst]

If I just may rebound on this. Not trying to be optimistic on the COI, but if you target 7.5% of ROCE over EUR 15 billion to EUR 16 billion of CapEx grossed up at 25%, the math are pretty straightforward, hence the calculation. But your message is that it's more than EUR 1 billion.

[Judith Hartmann, CFO & Executive VP]

Indeed. [indiscernible]

[Emmanuel Philippe Turpin, Equity Analyst]

Of course, ROCE is not a static number, and it may take a few years to get to full potential. Maybe that's the explanation as well.

[Judith Hartmann, CFO & Executive VP]

Absolutely. So it's not 100% easy to read across. But yes, it's higher than EUR 1 billion but lower than your EUR 1.5 billion.

[Emmanuel Philippe Turpin, Equity Analyst]

Okay. Just -- if I could just rebound on Catherine's comments on the peer group. Many years ago, I guess, management shared with us what peer group they were benchmarking themselves against in terms of dividend policy. You said that you revisited that benchmark. Would you be able to share with us what companies you put in your benchmarking group?

[Catherine MacGregor, Chief Executive Officer]

So Emmanuel, what we have done this year, 2 things. We've revisited our peer group. And we also, as I've mentioned in my presentation, improved the contribution of relative performance to our long-term incentive plan. So before we had a [ TSA ] as compared to our peer group, and now we have added the net recurring income growth over the period. So we've actually incrementally augmented our focus on peer groups. And indeed, we have disclosed our peer groups in -- actually in our UID. So I can share it with you.So we have notably Enel and Iberdrola, EDP. We have Naturgy and Snam as well as RWE, which are the key players in our peer group. So this obviously drives the way we look at our performance. So as exemplary or as demonstrated in our [ LT ] plans, but then when we think of, obviously, dividend practices, et cetera, these are the type of companies that we will be looking at as a key benchmark. And of course, it represents the future of ENGIE before you could have some more asset-light service companies as part of our peer groups. And obviously, we took that into account as we are projecting ENGIE to its future perimeter.

[Operator]

And we will take our next question from Stefano Bezzato with Crédit Suisse.

[Stefano Bezzato, Lead Analyst on Southern European Utilities]

Two questions from me. The first one on your EUR 9 billion to EUR 10 billion disposal plan, can you give us a rough idea if that includes anything in Networks? In the past, you have mentioned the possibility of opening up the capital of gas networks. Would that be something that is included in that EUR 9 billion to EUR 10 billion indication? So that's the first question.The second question, probably for Paulo, on your expectation of a falling LCOE or declining LCOE. Can you give us some color on how you think cost of material inflation will play out in that equation? And maybe if you can give us an idea of the planned ambitions that you have, how much have cost of equipment that is already locked in?

[Catherine MacGregor, Chief Executive Officer]

Yes. Thank you, Stefano. So let me take the first question, and then I'll pass the following LCOE questions to Paulo.So in terms of disposals, and just to remember -- to remind what we're trying to do with disposal plan, the whole key objective is around simplification, simplifying the group. So obviously, BRIGHT is a significant contributor to the EUR 9 billion to EUR 10 billion.We are also including our decarbonization action. So obviously, coal exit plans are also part of that. And we are also looking at our selectivity on the geography front where we said 70 to 30. So that is also contributing to the EUR 9 billion to EUR 10 billion.And the fourth category, if you like, that we have introduced is this whole rebalancing our networks from very French gas-heavy to a bit more international and a bit more gas to power balance. Now this is a rebalancing. So the choice of word here is important. And so decreasing a little bit our exposure to our gas infrastructure in France could be considered as part of this EUR 9 billion to EUR 10 billion. So obviously, we have a range of scenarios, but this could be one of the topics under consideration indeed.Paulo, you want to comment a little bit on the LCOE?

