Uniper SE (UNPRF) CEO Andreas Schierenbeck on 2020 Full Year Results - Earnings Call Transcript

Uniper SE (OTCPK:UNPRF) Q4 2020 Earnings Conference Call March 4, 2021 2:30 AM ET

Company Participants

Stefan Jost - EVP Group Finance & Investor Relations

Andreas Schierenbeck - CEO

Sascha Bibert - CFO

Conference Call Participants

Sam Arie - UBS Investment Bank

Peter Bisztyga - Bank of America

James Brand - Deutsche Bank

Vincent Ayral - JP Morgan

Lueder Schumacher - Societe Generale

Deepa Venkateswaran - Bernstein

Alberto Gandolfi - Goldman Sachs Group

Piotr Dzieciolowski - Citigroup

Elchin Mammadov - Bloomberg Intelligence

Operator

Dear ladies and gentlemen, welcome to the Analyst and Investor Conference Call of Uniper. At our customer's request, this conference may be recorded. [Operator Instructions].

May I now hand you over to Stefan Jost who will start the meeting today. Please go ahead.

Stefan Jost

Good morning, dear analysts and investors. Welcome to the Uniper Call for the 2020 Financial Year, and thank you for participating. I'm sitting here with our CEO, Andreas Schierenbeck and our CFO, Sascha Bibert, in our headquarters in Düsseldorf.

Most of you may not yet know my voice, I am Stefan Jost. I am the new Head of Finance & Investor Relations at Uniper. I'm new to this position, but not at all new to the group. I have been working for this company for more than 15 years now, most of the time in M&A and Strategy. I look forward getting in touch with you online and hopefully at one point, in person. Needless to say, our experienced Investor Relations Team remains at your disposal for all topics and questions.

Looking at today's agenda, Andreas will start with the highlights of the past fiscal year, and then move over to Uniper's key strategic objectives, going forward. Afterwards Sascha will dive into the details of the financial results and provide an outlook for 2021. Right after the presentation, you will have the chance to raise your questions.

Having said that, Andreas, please?

Andreas Schierenbeck

Good morning, everyone and welcome also from my side. Thank you for participating in our conference call today. 2020 was a remarkable year not just because of the COVID-19 pandemic. We took great care of our employee's, the highest possible level of health precautions through extensive home office options and adjustments to our operating procedures and that had worked very well. We will continue to develop our organizational processes in this way for the benefit of our employee's motivation and to make process even more efficient. 2020 was only - was always and also remarkable year in terms of boost business and strategic decisions within the company.

Let me start with a central topic for fiscal year 2020. I can be very happy with our financial performance in 2020. Uniper's group earnings ended at the upper end of the guidance ranges. Adjusted EBIT increased by 16% and reached the upper end of the range at around €1 billion. Adjusted net income increased disproportionally by 26% to €774 million. The key factor here was the improvement in economic interest income that we anticipated and the lower operating tax rate.

And now to the outlook. We expect another very solid operating results for fiscal year 2021, albeit, not quite on top as the prior year. Now let me go into more detail on the outlook and the key earnings drivers for 2021 in the second part. Let's turn to the development of Uniper's portfolio and its strategic move. The financial and strategic update in March 2020 was the initial spark to enable us to significantly accelerate our development in the changing energy world.

We have placed a much stronger focus than before on decarbonizing the portfolio. For 2035, we have set an ambitious target for Uniper to become carbon neutral in European power generation. It was also a message for our own organization, empower energy evolution and managing the transition by setting up new sustainable sources of earnings and at the top of Uniper's radar.

This year Uniper is working to specify further targets for reducing carbon emissions. At the same time, we want to make the development steps in terms of ESG more transparent to further improve Uniper's ESG rating.

In 2020, Uniper also took steps to align its organizational structure with a new strategy. One example is in the area of renewable energy. Here, we want to move out of the niche where we have already been operating internationally for some time in the business field of solar and wind power purchase agreements. In the area of entering a sustainable hydrogen economy, we have set up teams which enables us more and more to utilize our competencies in a variety of different projects on the value chain.

And as a part of European policymakers, we ought to be able to launch the first commercially functioning flagship projects and joint ventures by 2024-2025. Here we are talking about electrolyzers plant in the range of 25 megawatt to 100 megawatt. The year 2020 saw quite a few new project initiatives. Going forward, our task now is to put our projects and plans into practice.

Coming to the next slide. As already mentioned, 2020 saw some highly volatile commodity markets throughout the year with a clear upward trend towards yearend as positive news on COVID vaccines hit the headlines. For the fossil commodities, gas in particular, is sensitive to swings in the economic outlook. The price rebound was supported by quote rates in Asia in December 2020 and early January 2021, followed by cold snaps in Central Europe and the U.S. and led to strong demand peaks and massive price prevalence, especially as the gas and energy markets.

In our view, globally, natural gas will remain an important fuel for the transition, because that'll be decarbonized over time. I think this winter season has done quite a good job to remind us of that.

Moving over to carbon. Here the European Allowance unit price has increased by around 150% since its low in March 2020. The key driver for higher prices is the commitment of European countries to reduce their carbon emissions even more than initially planned by 2030. European's ambition was a rightful cut of 40% in greenhouse gas emissions from 1990 levels to minus 55%.

Following the gas and carbon prices, electricity prices in Europe showed also a recent uptick. In Central Europe, the price setting power plants had to be [covered], which explains the level of correlation. Nordic electricity prices have also recently recovered significantly from their lows. The linkage between Nordic and German outright prices is limited, as of today. The upward trend was far more influenced by the weather situations than carbon, really.

Spark and dark spreads show how fossil power plants move in the emerging market. Dark spreads remain weak, spark spreads in our two important markets, the Ukraine and Germany, are at reasonable levels. The German peak spark spread has been in the [dark rejected 9:02] area now for quite some time. This development was a base for bringing back the German COGT power stations, Irsching 4 and 5 into the merchant market in October 2020.

However, Uniper fossil power plant portfolio is more than just about how high the spread level is. Given the embedded optionality, the value capturing does not end by hedging which means looking in positive spread and then waiting until delivery. If markets are volatile, like we have been from 2018 to 2020, you're able to churn those positions, which means buyback spreads, what they collect and potentially rehash again later. By doing so, you can capture significantly more value than with a steady catch approach.

Therefore, there's not a stable correlation between volumes and earnings on a spread plan. The year 2020 is a good proof point for what - for that as you will see in data section. Now for the underlying market and our key performance indicators, on the next slide.

On this slide, you can see how our operating KPIs are developing during the business year 2020 compared to 2019. Let's start with the global commodity business. We've got 2020 with full physical gas storage facilities, an unusually high level due to a warm winter last season. However, entering the winter season 2020-2021 the market changed.

