Hey, good afternoon, ladies and gentlemen, and thank you for joining today's call on our full year results 2025 and our outlook for 2026. In addition, we will take the opportunity today to walk you through our strategy update out to 2030, which provides an integrated view of our long-term priorities. I'm pleased to be joined by our CEO, Georg Stamatelopoulos, and our Deputy CEO and CFO, Thomas Kusterer, who will lead you through the presentation before we open the line for your questions. For everyone watching via the webcast, please feel free to send questions through the chat function. With that, I'd like to hand over to Georg.
Thank you, Marcel. Good afternoon to everyone, and a warm welcome from me as well. Looking back, the past financial year has once again underscored the central point. EnBW delivers reliably, consistently, and with a clear sense of direction. 2025 unfolded against the backdrop of elevated geopolitical tensions and the challenging macroeconomic environment. Conditions that regrettably have not eased and, in some areas, even intensified, most recently in the context of the Iran conflict. In this environment, EnBW has demonstrated the qualities of a stable anchor. Only few companies combine continuity and resilience in such a way. Our financial performance in 2025 again showed the strength and reliability of our earnings profile. Our operational execution across grids, renewables, dispatchable generation assets, and smart infrastructure demonstrates how we turn structural trends into long-term value. These trends are powerful.
The transformation of the energy system, the expansion of System Critical Infrastructure, rising electrification, and growing demand for flexible assets. Combined with our integrated and diversified setup, they give us a highly resilient and scalable foundation for continued growth. This perspective at the heart of our strategy update through 2030, which we'll discuss in more depth later today. Before we move to that, let me briefly reflect on what we achieved in 2025 and how this sets the stage for the years ahead. In 2025, we stayed firmly on course in what remains a highly dynamic environment. Our earnings were solid, our operations strong, and we continued to invest at scale in the transformation of the energy system. Our adjusted EBITDA of EUR 5.1 billion was right in line with our guidance of EUR 4.8 billion-EUR 5.3 billion.
We delivered in all three business segments, a clear sign of the strength and balance of our portfolio. Our investment activity reached a new level. With EUR 7.6 billion in gross investments, 22% more than last year, we reaffirmed the scale of the task ahead and EnBW's commitment to driving it. We also made measurable progress in our low carbon strategy. 2025 saw record additions in wind and solar, bringing the share of renewables in our installed generation portfolio to 66%, the highest level we have reached so far. At the same time, we continued to reduce coal and added new flexible hydrogen-ready capacity, strengthening our trajectory towards net zero. Beyond our financial performance, 2025 was also a year of strong operational delivery across all our business segments.
In System Critical Infrastructure, which comprises our electricity and gas transmission and distribution grids, our major projects continued to advance at pace. ULTRANET is now 99% completed on our side with a converter station already in operation. Construction on the remaining parts, covered by other TSOs, continues as planned, and the full line is scheduled to go live by the end of this year. SuedLink, our largest flagship transmission project, entered construction in all six federal states last year, marking a decisive step towards strengthening Germany's north-south transmission capacity. In distribution, we are accelerating the modernization and digitalization of the grid. Our new automated connection check allows customers to find out within a single day whether their PV system or battery storage unit can be connected to the local grid.
At the same time, our largest distribution system operator, Netze BW, successfully renewed more than 310 concessions with no loss since 2020, securing a strong long-term basis for reliable regional and local grid operations. Our segment Sustainable Generation Infrastructure also made significant progress. In renewables, we added 800 MW of new capacity in 2025, the highest increase in our history, and secured 400 MW in onshore wind and solar auctions. At the same time, disciplined capital allocation remains essential. This was evident when we decided to withdraw from the U.K. offshore wind projects, Mona and Morgan, as economics no longer met our criteria. We also made further progress in transforming our flexible generation portfolio. In spring 2025, we commissioned the first of our three fuel switch power plants.
The hydrogen-ready gas units add urgently needed flexibility to the system. In parallel, we continue to decarbonize our thermal generation portfolio, taking out nearly 1.7 GW of coal-fired capacity over recent months. On track for coal exit by 2028, we sold our last lignite plant, Lippendorf, end of 2025, and recently took another hard coal unit off the market. Finally, in our third segment, Smart Infrastructure for Customers, which includes our retail and e-mobility activities, we continued to build strong momentum. We added more than 2000 fast charging points, reinforcing our market leading position in the DACH region and supporting the rapid growth in electric mobility. All of this shows we are delivering today and building the energy world of tomorrow.