[Paulo Jorge Tavares Almirante, Executive VP & In]

Yes, of course. Thank you for your question. So regarding the -- what we see now in terms of the increase on the cost of some materials, we believe this is a short-term case. And more importantly, the evolution of technology has demonstrated that it's able to compensate for that kind of increases. So we strongly believe that the LCOE will continue to decrease. Maybe in the short term, that it will be not at the same level of decrease, but I think we are on that trend. By facial panels, for example, larger and more efficient panels, tracking systems on solar, cooling of inverters, so these are examples of additional performance coming through technology which will offset, I would say, the short-term impact of materials increase.In terms of what we have locked in, for now, we have about 7 gigawatts of assets that are under construction and secured, and that's locked in. So that's a good level, I would say, for this phase. And we continue to negotiate with the suppliers for the next years.

[Catherine MacGregor, Chief Executive Officer]

And maybe just to complement maybe what Paulo has just said. This whole setup of renewable GBUs led -- driven by Paulo was -- sorry to -- I don't mean to flatter you, but was a very strong industrial experience. What we're trying to do here is to make sure that indeed we can leverage ENGIE's renewable size. In the past, it was a little bit difficult because of the organization which was quite fragmented. By having a GBU dedicated to renewable, the whole ambition, and we've started to do that, is to have very privileged suppliers relationship, able to drive and use the advantage of the size. And as we are growing our Renewable businesses, we feel that leverage from an organizational standpoint will be strong, and also in terms of volume, will actually get stronger. So this is really a key aspect to counteract some of the inflation effects that you are rightly so mentioning. Thank you, Stefano.

[Operator]

And we will take our next question from James Brand with Deutsche Bank.

[James Brand, Research Analyst]

Thanks for the presentation. It was a very clear, concise chart, so thank you for that. So 2 questions from me. The first is the -- just wondering whether you could just give a bit more detail on the growth CapEx that you're spending in Energy Solutions. I appreciate it's 15% to 20% of the total, but is that going to go on organic CapEx, on acquisitions? I was particularly interested in whether you thought there were growth opportunities in district heating because that's one area where assets are being valued very highly, but where traditionally, profitability has been quite stable. But as we kind of move through the ENGIE transition, it seems having a bigger role.And then secondly, on your renewable investments, I was wondering whether you could say how much of that you're expecting to be covered by government PPA, corporate PPA and whether you're expecting to take on any merchant exposure.

[Catherine MacGregor, Chief Executive Officer]

Yes. So let me start on the Energy Solution Capex. And frankly, this is a bit of a jewel that we want to make shine over the next few years because we have, as I think I mentioned in my presentation, a bit of an incredible situation here where you have a huge growth, and this growth is driven by -- again, I'm repeating myself, but all this climate commitment, they have to be delivered through the development of this low-carbon distributed infrastructure.So a company, for example, and every company CEO I meet today is having done this commitment, having committed to net zero, is coming to ENGIE and says, you have to help me because it's not our core activities and we're not quite sure how we're going to get to this net zero. And typically, it's around facilities, it's about plants, it's about manufacturing facilities that have a huge potential for decarbonization, often needs an infrastructure-type investment and then the operation model that goes with it. And this is where ENGIE is so pertinent.So in that area now, in that context, the example I gave in Singapore is very, very telling. This is a district cooling. So this is a new district cooling. So it's new. We are building it and then we will operate it. And then once we're there, once you have invested in the infrastructure and the CapEx, additional customers, obviously, from a profitability standpoint, it's an amazing business model, as you can imagine. So very, very excited about the energy solution. In fact, in my mind, there is -- the whole challenge here is about selectivity and picking the right opportunity because there are so many. So we can be selective, we will be selective, and this is one thing that we will be driving the organization for.Now so organic versus M&A, obviously, we'll privilege organic development, but we will look at M&A very carefully because you're right to say that we have seen in this business some premium that, frankly, we are not ready to pay. So we are going to be very disciplined, very careful and always looking at, okay, how are we going to bring value? What is our industrial role? How do we make this asset better than it was run before? And there's going to be a very strong focus within this GBU to make sure that we bring value if we were to do M&A in that domain. But really, really exciting energy solution with this infrastructure business.And then there was a question around renewables. Again, government, corporate PPAs versus merchant exposure, I think, Paulo, since you've talked about energy management. And before you do that, I just want to make a comment that what Paulo has shown you on energy management is very important. It's super differentiated. And it is something that he is running as part of his Renewable businesses. So the whole idea here is to fully, fully leverage the synergies between our energy management organization and our renewable organization. We thought it's truly differentiating. It's a competitive advantage. And this, in a way, integration, from a deployment standpoint, geographical footprint, is going to be really important to us.And Paulo, I'll let you take over.