An early quote, but in Asia the growth in LNG cargos from Europe to Asia, which has been reflected in rising cash spot price on the European markets and higher withdrawals from storage since the beginning of December. Physical storage level at the end of the year, we are back to the seasonal normal of 75%. With the cold waves in Central and Northern Europe, storage withdrawal further accelerated in January to mid-February 2021. At the end of February, European storage levels were around 37% almost at normal level of deals.

Recent market developments enabled Uniper's gas business to get a promising start to the year, once again, one might say. Looking at our European generation segments, our power generation volumes has fallen by 40% year-on-year. This decline is clearly attributable to the COVID-19 related lockdown in the second quarter. As a reminder, in the half-year's page, we saw a decline of 25% here. Coming up at 40% lower volumes at the yearend means the second type of fiscal year 2020 was largely stable compared to prior year.

Going through the [indiscernible], hydro volumes in Sweden benefited from higher precipitation all over the year while hydro volumes in Germany were clearly below average due to long periods of drought during last summer. Nuclear was down around 30%, mainly driven by the closure of Ringhals 2 and extended outages at Oskarshamn 3, Ringhals 1 and 3.

Broad starting point for 2021 means that even with the closure of the Ringhals 1 nuclear plant at the end of 2020, you still expect overall higher nuclear generation volumes in 2021. Gas and coal-fired power generation was down 12% mostly due to a lower power demand caused by COVID pandemic and the greater availability of renewables. After a strong decline in H1 2020 there is a drop of 35%, the second half was way better with an increase of 20%. Here, the start of Datteln 4 coal power station and bringing two gas plant Irsching 4 and 5 back into the merchant market are the main positive drivers.

The volumes in the Russian power generation business showed a pattern very similar to the European business. Following a double digit decline in the first half of 2020, it was affected by unusual warm weather in Q1 and a lower demand to COVID-19 as the OPEC+ Agreement that became effective from May last year. Hydro generation production in Russia increased significantly in 2020 in both pricing zones that all the results got lower price.

Finally, Uniper carbon emissions for the group were further down, 9% for the full year 2020. Here, the decline of the second half of the year was slowed down by the increasing deliveries of the fossil power plants. Overall, this is a movement to the right direction that comes through our decarbonization efforts. Targets, going forward, are summarized on the next slide.

We are constantly working to improve our ESG performance and to make our achievements more transparent to the external world. Beyond, it is important to understand ESG is not only a side topic for us, it is an integrated part of our new strategy available. For example, as part of our Sustainability Improvement Plan, most of our teams have annual ESG targets defined and most importantly, they consider various ESG criteria's, including emissions for all of our different segments. That's the central part.

To look at this topic, not only retrospectively but also prospectively. Starting with the retrospective view, putting decarbonization and the energy transition at the center of our new strategy, we made very significant steps ahead towards the last fiscal year 2020. Our Group-wide carbon intensity targets of an average of 500 grams per kWh of 2018 to 2020 coming to an end, we saw the odd need to set ourselves new rather mid-to-long term targets and above all, more efficient carbon reduction targets.

In March, we first announced that we will make our European generation business carbon neutral by 2035. At that time, we had already reduced our direct emissions from our European generation business by 50% since 2016, the year of Uniper's start. Last December, we committed to an additional target to cover the entire Uniper group under on the one hand, and extended our target to all scopes of emissions on the other hand.

Our base case and overall commitment is to become carbon neutral by 2050 on group level, including Scope-1, 2 and 3 emissions. This is all in line with long term goal of the Paris Agreement. However, the path to this goal is of crucial importance. For European generations, we have made our path clear. As already mentioned, for this part, we will be carbon neutral by 2035.

As a further intermediate step, we will reduce our emissions by 50% by 2030, starting from our 2019 emission levels. For our global commodities and Russian power business, the predictive path is not yet so clear. However, grabbing the decarbonisation for those two segments has also attempted to achieve our 2050 carbon neutral target.

For global commodities, that's most relevant to reduce Scope-3 emissions. As a reminder, here we are talking primarily about those emissions that are linked to gas and coal we sell to our customers. And that once burned by our customers will ultimately turn into Scope-1 and Scope-2 emissions on their end. As we do not have direct control over the technologies and process of our customers, reducing Scope-3 emissions, is significantly more complex and requires even more collaboration.

Nevertheless, we set our best goal to come up with concrete and quantitative Scope-3 targets towards the close of 2021. For Russia, we have the quantitative midterm target, to focus on renewable capacity schemes, and to build up carbon free capacity. Uniper is known for delivering on its promises. Therefore, it's important to point out that our decarbonization ambitions are well founded on a track record of the significant progress so far.

Our major improvement in terms of carbon management and disclosure is reflected on our GDP rating. 2020 we were able to further improve our score from B minus to B, which is in line with the energy utility network sector's efforts. Another important milestone in this regard was the announcement of Uniper's efficient coal exit plans for our 8 GW coal-fired capacities in Europe. As a first step, we successfully submitted a bid for our 875 MW hard-coal plant Heyden as the first tender under the German coal phase-out law.

As a result, the plant sees commercial electricity production at the end of 2020 and will permanently be decommissioned on July 1 2021 unless the transmission system operator and the regulators are determined that the power plant is still relevant.

Looking at all aspects of ESG. We also made progress on the SNG level. This is, for example, reflected on our [indiscernible] assessment score, which has improved significantly from 15 points to 37 points towards the industry benchmark score of 42. The CDP questionnaire is now issued by S&P Global and provides the base for the Dow Jones Sustainability. When it comes specifically to the health and ESG, the public health and safety of our people, ESG can't be more important a response.

Overall, we received very positive feedbacks of our employees, expressing a high level of appreciation for the measures Uniper has adopted to safeguard their health. Overall in the area of work safety, we managed to achieve the TRIF of 1.17 in 2020, which is a significant improvement from 1.48 in 2019. This bulleted performance is due to the consistent high level of occupational safety across the entire group. To further improve in this area, Uniper is committed to achieve a TRIF at or below 1.0 by 2025.

Those achievements do not go unnoticed and further adds up to Uniper's overall attractiveness for new talents. Uniper was able to attract a large number of new talents during 2020, leading to an overall increase of 200 employees. Well not a huge increase yet, the percentage of female colleagues moved into the right direction from 24.6 to 25.2%.

Finally, the average employee turnover rate of 3.7% has been the lowest since the inception of Uniper in 2016. This is an important indicator for us. Even so we are aware that this metric has to be interpreted carefully in the year like 2020.

Let's now have a look at Uniper's ESG priorities for 2021 and beyond. By now, you already have two important achievements I would like to highlight. First, since the beginning of this year, ESG is a significant part of our management compensation. Specifically that means that 20% of our long-term incentives will be dependent on predefined ESG targets. The LTI for 2021 for example, linked to the implementation of the TCFD framework that Uniper committed to in December of last year.

The implementation project is driven by a team of experts from different departments to fully reflect the scope and underlying idea of TCFD that, for us, goes beyond the semantics of box for the exercise. Second, 2021 is the year which will mark the end of Uniper's lignite-fired power generation in Europe. Already in February 2020, Uniper signed an agreement to sell 58% stake as lignite-fired power plants in Schkopau in the eastern part of Germany, to Saale Energie, a subsidiary of EPH. The transfer of ownership will take place in October 2021.