With this in mind, let us move to the financials on Page six, and I will hand over to Thomas for a closer look at the numbers.
Thank you, Georg, and welcome also from my side. Let me get started with financial highlights for 2025. They show a strong year, fully in line with our guidance and a balance sheet that gives us room to invest and grow over the coming years. Our adjusted EBITDA came in at EUR 5.1 billion, right within our guided range and above last year, driven above all by the sustained strength of our grid business. Retained cash flow was also strong at EUR 3.3 billion, reinforcing our internal funding capabilities. The net debt repayment potential of 25%, we are well ahead of our target range of 15%-18%. To support our growth program, we secured EUR 5 billion in diversified equity and debt funding since the beginning of 2025, including the capital increase last summer.
This further strengthens our financial flexibility. Let's now turn to the performance of our three business segments on Slide seven. Our adjusted EBITDA came in exactly as guided, growing by 3% year-on-year. The key driver was System Critical Infrastructure, achieving a 20% earnings increase in line with our upgraded guidance. This was fueled by the investment-backed expansion of our regulated asset base in both transmission and distribution. We also benefited from one-off tailwinds, including higher peak load effects in transmission and lower costs for grid losses. In Sustainable Generation Infrastructure with our renewables, thermal generation, and trading, earnings came in at the upper end of our revised guidance. However, they trended below last year due to weaker wind and hydro conditions and lower realized hedged margins.
Our third segment, Smart Infrastructure for Customers, performed well and reached the very top of the guidance we had set for 2025. Within the robust set of results, our low-risk activities continue to gain weight. Grids and renewables contributed more than EUR 3.8 billion to Adjusted EBITDA in 2025, lifting their share to 76%, up from 71% in 2024. This expanding predictable earnings backbone is a central pillar for long-term stability. Moving on to adjusted net profit and our dividend proposal for 2025 on Slide eigth. Adjusted net profit attributable to EnBW's shareholders amounted to EUR 1.4 billion, broadly in line with the previous year. The development largely reflects higher expenses in the adjusted financial result due to market valuation effects and slightly higher interest costs from increased financing volumes.
Based on this earnings development and our positive outlook, we propose to increase the dividend for 2025 by 6% to EUR 1.70 per share. This corresponds to a payout ratio of 39%, which is broadly in line with our policy of distributing between 40% and 60% of adjusted group net profit. Let's turn to our investments on Slide nine. Ladies and gentlemen, our investment program remained at a very high level, reaching EUR 7.6 billion in 2025, which is 22% more than in the prior year. Around 60% of our gross investments went into System Critical Infrastructure focused on expanding and modernizing our transmission and distribution grids. Key projects included SuedLink, ULTRANET, and the South German Natural Gas Pipeline. About 30% were allocated to Sustainable Generation Infrastructure.
This mainly included construction and development of our offshore wind projects, He Dreiht and Dreekant in Germany, as well as our discontinued U.K. projects, Mona and Morgan. We also invested further in our hydrogen-ready gas power plants. Furthermore, our investments went into Smart Infrastructure for Customers, above all in the continued rollout of our fast charging network. Overall, 90% of our CapEx was taxonomy-aligned and 87% supported growth. Divestments totaled EUR 1.5 billion, well above last year, driven by portfolio optimization and co-financing contributions by partners. Let's turn to our retained cash flow, which rose by 42% to more than EUR 3.3 billion, clearly exceeding the prior year. While adjusted EBITDA increased modestly, the strong uplift in retained cash flow was mainly driven by lower tax outflows in fiscal year 2025 and refunds for previous periods.
Net debt decreased by 8% to roughly EUR 13 billion and remained well below our original guidance of around EUR 17 billion. This was supported by the capital increase last summer and the strong contribution from retained cash flow by being only partially offset by our investments. Accordingly, this leads to a debt repayment potential of 25% for 2025, well above our long-term target of more than 15%. That brings me to our guidance for 2026. In 2026, we anticipate continued operational strength across all segments. In System Critical Infrastructure, earnings will continue to mirror the momentum from our grid investments and the resulting asset growth. At the same time, peak load and lost energy effects are expected to normalize.