[Paulo Jorge Tavares Almirante, Executive VP & In]

Thank you, Catherine, and thank you for the question. So maybe let me go through the different key countries where we're going to invest. So let's start with France.France, as you know, we are talking of feed-in tariffs that are awarded through an auction; using your words, the government kind of contract or PPA. Then we have the United States. In the United States, you have a mix of corporate PPAs and merchant positions. What we see there is, in fact, a huge appetite for corporate PPAs, different companies that want to secure green power, not only because they want to show that they are now consuming clean energy, but because it's cheaper than the fossil power. So that's for the U.S. And there, we make a combination of the corporate PPAs with a multitude of different instruments to cover our risk on the part that is open, that is not secured under corporate PPAs.Then we have Brazil. And in Brazil, we have the 2 cases. We have auctions, which are awarded from time to time, and we bid into that auction. But we also have a very significant B2B supply portfolio. And there, we can do short-term contracts, 3 years, 5 years, 7 years, which also complement sometimes the volumes that we take from the auction. Sometimes they are sufficient to develop the project.Then we have Chile, as Catherine mentioned before. And in Chile, we are transforming existing PPAs attached to thermal assets, which will be attached to our renewables development. All this combination, I can give you a figure, around 50% will be around corporate PPAs.But more importantly, for us, we have a very disciplined investment process. We lock in a significant part of the NPV at the FID. So at the financial investment decision, we make a clear call on what is the level of NPV for this project. And then we decide to go or not, depending if that threshold is achieved.

[Operator]

We will take our next question from Meike Becker with Bernstein.

[Meike Alina Becker, Research Analyst]

I think I have 3 left on my side. One, just a brief clarification, if you don't mind, on the Renewables. Your target of 200 basis points over the WACC, is that including or excluding the farm-down? So should I actually think you are targeting organically 200 basis points over WACC and then the farm-down proceeds on top of that? Or is that included?The second question is on the Energy Solutions business and the distributed solar. And we have discussed sort of like a lot the Networks business and the long-term footprint of that business. How should we think about the additional capacity in distributed solar? Is that -- does that also have the long-term contracts attached to it? Or is it more sort of like a building -- the building part? Is it so integrated, as you just described, in the sort of like overall service provided to the customer? I think it's actually difficult to pick apart. But just sort of like interesting, if you could contrast it, a little bit relative to the Networks business.And the last question was on the performance part of the business plan. I guess one way to look at the EBIT waterfall between '21 and '23 is that the asset rotation, the investments and other kind of net off, and then there is the EUR 500 million growth from performance. Do you mind sort of like just going a little bit deeper? Is that -- I mean, how much of that is employee-related? Are there captured costs? Or is it really the performance improvement, as you described, in Renewables, the underlying sort of like improvement, the size, the growing?

[Catherine MacGregor, Chief Executive Officer]