So what we are working on for the rest of the year and beyond. As already mentioned, we will design concrete midterm Scope-3 emission targets which are particularly important for our Global Commodity segment. And we will intensively work the implementation TCFD framework. The same applies for the EU Taxonomy rules which are basically obligatory for reporting starting with the fiscal year 2021.

As a last part, we will put forward existing and initiative new projects aiming at reducing our Scope-1 emissions of our fleet. However, the year 2021 will most certainly be a trailer when it comes to achieving a further short-term decrease in direct emissions compared to 2020. But the commissioning of the German coal-powered plant Datteln 4 in mid-2020 and the plant commissioning of the Russian lignite plant Berezo 3 in the first half of 2021, our direct emissions will most likely increase assuming oil generation is required.

The shock wave is not only the importance and ambition level to our decarbonization targets, it also highlights that the scope of our decarbonization measures needs to go far beyond the shutdown of all our coal plants. This very much summarizes the next slide that gives breadth of overview of Uniper's strategic milestones and the theory is visible.

Now our strategic and financial update of March 2020, we sent a clear signal to the market to support the path to a more sustainable and decarbonized world and to make a significant contribution to the energy transition. Now, in this slide you can see the three layers of our strategy. First, decarbonization, we have a phase out of coal, we already covered today.

Second, in the short to mid-term, we have significant growth investments in the non-wholesale area that are focused on security of supply for regulators and other customers. Third, the area of investment and decarbonization of gas, gas and other green technologies and businesses which was today already in our focus, but will gain more weight in terms of financial figures, in the mid to long term.

Our investment pattern for organic growth investments for the year 2021 to 2023 amounts to about €1.5 billion in total. Uniper has always been a reliable partner who provide security and diversification of energy supply to its customers. In the short to mid-term, this area will play a key role from a CapEx perspective. Due to the increasing share of volatile [grid] from renewable, transmission system operators face the challenge of ensuring stability in the power grid. In the UK, Uniper was awarded four six-year contracts to provide innovative grid stability services as Killingholme and Grain starting in 2021.

In Germany Uniper is building a new 300 MW gas-fired power plant Irsching 6 for the TSO in order to prevent system outages. It is expected to enter service in the last quarter of 2022. Unipro, Uniper's first subsidiary in Russia will make significant investments in the modernization of our four large units at Surgutskaya power plant totaling 3.3 GW. After refurbishment, the unit will be back to the grid between 2022 and 2026 that will provide greater security of supply.

And it's not only regulators that Uniper is supplying with secure and affordable energy. For example, the convert of the Staudinger site in the [Ruswil] region from coal to gas, the dream about driving forward is in full swing. Uniper will be offering its industrial customers, individual energy solutions, with the supply of electricity, heat and other services. The resulting return from those projects will be another catalyst for the third layer, for instance, investment into the areas of renewable energy and hydrogen.

Uniper's goal is to organically develop a portfolio of photovoltaic and on-shore wind assets of over 1 GW in its core European markets by 2025. This portfolio is to be expanded to 3 GW years thereafter. You see additional growth options in the renewables in the Russian markets as a new investment window will be opening in 2021 under its technical renewable capacity program.

Uniper will focus on developing options to enter renewable energy. In the longer term, we see even more potential entering the hydrogen economy. The group aims to play a pioneering role. Uniper already has extensive experience in operating hydrogen plants, as Uniper was one of the first driven utilities to produce green hydrogen-based on electrolysis process.

Uniper is in the process of developing an extensive range of projects and will focus on realizing its first flagship project in the next two years. In Eastern Germany [indiscernible] large scale joint venture with Uniper called Energiepark Bad Lauchstädt is underway and awaiting approval. This is a fully integrated project with a 30 MW electrolyzer. The plant is to supply green hydrogen to companies in that industrial cluster by 2020.

Another flagship project is a collaboration with specialty chemicals company Perstorptalk in order to produce sustainable methanol by 2025. In co-operation with Fortum, the project been developed to supply green hydrogen by means of 25 MW electrolyzer plant and renewable energies as source.

But with a very good infrastructure conditions and sales potential, Uniper's Maasvlakte power plant site at Port of Rotterdam is suitable for hydrogen production. Here in a joint venture with the Port of Rotterdam, we're examining the option of building 100 MW electrolyzer which could be realized by 2025.

Just last week, we joined forces with H2E Energy, newly founded forum for Siemens Energy and other partners to develop the generation and supply of wind hydrogen as well as green process at district heating at Moorburg work site. The game changer lies in the interaction of three future technologies for the production and storage of green hydrogen, green heat and peak electricity from renewable energy.

We also want to join start of the hydrogen trading platform. The vision is to expand quantum commercially by 2030. We have stated before, Europe is by no means be able to cover the entire energy requirements for green hydrogen by itself. Therefore, Uniper is also working intensively on solutions to be able to cover these gaps with the option of blue hydrogen when it was produced from conventional gas facility [as a rule]. In this environment Uniper is very well positioned in the growing hydrogen market, this extra procurement, optimization, trading and risk management.

Having said that, I would now like to hand over to Sascha for the financial part. After that, Sascha and I will be ready to take your questions. Thank you.

Sascha Bibert

Thank you, Andreas. And good morning, everybody. I can tell you that we are very satisfied with the set of numbers that I'm about to go through. We are especially proud of, is that 2020 and the first weeks of 2021, challenged us with all kinds of extremes from COVID-19, to weather and very volatile markets. And finally, our teams have turned many of those into opportunities, with no disruptions, also on how we communicate our outlooks.

With an adjusted EBITDA of €998 million, we are 16% above last year's result, and just a notch below the upper end of our 2020 guidance range. The outcome above the envisaged midpoint was the result of a strong ending to the year, especially in the gas midstream business.

Adjusted net income increased even stronger year-on-year as it additionally benefited from a higher net interest result and a lower operating tax rate. Operating cash flow was significantly up to €1.24 billion. Compared with adjusted EBIT, the increase is even more pronounced due to higher cash effective EBITDA.

And finally, economic net debt is up one €460 million to now €3.1 billion, purely driven by lower interest rates, pushing pension obligations and asset retirement obligations up while at the same time we could reduce our financial net debt by more than €100 million. The economic net debt over adjusted EBITDA is still comfortably within our previously guided range. I will share more thoughts on the debt factor going forward in the outlook section. To sum it up, strong results and our credit metrics, remain very solid.

Looking at the year-on-year drivers for the adjusted EBIT, the picture is broadly in line with what you have seen in the past quarters. Please keep in mind that the effects on this slide do not perfectly match the segmental split in the appendix, as there are some further shifts and consolidation effects between the segments. As those net out on a group level, we omit them here for the sake of a clearer view on the underlying business drivers.

Let's start with a well-known commodity effect that predominantly reflects the outstanding results in our gas midstream business, which is about €360 million above prior year. Looking at the full year, 2020 is a good example for how our gas team is capable to capture value in different market situations. Even though Q1 and Q4 were fundamentally different when it comes to dynamics and the development of gas prices, both quarters saw very strong earnings contributions.

For me, this showcases the potential of having a portfolio based on optionality, managed by an experienced team. However, aside from gas midstream, the first effect also includes a negative effect of about €120 million from the other/international commodity business, formerly known as [COFIN]. This negative effects stems mainly from our U.S. LNG, and our trading activities. One major driver, where negative contributions from our LNG Freeport deal, which suffered from the realization of lower entry hub, duty aspects. Additionally, we saw negative effects in our U.S. gas and power trading business. I suspect that 2021 could be quite different. But let's come back to this later.

The next effect is a negative one within commodity power optimization. You might remember that we saw a very strong power optimization contribution in Q4 of 2019. Accordingly, we expect a swing back to normal at year end 2020. The overall year-on-year effect amounts roughly to €130 million and is also influenced by non-operational items like the disposal of our French business.

Next one is the positive outright power price and volume effect, which amounts to about €40 million in total and primarily reflects higher achieved prices. This effect is somewhat diluted by excess hydro volumes, which were not hedged in advance and therefore sold at comparatively low spot prices, especially during Q2. Additionally, nuclear volumes were down due to the closure of Ringhals 2, end of 2019 and extended outages in Oskarshamn, Ringhals 1 and 3.

UK capacity market income amounted to a negative €30 million. Even though capacity market payments have generally been on the same level in both years, we had accruals in 2019, the outstanding Q4 2018 capacity market payments, which explains the negative year-on-year delta. Aside from the UK capacity market, the European fossil fleet optimization showed a very good performance year-on-year, as reflected in the next element.

One major driver was the broader asset base but benefited from the return of Irsching 4 and 5 into the merchant market, from the COD of Datteln 4, and also from higher availability of Maasvlakte 3 which had prolonged outages in 2019. The optimization and operations team then very successfully utilized this broader asset base by capturing a sizable, positive contribution in volatile markets.

Russia's adjusted EBIT is down by about €80 million compared to prior year. The main reasons are significantly lower electricity prices in the day ahead market, driven by an unusually warm weather in Q1, and a lower demand due to COVID-19 and the OPEC+ Agreement that became effective from May last year.

Hydro generation production in Russia increased significantly in 2020 in both pricing zones, that also resulted in lower prices. Subsequently, slightly stronger operational performance in the second half was compensated by a weaker ruble. The category Other, amounts to about minus €30 million and consists mainly of unallocated consolidation effect. Lower results in the engineering business due to COVID and partly offsetting the lapse of a prior year one-off nuclear provision effect.

To sum it up, significantly stronger results in our gas midstream and European fossil generation business are partly compensated by lower performance in our power, LNG and U.S commodity business and weaker results from Russia. One remark when it comes to EBITDA effects that you might have expected on this chart, but that aren't there, specifically effects from the first German call exit auction round where we participated successfully with our Heyden plant.

Please note that we will book the consequences of this tender as non-operating. This is in line with the industry standard in Germany and applies for all elements of the auction, including the option premium that we are entitled to, as well as the offsetting effects on provision and book values. You can expect the same treatment in case we should also succeed in future auction rounds.

Now over to operating cash flow, on the next slide. At year end '20, operating cash flow amounted to €1.2 billion, which translates into a cash conversion of roughly 82% which is as expected but at the same time significantly above prior year's 65%. Cash effective EBITDA, i.e. the EBITDA adjusted for non-cash items is €363 million, higher than the reported EBITDA. This is another proof point for the quality of our results.

Secondly, the cash effective utilization of provisions comes up to €436 million. Roughly 40% of the provision utilization is for decommissioning mainly nuclear decommissioning. 30% is for pension and personnel related provisions. And finally, another 30% is related to the gas business and its infrastructure.

Thirdly, working capital has mainly been influenced by how we utilize the different gas assets. The fourth category summarizes all other mainly CO2 related effects. Next is adjusted net income. The economic interest, which is an income for Uniper, has increased from €33 million after the first nine months to now €39 million, and it's driven by interest income from Nord Stream 2, as well as capitalized interest, from our legacy growth projects. The applicable tax rate ended up at about 22%, therefore, in the middle of our guided 20% to 25% range.

The minority interests are largely driven by Unipro, where minority shareholders hold roughly 16%. This item further decreased from minus €34 million at the nine-month stage to now €37 million. On the next page, the waterfall shows the development of economic net debt from '19 to 2020. The increase is driven by higher pension and asset retirement obligations, reflecting a lower interest rate environment.

The net financial position, on the other hand, is a part of the economic net debt that is based upon cash flows actually improved. The related items are in the dotted box. Main driver here is as discussed, the strong operating cash flow. Investments has been €86 million higher than last year, with a total of €743 million. The increase is purely driven by higher growth investments.

Overall, more than half of our investments specifically €406 million, has been growth investments evenly split into legacy projects like Datteln 4 and Berezo 3, and new growth projects like Scholven and Irsching 6. The remaining maintenance and replacement CapEx amounted to €336 million. Pension provisions, which are the light blue boxes in our reconciliation increased by €340 million, as German interest rates came down from 1.5% at the end of 2019 to 0.8% at year-end 2020. The same applies to UK interest rates being down from 2.1% to now 1.5%.

Finally, the asset retirement obligations in orange, those are up by €231 million to now €1.2 billion, mainly driven by the asset retirement obligations for Swedish Nuclear, the corresponding interest rate applied, decreased here from 2% at end 2019 to now 1.25%.

In the appendix of our presentation, you'll find a slide that gives you further details on the interest rates and activities when it comes to our pension and asset retirement obligations. Looking at the debt factor defined as net debt/EBITDA multiple, we ended up at 1.9 times. This is fully in line with the target range that we need to secure our BBB credit rating. While the target range used to be 1.8 to 2.0, this would change the future shown on the next slide.

Looking at the three pillars of our finance strategy, the solid investment grade rating has always been a key prerequisite, especially for commodity business, given our business risk, we need to demonstrate a minimum 55% on the FFO/net debt KPI as defined by S&P. To facilitate communication, we usually express this requirement via the Uniper debt factor. In the past, the FFO/net debt threshold, translated into a debt factor target range of 1.8 to 2.0 times adjusted EBITDA over economic net debt.

Going forwards and honestly this just didn't start yesterday, this link would be somewhat different. Over the next few years, a growing part of earnings will be materializing within the interest result, i.e. outside of EBITDA. This was actually one of the main reasons for us to introduce the adjusted net income last year. Examples are not streamed to the lending agreement, or Irsching 6, that will classify as a finance lease under IFRS guidance. Those, let's call them non-EBITDA earnings components, support the S&P KPIs, and ultimately our rating.