Okay. Thank you. Thank you for the question. So on distributed solar, indeed, we have an ambition to grow this business quite a bit, but very, very focused in distributed solar on B2B type of activity and often trying to bring integrated solution to our clients where distributed solar contributes and is part of the solution. So it's really very much in line with our view that we are going to be partner with our customers and, over the long term, being able to help them decarbonize, distributing solar, bringing a very good solution as -- among others, if you like. But definitely distributed solar, we have an ambition, and we'll share that with you, obviously, in the coming -- when time comes, when we're ready to disclose that.We obviously don't have that -- those gigawatts of distributed solar. Obviously, they are not included in our centralized renewable generation capability. This is accounted separately for sure.So I think you asked about the net growth -- the performance plan. So let me talk a little bit about that. Several buckets on the performance plan. I think you mentioned EUR 500 million. So just to clarify, we're seeing a EUR 600 million EBIT over the 3-year period. Really, 3 broadly, 3 main categories, efficiency related to the full deployment of digital and data tool. I insist on this because I wanted to really contrast the richness of our offering in digital and IT, as shown by the number of talent we have in that domain with the deployment opportunity that we have. So we have deployed a lot of these tools. But with the GBU, we're really looking forward to an at-scale deployment. And this will contribute to the performance plan quite significantly.Second bucket, if you like, it is indeed operational improvement. I think Paulo gave you a really good example. And this is really about every GBU having very granular operational KPIs linked to financial results, driving their operational performance to show financial improvement. And today, we feel that by the sheer better visibility that each of our EVPs will have on their business with very specific and adapted KPIs to their operation, we will drive improvement. Multi-activity BUs, it was very difficult to have this level of granularity to drive these operational improvement. So this is well identified, and we have a road map, each EVP is accountable for delivering on that. So that's the second category.And the third, which is around the support function. And here, again, we feel that by having a bit more centralized approach to how we manage our support functions as well as our shared services and increasing the deployment of our shared services, ensure that they are best-in-class, et cetera, this also contributes to a third bucket to that performance plan.And maybe I will add very modestly that we also have a few activities that are in the underperforming bucket. And each of the EVP has some of these underperforming units well identified and has a plan to improve the performance of those units. We don't have that many, but we have, and so there is also very high attention to make sure that these underperformance get fixed.So I think, Meike, that's really the key points on performance on performance plan that I would like to comment. And then there is a question around the WACC over 200 bps. And I think one can say that, indeed, it includes the DBSO sell-down margins. Okay?

[Meike Alina Becker, Research Analyst]

Very Clear.

[Operator]

And we will take our next question from Louis Bouchard with ODDO.

[Louis Boujard, Analyst]

Thank you for your good presentation today. Regarding the question, it's going to focus mostly on Renewable, even if there is not a alternative aspect to look at as well. But maybe 3 question on this topic. The first one is regarding the cover ratio of 2x from 2020 to 2025 considering your current pipeline and advanced development project. In the end, it appears to be pretty cautious for you to remain at 4 gigawatts. It seems that with 32 gigawatt blended in terms of advanced development, et cetera, to try to develop organically, only 16 gigawatt could eventually have been a bit higher than that. So what has prevented you from eventually being more aggressive on the short-term target in terms of Renewables?My second question is on the LCOE. You mentioned 2% to 4% of reduction on the LCOE going forward. I'm not sure to understand if you're talking about LCOE reduction, including CapEx and O&M, and if we're talking only for the future project development or if we are talking there only on the one that you expect to achieve on your current assets and then mostly on the O&M, for instance. So could you eventually clarify a little bit what do you mean with this 2% to 4% in terms of prospects and what we are talking about in terms of assets?And then my last question is on the 150 to 250 basis point returns with the average of 200 basis points. I was a bit curious to understand, what would make you prefer a 150 basis point above WACC development project? Is it considering the geographies, considering maybe the hub effect that you could have in the future project? What would make you accepting to going below the 200 basis points and eventually take 150 basis point over WACC development project?

[Catherine MacGregor, Chief Executive Officer]

Okay. Very good. Let me just start by saying that, obviously, disciplines in return, WACC plus 200 is really a compass in the north. I think in Renewables, given the variety of projects and opportunities that come our way, indeed, we will be looking at giving ourselves a bit of a range from 150 bps to 200 bps, aiming to be on average add the 200. And I think you've actually quoted and listed some of the -- in the key factors where we would give ourselves a bit of flexibility to go towards the 150. And it's really indeed the geography. Is it in a place where we have already a platform and we're just building incrementally on this platform? Do we know the location? Are we super entrenched with the local ecosystem, the hub effect and potential synergies with the other GBUs? And I think we've shown you in Chile how very nicely all the GBUs can provide values together to our customers. So that's really important, the system play, for sure.And in general, our comfort factors for the risk of the project would be all criteria that we would consider. But I think it's really important to reiterate that our commitment to the disciplined strict return expectations and centered around 200 with a bit of flexibility in very, very specific cases. So I think that's the point on profitability.I think you asked the question on cover ratio, and I'm going to let Paulo comment a little bit. But I just think one thing that we're really trying to vehicle today as a key principle is that we want to show you our ambition, and also we want to vehicle the fact that we want to set them at a credible level. So we really want to build credibility. We've delivered credible track record in Renewables over time. We're very focused to the 3, 4, 6. We've shown you our 56 gigawatt pipeline. It's a very solid pipeline, and I make a bit of a side comment here because sometimes when you see how pipelines are accounted for, it defers, right, from one period to another. So I think you'll see that we've been very rigorous in the way we're counting that pipeline. And so now I've set the floor for Paulo to comment about how this 4 gigawatts is cautious or not.

[Paulo Jorge Tavares Almirante, Executive VP & In]

Thank you, Catherine, and thank you for your questions. Let me start with that. I think we are not in the race of announcing capacity. This is not what we are doing. We wanted to present realistic and credible targets. Maybe there's not a clear view on this. When we say that we're going to deliver 4 gigawatts, it means that in every single year, we have to have at least 6 gigawatts under construction. So jumping from 3 directly to 5, 6 or more, it's not feasible. To do it correctly, to create the value, to be selective on the projects is not feasible. So we are jumping from 3 to 4 and then to 6. And this trajectory is also an average. For example, we expect that in 2022, it will be the start of the ramp-up. '23 and '24, we will be on the average. And '25, it will go above that average with the contribution of offshore. So that's, I think, a well-planned, well-thought of way of delivering on these targets because we also are delivering on previous years, and I think that sets up our track record, and we want to continue on that same path.Regarding LCOE. Absolutely right. So part of it will be value creation, the part that is on O&M, the data that we have now that we are starting to do data analytics because you need some time for these assets to be in operation before you can look at the data. And in many cases, they were contracted with the original supplier. So now we have the opportunity to start improving the performance of these assets, and that will generate additional value. On the other side, we want to reduce our CapEx, to lower our CapEx, and that will go through discussions, volumes with suppliers, and that will impact on the new fleet. But this is more likely to improve our competitiveness than to generate additional value. And I think on the returns, Catherine already commented, I just add one element. We see clients now wanting to do corporate PPAs in multi-locations. So several of our corporate PPA clients, I mentioned some during the presentation, they are not going for a specific market. They want assets in different markets. And it's not necessarily the same risk profile, and also the volume that we can lock in allow us to -- if a client is looking for an asset on a specific market, to maybe accept a lower return on that specific asset because on the overall contract, we are at the average of 4 plus 2 or even above if that is possible.

[Operator]

And we will take the next question from Sofia Savvantidou with Exane.

[Sofia Savvantidou, Head of Utilities Equity Research & MD]

A very good presentation, and I like how the focus really is on the future and how ENGIE will look like going forward. However, in recent months, we have all heard the questions about what is different this time than before. So Catherine, I would love for you to tell us a little bit of some of the things you have changed since you came at ENGIE, especially on the capital allocation process and if there are any examples you could give.And then my second question, probably for Paulo on Renewables. I hear everything that you say, and it's clear you're emphasizing specific geographies and the one -- and the areas that you are strong at. But is there an ambition in the future to expand that geographically? And are there any particular markets that maybe you are monitoring for an opportunity to enter?

[Catherine MacGregor, Chief Executive Officer]