Accordingly, from a technical point of view, we can have a higher debt factor and still secure our target rating, as those additional positive factors contribute below the EBITDA line. More specifically, going forward, our target is to have a debt factor not higher than 2.5 times EBITDA over economic net debt. Other than this rather optical change, I can reiterate that we feel very comfortable with our capital position indeed.

Ensuring a cost-efficient access to capital is the first pillar. The two other pillars deal with the question on how to best allocate those financial means. CapEx, the second pillar reflects our ambition to transform and grow the company, which requires investments. We're talking about €1.5 billion of growth investments for the year '21 to '23, which is fully in line with the ambition that I presented a year ago.

Please note that this assumes normal activities and no acquisitions are included. In terms of maintenance CapEx, you can expect us to stay on the historic level of roughly €400 million per year on average. However, just like in 2020, there will always be years when some measures shift into other periods, resulting in a somewhat different number now and then.

With respect to dividend, management and supervisory boards will I think confirm the dividend proposal for the year 2020, which due to rounding is €501 million in absolute terms, translating into €1.37 per share. As always, the final decision will be made by the shareholders during the AGM on May 19.

Assuming approval, Uniper will show a 19% higher dividend year-on-year. A dividend policy for the fiscal year 2021 will be given at a later point in time, as announced yesterday in the ad hoc.

When it comes to our earnings outlook for 2021, our guidance on adjusted EBIT and net income is summarized on the following slides. Starting with the adjusted EBIT, we expect the result in the range of €700 million to €950 million. This assumes a normal operating environment and also reflects that 2020 had extraordinary elements. I will come back to this in a second.

For our European Generation segment we expect a positive development however, the other two segments Global Commodities and Russian Power are expected to come out lower in '21, which explains the overall picture on a group level.

On top of that, when it comes to Administration and Consolidation, you may expect administrative costs to stay in the range of €200 million to €220 million, the consolidation line will not be zero. However, from a group and modeling perspective, it will then have an offset in one of the operating segments.

Looking at our guidance on adjusted net income, we see a range of €550 million to €750 million. The year-on-year change corresponds to the adjusted EBITDA development. That is one if takes into account a tax rate of somewhere between 20% and 25%. Accordingly, let's go over the last slide which breaks down the major expected EBIT drivers' year-on-year.

Starting with the outright portfolio in European Generation, we expect to sum a positive effect in a higher double-digit area, despite lower achieved prices in our Nordic markets. The main driver are higher nuclear volumes. As in 2020, we saw prolonged outages in our nuclear fleet. Therefore, we expect an overall increase in nuclear volumes year-on-year, despite the shutdown of Ringhals 2 at yearend 2020.

The positive development in the outright portfolio is partly compensated by a mid double-digit effect in the European fossil generation business. While we see more of that and for contributing in 2021, we will on the other hand lose the contribution from our lignite power plant Schkopau after Q3. Another main driver is that we do not expect the strong 2020 fossil optimization result to repeat in 2021.

Moving towards normal is also the description for the net effect of about minus €150 million which summarizes the development in our gas as well as our international/other commodity business. In gas, we expect to significantly lower contribution year-on-year, simply due to the very strong comparison base last year. This is partly compensated by the international commodity business where the swing towards normalization is a positive one.

We expect that the negative effects in our U.S. LNG and power trading that we saw in 2020, to not repeat in 2021. Russian generation will have a lower contribution in 2021. As most of our plants receiving CSA payments have transferred to comp payments at the end of the year 2020 or will transfer to comp payments over the course of 2021. Taking additional negative effects like FX and lower day ahead volumes into consideration, Berezo 3 CSA payments will not be able to fully compensate for this, once online in Q2.

Therefore, in total, we see a mid-double digit million negative effect here year-on-year. Please note that if communicated via EBITDA in ruble, as our friends from Unipro will do, the picture looks more promising. And some of those effects bring us into the guided range of €700 million to €950 million adjusted EBIT. If one would be trying to summarize the year-on-year development was one word, normalization would not be entirely off, the fact that we do not expect any significant one-offs and as such, underlines this theme.

Finally, I usually give you an indication for how to think about the next quarter. This is this time especially challenging. Overall, I can say that we operationally had a strong start to the year. And I would like to believe that as of today, and it is very early in the year, the midpoint of our outlook may prove somewhat conservative. Among others, our LNG business used the global cold spell very well. And also our U.S. business did their very best to use our assets in the extreme environment that we experienced there.

We are also more optimistic that Berezo 3 can be commissioned already in April. Therefore, I currently expect the first quarter EBIT to come out at around a very strong level we have seen last year, that is €650 million, with even some chances to the upside. Obviously, given the full year outlook, we expect the remaining quarters to come in at a lower level than last year in the base case. I will give you a firmer update with the publication of the first quarter figures.

Now before we start the Q&A section, I briefly hand over to Stefan.

Stefan Jost

Thank you, Andreas, thank you, Sascha. We now come to the Q&A session. And as always, please restrict to two questions each. And I hand over to the operator to start the Q&A, please.

Question-and-Answer Session

[Operator Instructions] The first question is from Sam Arie of UBS. Your line is now open.

Q - Sam Arie

Hello, Hi, good morning, Andrea, Sascha, Stefan and all the team. Thanks again for a great presentation very, very clear and some really positive messages there. I wanted to ask just about the dividend and, of course about Russia, as I always do. So on the dividend, can I start by just following up on this comment in your release last night, that discussions about the '21 dividend was still pending. And I just - it would be helpful to understand what kind of discussions those are and is essentially, forward communication about the dividend depends on what Fortum does with a domination agreement and so on, I suppose also on dividend, is it is it fair to assume you wouldn't be proposing the €501 million for 2020 if you didn't have some sense of both and plan to approve that at the AGM? That would be very helpful on the dividend. Thank you.

And on Russia, well, look, I'm sorry, I always come back to this. But I remember we had a conversation at full year results last year. And I asked if you would be - you would consider selling Unipro. And the answer at the time was, no, that Russia was an important part of the three-legged strategy at Uniper. But I think since then it's been reported that you're more open-minded, you would consider offers on Unipro. And I just wanted to have a thinking that has evolved there and if we should be expecting some kind of a change on Unipro this year? Thank you very much. And thanks again for a great presentation this morning.

Sascha Bibert

Yeah. Hey, Sam, good morning. Hope you're well and thanks for your question. I'm taking the first one. And then Andreas will take over the second. And I'm grateful that you are actually almost gave me the answer in the latter part of your first question. And that is, indeed, we would not propose something where we are not sufficiently aligned with Fortum. As this could simply be misleading, from a market perspective, Fortum owns 75% of our shares, as you know and therefore, an alignment is necessary. This alignments is still pending and therefore, - Sam you're quite loud, you need to mute.

Sam Arie

Thank you.

Sascha Bibert

And since this alignment is currently pending, the decision is proposed. And we will follow up on that as soon as we can. And now for Russia, I'm handing over to Andreas.

Andreas Schierenbeck

Yeah, Sam, good morning. Thanks for the question. I think Russia is an ongoing discussion, we get this message or this question again and again. But again, you're right. Russia is a very important part of our earnings. Sometimes we have more impact from them and sometimes that truly depends more on the ruble and the situation we described. At the moment, really focusing on the commissioning of Berezo 3, and then to transform the businesses there to more CO2 friendly generation portfolio and to renewables. So on that point of view, we have a lot of things to do. And just it remains an important part of us but of course, we are always looking into other options as well. We will not exclude that either.

Sam Arie

Okay, thank you very much.

Operator

The next question is from Peter Bisztyga of Bank of America. Your line is now open.

Peter Bisztyga

Yeah. Good morning. Thank you for taking my question. So can you update us on the latest status of the Nord Stream 2 project, please and your views on the risks? There the project isn't completed and the status of your loan? And my second question is about the UK capacity market. There was a T1 auction earlier this week that played at 45. Just wondering about your thoughts on that? And also, what are your thoughts about the dynamics of the T-4 auction next week and how that might play out compared to last year?

Andreas Schierenbeck

Yeah, Peter. Good morning from my side. Thanks for the question. Let start with Nord Stream 2. As you know, we are a financial investor and we are not really running the show. Therefore of course, we are following the completion of pipelines very closely. I think pipeline is going on. As far as we know and from that point of view, we are quite okay that the Russians will finish the pipeline as promised. I don't see any big technical risks. The pipeline is starting, it seems to be under control but it's only speculation on our side.

On the political side, we are very much following the ongoing discussion in Europe and in the U.S. The issue with that, of course, it is still volatile, but I'm quite sure we will find a solution there. So, we are quite positive about that. And as you know, we believe in the rationale why we need Nord Stream 2 for the security of supply of gas for Europe, it is a business project, which was to 98% finished and we're looking forward that to be finished.

Coming to the UK I think the results of the T1 auction needs to be confirmed in the UK by the political regulators. I think it have clear and a very good result from my point of view and we were a little bit surprised how good the result was. So from that point of view, we see it quite positively. And please excuse that of course, for the T-4 auction, we cannot give any guidance about the strategy at the moment, if we participate or what we participated for.

Peter Bisztyga

Okay, thank you very much.

Operator

The next question is from James Brand of Deutsche Bank. Your line is now open.

James Brand

Well, good morning, and thanks for the presentation. Two questions from me. The first is, I thought I just ask a question Russia, given that it keeps on coming up, but with a different angle. And if people are asking regularly, whether it will make sense for you to sell it, can I just ask why it wouldn't make sense to merge your Russian business with Fortum's? I'm not expecting you to announce that on the call today about other minorities in a merger. But you talk a lot about areas with Fortum where you can have, as you say, joint value pools. And when I think about the two entities, it just seems like Russia is the area where there's almost the most overlap and scope for synergies. And so that's question number one.

And then secondly, you obviously had an increase in pensions and provision charges due to the lower bond yields at year end, and then subsequently, bond yields have soared. So I was wondering whether you could tell us how much if we did a mark-to-market today, how much that would lower your net debt? I would imagine that could be quite material. Thank you.

Andreas Schierenbeck

Yeah, James and thank you for the question. Of course, if you don't expect an answer, I request that why you ask the question but let me let me try to give you at least some insight. I think for Russia that - it was so far out of the focus of our one team approaches. I think there will be limited synergies, maybe in some fuel purchases and joint procurements. But otherwise, as you know, all the assets, our own assets, and the assets of Fortum are quite as close in the geographical area as by nature of power plants. So they are not too many synergies as maybe it would be expected.

At the moment, we are focusing with our collaboration with Fortum as our team approach in the area of Nordic Hydro - hydrogen and renewables. We're making good progress on that. And I think, from my point of view, it's essential to really harvest the synergies and deliver value that we would take on the other things a little more later.

Sascha Bibert

Yeah, James, I would hope that these slides in the appendix helps somewhat to think about the balance sheet position when it comes to interest rates and utilities. Surely, every one of those illustrations is a bit simplified, but at least it gives you an order of magnitude. That's Slide 18 of the presentation.

James Brand

Great, thank you very much.

Operator

The next question is from Vincent Ayral of JPMorgan, your line is now open.

Vincent Ayral

Yes, good morning. So we already had quite a few times questions on the Russia and potentially the dividend. I'll come back to it. And so on the dividend, beyond talking about the €501 million dividend for 2020, it's more a question regarding the outlook. And when looking at a Uniper, it would seem that further growth, either from an earnings power point of view or balance sheet point of view, further growth of the dividend may be difficult. So maybe it's time for a breather. What's your view on that? I'm sure you cannot comment on the Fortum's view but maybe you can come into on Uniper's view there.

And on Russia, I'll talk about ESG here. That's another angle to look at it. You say that, basically, you can go neutral and European generation still have some CCGT. So not fully understanding exactly if they will all cease operation or they switch to hydrogen in the meantime. But on Russia, you say there is no clear path on CO2. So the question is, will there be actually a solution, just selling your assets in order to get on track? I know it's not helping the environment but its helping - meeting decarbonization targets at Uniper level? Thank you.

Sascha Bibert

Vincent, maybe I'll start with a dividend and you have indeed given it a different perspective. And I would say the following. I think already in March of last year, we were, yeah that dividend policy of the past that included a 25% CAGR is not a sustainable thing. Yeah, it's simply not to be expected that we increase earnings or cash flow by 25% every year. However, that aside, I can just reiterate, we have a very comfortable capital position. We just talked about great 2020 results, including very strong cash flow. I think I kind of indicated that also 2021 may have some upside potential. So I mean, it's certainly the case that we can afford a dividend, also considering the investment plans that I've talked about before, i.e. €1.5 billion growth over the next years, and about €1.2 billion in maintenance and replacement. Nevertheless, the alignment with Fortum needs to be there. And before that is not in place, we will not communicate.

Andreas Schierenbeck

Yeah, Vincent, thanks for the questions. Coming back to Russia, I think we have mentioned already a couple of times that the Russia earnings are quite an important part of our earnings profile. They are non-merchants, because they are mainly capacitive payments. So they have a fixed nature, so they're not that volatile. And from that point of view, it's an important part of the business. Nevertheless, we customarily announce that we have been working on ESG and the CO2 attentiveness in Russia as well. And we're investing into improvement programs to reduce the CO2 and centeredness of these pool of assets could convert more than once. And competitive scheme in Russia is just earning more and more into a movable capacity market. And we are going to participate there as well and it has the target, of course, it may be fixed payment for capacity as before. So from that point of view, it's the same thing, what we have now. And of course, we are working with Russian partners like Novatek and a trying to use hydrogen, blue hydrogen for our assets there. And from that point, that is a good outlook. So we are working on our ESG profile there and there is definitely a case.