Okay. So thank you, Sofia, for your questions. So I have now been 5 months at ENGIE. And actually, it feels much more because I do believe that we have done a lot. And it all started with the establishment of the new organization and the new team. And I have picked the team, myself, handpicked the team because I really believed in their ability to deliver what we want to do here with this road map. And in fact, today, Paulo is presenting Renewables, and next time then you will see other of our EVPs, and you will, I hope, notice that they are as aligned as we are the 3 others here to really adjust that more industrial approach that we want to drive at ENGIE and sharpen our focus on performance.On the capital allocation question that you're asking very, very specifically, so I've mentioned the fact that we -- ENGIE is a development machine. And ENGIE naturally will bring to the [ ComEx ] table a lot of opportunities, a lot of opportunities. And the shift that I am trying to drive is to say we are going to continue to have this development machine working, but we are going to align it with where we want to go. And what that means is that we're going to stop trying and develop projects that are not in line with what we're trying to do.So the growth in renewables and infrastructures, obviously, carbon trajectory, really important returns for sure. And then what do we bring? What is ENGIE's differentiation? And it cannot just be ENGIE is able to financially engineer a superb SPV, which ENGIE is really good at doing, and that's good. But we also want to bring value as an industrial. We have to have a tangible competitive advantage. And so, again, in practical terms, and the team, if you were with them, you could attest that, but I have said no to many projects, and I have pushed back, and I have asked again, show me how we are bringing value.Another aspect of the capital allocation is around M&A. Obviously, ENGIE is a very well-run company. We have thresholds, M&A thresholds. This is something that we have changed. We want to have a better oversight of the M&A activities because M&A can be quite cheap, but you're stuck with a new company for a long time. And if you don't have industrial synergies, if you don't have a good integration plan, if you don't really understand how it's going to bring value and how you will bring value to this M&A, you're going to have an issue. So we are very disciplined, together with the team, to make sure that we are overseeing the M&A activities with a great, great level of [indiscernible].So that's some of the things practically, Sofia, that I think we are -- I know we are doing differently at ENGIE since I joined and since I formed this new team.I think there was a question around geographies. Paulo, you want to comment? You want to take this question?

[Paulo Jorge Tavares Almirante, Executive VP & In]

Yes. I can take the question, and thank you for it. So ENGIE is a very large group with a large footprint. We were in 43 countries doing renewables. And we felt these were too many countries. We have decided to exit 20 of these countries, and we are in the process of implementing that. Still, we will be present in 23 countries, but our focus will be in 5 priorities, 4 countries that I have mentioned, France, U.S., Brazil and Chile, and offshore wind. And I think for the next 5, 6, 7 years, I think we have enough to do in that priorities and, of course, maintaining a presence and development opportunities in the other countries that are still part of the footprint of ENGIE.

[Operator]

And we would take the next question from Peter Bisztyga with Bank of America Securities.

[Peter Andrew Bisztyga, Head of Pan]

Yes. Just a follow-up from me. So National Grid is paying a big strategic M&A premium to pivot out of gas networks and into electricity distribution because they see more visible growth in the latter. You were talking earlier about sort of a slower rebalancing. So I've got 2 questions about that. One, firstly, does National Grid's sort of strategic decision leave you concerned that you maybe are not moving fast enough to get out of gas, particularly that your incentive package is benchmarking against electricity-focused peers like Enel and Iberdrola?And then secondly, just wondering actually why National Grid is not in your benchmark given that Snam is. So are you actually giving yourself a sort of slightly easier target by including Sam?

[Catherine MacGregor, Chief Executive Officer]

Okay. Thank you for the question. So maybe just to reiterate that, obviously, we are very committed and we are very convinced that our assets -- gas assets in France have a lot of value and will serve the energy transition for decades to come. Gas is a key energy transition fuel. France has a very credible plan to develop the biomethane. So gas will be to 2050 pretty much all green in France.And so our gas assets, with this scenario panning out, have a long future ahead of them. And that's without even starting on the hydrogen topic, which I mentioned, but past biomethane, we do feel that having gas assets is a benefit to the hydrogen economy that we anticipate, obviously, not tomorrow, but as I think I've explained this whole story about hydrogen backbone, the fact that green hydrogen at some point, when huge volumes are reached, you will need to produce this cheap green hydrogen where affordable renewable energy is available. And in Western Europe, you're going to get some constraints in terms of how many new projects you can bring. So there will be places where green energy will be produced that when -- green hydrogen will be produced, not necessarily where the consumption will take place.So this whole view that at some point, we're going to have to transport hydrogen or a proxy for hydrogen in a gas manner, we're very convinced of. So long-term future for gas assets in France, we feel strongly about, and obviously, I'm not going to comment about National Grid's own strategy. We have all our different view.Now having said that, we are -- obviously, we love electricity. We are strong in renewables. And so what we've said is that, yes, we would be looking at rebalancing our network positioning. And this is why I showed you a little bit with our Latin America specifically presence where we do have an exposure to power transmission lines, where we have an industrial role there, and this is something that in terms of rebalancing, we could consider exploring but very selectively and always when we can have that industrial role.So obviously, every company is different and National Grid, I respect them, but I think we feel we have these very nice specificities. It's -- we feel we are differentiated that way to have this power and gas. And when I think hydrogen, I feel power meets gas. So I think we are actually in a good place with these 2 elements, which are going to be so important for the affordability and sustainability of the energy transition.And yes, we didn't have National Grid in our peer groups. Obviously, we had to make some choices. And we looked at, obviously, portfolio mix, geographical presence in order to select this peer group, and National Grid didn't fit in our criteria. But we have some really well-performing peers in our peer group. So I don't think we are being shy.

[Operator]

And we will take our next question from Emmanuel Turpin with Societe General.

[Emmanuel Philippe Turpin, Equity Analyst]

My first follow-up question is about CapEx in Networks, please. For growth CapEx, you mentioned EUR 5 billion to EUR 5.5 billion. And in some of the slides, you mentioned some CapEx for the French business in infrastructure. I wanted to know if you had qualified some of the French infrastructure CapEx as growth CapEx, so essentially a split of your growth CapEx by geography.My second question is about the geographical footprint. And Paulo started to address this point on Renewables, but you have a target of being exposed to less than 30 countries by 2023. How many countries are you operating in as of 1st of Jan this year? I guess that your disposal plan may naturally help reducing the geographic exposure, but I'm not sure. And therefore, for what is not related to disposals, could you give us the revenues and COI that you generated in 2020 in the geographies that you will seek to exit from? I expect it's a small number, but it would be good to know.And my last question is on management incentives. I may have missed your comment, and I'm sorry about that, about how many top managers will be linked to this incentive plan. And looking at the slide, which described the plan, I couldn't help notice that amongst your financial KPI, you have net earnings and not EPS. You also have economic net debt. And it's super helpful that you made it clear that big M&A is not part of your plan because the easiest way to achieve those financial targets would be to issue capital and make acquisitions. I would like to know if your remuneration committee discussed whether -- why net earnings and not EPS and what your view on that.

[Catherine MacGregor, Chief Executive Officer]

Okay. So let me -- thank you, Emmanuel, for your questions. So I think you -- maybe I'll start with the geographical question. So you're right to point out that we're going from 70 to less than 30 countries by 2023. And you're right to say that the EUR 9 billion to EUR 10 billion includes some of this geographical exit plan that we have. Now in terms of impact on EBIT, I think quite small because typically those countries where we decide to pull out or to stop developments typically don't contribute large amount of earnings. So I don't think that as a material impact.And then you asked how many countries were we in. I'd say, without disclosing the exact numbers, but between 70 and 30, we are -- that journey that we've started, and I think it was back in 2018, we are well advanced and we are more than halfway. That would be a number to give you qualitatively how many countries we are in today.You asked me about the management incentives. Yes, I did mention in my commentary, prepared remarks that this indeed management plan is related to top 500. It's the 500 top leaders of the company, Emmanuel, that are going to be aligned with this incentive plan. And obviously, that's really important because I do believe that alignment behind those targets is absolutely, absolutely key in terms of performance and getting to the result and the outcome that we're looking for. So absolutely.And then you had questions about incentive plan. Obviously, it's really around our remuneration committee discussion, and we feel that these metrics were the best one to drive the performance of ENGIE in the years to come with the ability, of course, really important, to align the 500 leaders across these KPIs. And obviously, it's part of the criteria. When we decide on the performance plan, we want to make sure that we can operationalize it, which is the case with the plan that we are proposing this year.I think you asked a question around network growth CapEx. So yes, we do have growth CapEx in France. The smart meter rollout has contributed and continues to contribute to growth CapEx. And we also have biomethane development because you have to make some adjustments to our network. That falls into the growth CapEx category indeed, Emmanuel.And then there was a last question. Did I miss? No, I think I covered all the questions, Emmanuel.All right. So I think we are at the end of our Q&A session. So I wanted to once again thank you all for attending, participating and asking us these interesting questions. So just a few points really for us. It's a simpler, more industrial engine, very focused on renewable and infrastructure, committed to net zero by 2045 and returning to growth in the years to come. So thank you very, very much, everyone, and looking forward to interacting in the near future. Thank you.