Operator

Our next question is from Lueder Schumacher Societe Generale. Your line is now open.

Lueder Schumacher

Good morning. Two questions from my side. The first one is on something, Andreas said quite early on in the presentation. You mentioned that you see significant upside potential for Nordic power prices. Can you maybe elaborate a bit on that? Is this mainly driven by a normalization of weather patterns, winter? I mean, this winter was quite normal compared to the previous winter, which was record breaking in terms of mild temperatures? Or is that something structural at play? What would be the drivers to get Nordic Power prices higher and how fast could this happen? The second question is on the quite phenomenal start to the year you had. What was the main driver behind it? Was it again, weather? Demand-driven or was it more gas optimization and trading? And this is partially coming back to Andreas comment on [COFO] the old COFO that 2021 could be quite different? This sounded a bit more optimistic than the not-negative? Could we actually see a positive surprise there as well?

Andreas Schierenbeck

Let me start Lueder about Nordic power prices. I think that the kind of recovery we see and we acknowledged because they were quite depressed in the last year, the Nordic power prices mainly based on a very warm winter. There is lot of rain instead of snow, where their dams were very much full. Now I think we have seen a kind of normal thing. It was winter, it was cold, there was no something more normal. So from that point of view, I think there is a start to recovery. And of course maybe as well kind of smaller COVID effect up there, as they're coming out of that pandemic. Therefore that may be and hopefully an effect there as well. Sascha?

Sascha Bibert

Yeah. I'm taking your second question, Lueder. Yeah, if the tonality was more optimistic than this was indeed on purpose. Now, where is the good start coming from? Actually more than one source, not every source being of equal magnitude but let's also acknowledge that our communication when it comes to the commissioning of Berezo 3 is now becoming firmer and firmer. That's a good thing. Someone already asked a question about the UK capacity market where we participated with our Ratcliffe power station. And yes, certainly I would call it U.S. platform.

When I talk about U.S. platform, I'm speaking specifically about our business line North America where we're active. We've about 80 colleagues there we are holding storage positions and we're trading power and gas and in those very extreme circumstances that also affected people including our own that were working without having power. But those extreme circumstances also provided some opportunities. And that also counts for the LNG business, which was additionally supported by that, by that U.S. platform.

So Lueder, for now, I wouldn't point to gas midstream in the sense that we were talking about it all along, in 2020. But there are other parts of the business that are also working quite well right now.

Lueder Schumacher

Okay, very, very good. Just one follow up question, if I may. I think at the end of January when we saw you on our field trip, stored gas storage that was about 6% full. Do you have a number where they are now?

Sascha Bibert

I think Andreas mentioned in his speech, for Europe 37%, if I'm not mistaken. A colleague just was quoted the other day 34%, I think that then depends on the reach but apparently somewhere in the 30's from a physical perspective.

Lueder Schumacher

Excellent. Thank you very much.

Operator

The next question is from Deepa Venkateswaran of Bernstein. Your line is now open.

Deepa Venkateswaran

Thank you. I have two questions, one on the CapEx. So it seems like 2020 CapEx is a bit below where you had guided last year. So just wanted to understand where the differences and is it phasing? And then for the growth CapEx that you've guided, from '21 to '23, €2.7 billion, can you provide a bit of transparency on how much of this new growth is the renewable projects that you discussed in the Fortum CMD? And maybe some color around that would be quite interesting. And certainly, on the Berezovskaya commissioning, I think you've mentioned a couple of times on the call already. Maybe if you could just update on what should be our modeling assumption on when we should assume a full ramp up? Is it already at the beginning of Q2 or how should we think about Berez? Thank you.

Andreas Schierenbeck

Yeah, Deepa, thanks for the question. Maybe I give Sascha a little bit more time to prepare for the two questions you got on CapEx and growth CapEx and so on. To give you some color on Berezovskaya 3. I think we have made good progress in the last weeks. We have had the first trim run, so the turbine was reaching 3000 RPM. It was the first time we have seen that and maybe a few of us. Remember, that's first time we have not reached that status in commissioning. So we are quite positive, that we will get all the necessary updates, technical documentation, and permissions to start the unit and have the COD at the beginning of Q2. So we always mentioned this. So I think maybe early in Q2, I think is a good time to mention that. So we are quite positive about that. And then of course, you will see, of course, the payment for the capacities coming in as well.

Sascha Bibert

Great. Thanks, Andreas. So now I'm taking over with respect to the CapEx question. Indeed, 2020, actual CapEx in the end was lower than we have expected at the beginning of the year. And I guess also lower than we have indicated back in March 2020 when we are at our CMD. There is predominantly a shift of payments, no fundamental rethink of our projects. So 2020, a bit less than some of that has gone into the following years. Now, when we principally think about CapEx, when we communicate CapEx, we are - we think of a total number, either, say the €1.5 billion or the €1.2 billion that I mentioned early on, that we can comfortably afford, given our other planning assumptions.

And then if we stick with the growth CapEx, part of that growth mix, CapEx is then already earmarked for specific projects that is usually more in the shorter term and this includes projects that you know, and that Andreas talked about, from Irsching 6, the gas plant to the grid stability project to show them, But then it also has quite a substantial part, that in the second half of the period of growth CapEx, which is not yet allocated to specific projects, but where we certainly have a strategic view. And then this gets us back to your link into the renewables also into the unit power Fortum renewable team. And we are optimistic that as we then go into the second phase of this time period, more and more will then actually be dedicated to specific renewable projects. And in the longer run, also, then, more and more into the hydrogen space.

Operator

Thank you. The next question is from Alberto Gandolfi of Goldman Sachs. Your line is now open.

Alberto Gandolfi

Thank you for taking my questions, and good morning. The first one is, I wanted to ask you about your expectations on what we might hear from the European Union in the summer with respect to any potential changes to the emission trading scheme and tightening and what that might do to the carbon price and how you're preparing for it. And the second question is, again, you talked about some of that, so forgive me to go back to the topic. But your idea to go to net zero by 2035, you're talking about something like 3 GW of renewables by 2030. You still have gas plant, so could you maybe elaborate a little bit more the main milestones in the next three to five years on how you intend to develop a renewable pipeline? Are you thinking externally? Are you starting to hire people? Are you ramping up organically? And are you looking into hydrogen ready turbines or hydrogen turbines to fully repower your gas plants? And maybe you can give us a bit more of a trajectory of when this new phase might begin? Or may, it's already started, I guess, but when we - should we expect an acceleration of all of these? Thank you so much.

Andreas Schierenbeck

Yeah, thanks, Alberto. Let me start with the second part about hydrogen and the CO2 emissions, I think our promise to be CO2 neutral in 2035 is based on a couple of assumptions and plans. Of course, we will take out our coal assets in a ramp down, as we have already said, not only in Germany, but as well as the UK and the Netherlands. So there are timelines behind that when we are exiting. And yeah, so today as well, our plans and scope of it, change the ownership and will be not in our responsibility starting from October, but that will take a big part of the CO2 emissions away.

On the other hand, yes, we're looking into H2 turbines. We have agreements with Siemens and with GE to check our existing assets can be converted and how they can convert it, I think the good news is that all our turbines are able to take a higher percentage of hydrogen, I think we would have samples, if you have a turbine with a high capacity, very efficient, and of course, it's harder to convert them completely to hydrogen, as the smaller assets are normally easily converted. The turbine, of course, there was instrumentation around that, regulations have to be adopted.

On the other hand, in one of our side projects, the one in Hamburg, the H2E project, there's a hydrogen turbine of 300 MW in cooperation with Siemens Energy included in there, so that could probably the first complete hydrogen turbine being implemented in Germany. And of course, this reduces all our CO2 intensity, using blue hydrogen in the meantime, as well.

That's something but we are assuming, but of course, you're right, the ramp up of hydrogen completely as a big business will take some time, because the framework is not there yet in Europe and in Germany, that's too expensive. But I think everything is pointing in the right direction. And I think we have one of the fourth one when I say that there is a lot of projects. So very, very promising science and I'm very comfortable in that disposition of Uniper.

Sascha Bibert

Does it mean you leave the CO2 question to me?

Andreas Schierenbeck

I can type lines for the CO2 question. As Sascha is leaving me alone on that one.

Sascha Bibert

We'll do it together, I guess none of us will provide a CO2 price outlook. That we take from the market. But our fundamental belief is that the trading system will be a key steering instrument for the overall decarbonization in Europe. And if anything, year-by-year and month-by-month that political but also the economic, the societal belief seems to be firming up. So you get the sense that there is structural support for certain level of CO2 prices.

Andreas Schierenbeck

Let me maybe add to that, because you cannot make a forecast of what you will do. But one thing is clear, politically, I think probably they want to tie the CO2 price to drive it up because it drives the conversion and the transition. And actually from where I'm sitting, a higher CO2 price combined with higher coal prices and moderate or low gas prices is something which plays definitely into our portfolio.

Alberto Gandolfi

Thank you.

Operator

Question is from Piotr Dzieciolowski of Citibank. Your line is now open.

Piotr Dzieciolowski

Hi, good morning everybody. Two questions from me, please. The first one is we've seen RWE suing the Dutch government for LE foreclosure. You are and you also have the same or similar assets. Do you think there is a ground for such legal action? And would you consider the same step? And can you comment on price possibility? And second, can you please explain, you announced the cooperation with Novatek around the hydrogen in Russia. What is exactly the nature of this agreement, what are you trying to achieve there?

Andreas Schierenbeck

Yeah, Pitor, thanks for the question. Let's start with Maasvlakte and others but you get these things. We had discussion with the Dutch government, about Maasvlakte. I think we had a good constructive talks but of course, we prefer a mutual agreement. And that has a win-win situation to that, of course, we reserve the right for legal steps as we have to talk to our shareholders. We believe that there's a legal ground for that. We are not that proactive and some competition, so we are looking for a negotiated solution. But of course, we cannot exclude any other things, as you can understand.

And regard to the Novatek agreement, we signed an agreement with Novatek, to look into blue and green hydrogen or ammonia to be transported, shipped, whatever into Germany. Novatek is looking into these things, we are collaborating with Gazprom on the same area as well. So I think that's something where I believe there could be one of the intermediate steps for hydrogen economy in Germany and Europe. We know that we have to import quite a lot. And coming from Russia as blue hydrogen is definitely ammonia is definitely a very elegant solution at the moment.

Piotr Dzieciolowski

Thank you for the follow up, and can you maybe say about how much the early closure, do you think is damaging your NPV of Maasvlakte. You know, its we've seen that RWE figure, what they are claiming but any the damage on your side, whether you are forced to do a right down on this asset and so on, could be quite helpful?

Andreas Schierenbeck

I think Piotr, we will comment on that. I think that that's something we have to decide, from that point of view. I will to try to avoid that question for the moment. I'm hoping, I'm quite positive that we probably find a negotiated solution. And then of course, we will see.

Piotr Dzieciolowski

I understand. Thank you very much.

Andreas Schierenbeck

Thank you.

Operator

The next question is from Elchin Mammadov of Bloomberg Intelligence, your line is now open.

Elchin Mammadov

Hi, there. I have a couple of questions too. The first one is, sorry, if I missed it, but you mentioned Scope-3 emissions, you were planning to reveal them at some point this year? What shall we expect? And the second one is, what's your outlook for evolution of power, carbon and spark spreads there for the coming year or two, if you can give some light to it? And where do the low taxes for CCGT stand now in relation to spark spreads? So, that'll be great. Thank you.

Andreas Schierenbeck

Thanks, again, for the question. Let's start with Scope-3. Scope-3, Chapter 11 emissions are indirect emissions. So they are the emissions our customers are creating if they are taking our products and then use them, burn them or whatever. As we, as it already sounds a little bit more complicated in nature. It's not direct emissions, it's indirect emissions. And of course, first step from our point would be to create transparency about how high is it and then of course, we want to do have a target as to [off-mic]. And it has to give you some food for thought, why the Scope-3 emissions are so tricky. Except we would get LNG to India, which has some carbon intensity, but Indians would replace coal burns with our LNG. That would mean our Scope-3 emissions are going up because we are selling now our gas to them and we haven't sold coal to them. On the other hand, for the Indians themselves, there too emissions are going down, because they are embracing efficient LNG whereas formerly, they have burned coal. So you can do good things and still having a higher target. So that's why we're looking at that first-grade transparency, then how to deal with that. Of course, if you're dealing with hydrogen, that would be no Scope-3 emissions be involved and so a good target at the moment.

Sascha Bibert

Yeah. And maybe my approach on your other questions is the following. You have seen that already in 2020, I think it was October, we have put two of our German gas facilities Irsching 4 and 5 back into the market, into the merchant market. I think that is a certain - signals a certain expectation. I can additionally say that, over the next years, we expect the running hours of our gas fired power plants to increase and I would say, increase meaningfully. And if we go even one step higher in the discussion, I think one of the questions that we have come across also in 2020, is what actually happens and will happen in days and weeks, where we have a certain weather constellation, in combination maybe with outages or not fully working interconnectors or similar, I think then already today, we see that things are getting very, very tight. And I think the more we then expand on renewables in Europe, as we should, as also Uniper will, the more we will then also face those kind of questions with very practical events, reminding us of the importance of security of supply.

Sascha Bibert

I think with that, guess we say we have tackled most of the questions. I'm sure there are some remaining. These then approach the IR team during the day. And we have now come to a close and also our press conference will start in due course. From my side, big thank you to all of the participants. Andreas?

.

Andreas Schierenbeck

Yeah, thanks from my side as well. Thanks. Thank you for participating. Thanks for your questions. Stay tuned and stay safe and healthy and have a good day. Thank you. Bye-bye.

Operator

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.