In renewables, part of Sustainable Generation Infrastructure earnings will benefit from new wind and solar capacity coming online in 2025 and 2026, in particular from He Dreiht, which will be fully operational this summer. Thermal generation and trading are expected to deliver a solid performance as well. However, lower realized power prices and the absence of a lignite contribution following the sale of our lignite power plant end of 2025 will likely lead to lower earnings compared with last year. In Smart Infrastructure for Customers, operating earnings are set to further improve, supported by the continued e-mobility growth and recovery in our solar home storage business. Overall, we expect group adjusted EBITDA of EUR 4.6 billion-EUR 5.1 billion in 2026.
With that, let me hand back to Georg to take you through our strategy update and to outline our ambitions for 2030.
Thanks a lot, Thomas. Ladies and gentlemen, I am pleased to present our strategy update, our roadmap to 2030. The energy system is moving towards greater electrification and integration. EnBW is ready for this next phase, ready to execute our ambitious investment program, and ready to unlock our full potential as one of the companies shaping the future. EnBW is uniquely positioned in Europe with all key assets of the energy transition in one integrated portfolio. We combine a complete electricity and gas grid footprint with deep expertise across all major technologies, strong market positions along the value chain, and proven track record of execution. That is what makes us so distinctive. Across our core market, Europe and especially Germany, we hold leading positions in all essential elements of the energy transition.
As one of only a few European utilities, we bring together regulated high growth electricity and gas grids, a substantial renewables and dispatchable power generation portfolio optimized by smart energy trading, a large and loyal customer base, and a leading e-mobility footprint with one of Europe's most extensive high-speed charging networks. This integrated strength gives us a distinctive platform to build on, and the results speak for themselves. EnBW is stronger than five years ago. Our strategic direction has consistently proven right with resilient and profitable earnings growth and the ability to weather even major external shocks. As we continue our transition journey, the benefits are becoming increasingly visible, a growing low carbon portfolio and a meaningful contribution to a more resilient and affordable energy system. Let's turn from what we deliver to what lies ahead.
Large scale electrification and industrial decarbonization will shape the next phase of the energy transformation in Europe. In Germany, this dynamic is already supporting structural growth in energy demand. Mobility, heating, and the rising power need of data centers are the main contributors. This transformation demands a major system build-out. By 2030, Germany must expand renewables far beyond today's 200 gigawatts, develop about 70 GW of flexible capacity, and invest roughly EUR 150 billion in transmission and distribution grids to integrate new assets and ensure system stability. This is not just a challenge, it is a significant opportunity for Europe with Germany at the core. With our integrated portfolio, EnBW is exceptionally well-positioned to turn this momentum into durable, high-quality growth. With that, let me now turn to our business segments, starting with the backbone of our company and of the entire energy system, our grids.
Grids are the core enabler of Europe's future energy system. As electrification accelerates and renewable generation scales up, the stability and performance of our networks will determine how fast the transformation can happen. Nowhere is the more true than in Germany, providing a clear opportunity for EnBW. With our fully integrated electricity and gas grids, EnBW is uniquely positioned to capture this momentum in both transmission and distribution. Anchored in Southern Germany, our grid backbone is one of the central enablers of Germany's decarbonization journey. Across the country, a rapidly growing pipeline of renewables, batteries, and new electricity demand is waiting to connect. Enabling these connections requires a significant network expansion and offers a unique opportunity to scale stable, regulated earnings in the coming years. Our regulated asset base of more than EUR 19 billion provides a highly solid foundation for this.
In distribution, we operate Germany's second-largest network, supported by more than 1,000 municipal concessions, a partnership model that gives us exceptionally long-term stability and reach. In transmission, we are delivering key north-south corridors that will transport offshore wind power to industrial centers. Through our involvement in the German Hydrogen Core Network, a cornerstone of the future European hydrogen backbone, we are helping to shape the next stage of transformation. This brings me to the future development of our regulated asset base on Slide 17. With strong contributions from our transmission projects, growth in EnBW's regulated asset base is set to accelerate meaningfully. Following robust expansions since 2020, we expect the remuneration bases to significantly grow at an annualized average rate of around 14% until 2030, driven by sustained CapEx in both transmission and distribution.
This translates into highly predictable low-risk earnings growth under a proven and robust regulatory framework. The regime effectively safeguards network operators' revenues. Investments are fully reimbursed, capital returns are granted over time, cost outperformance is incentivized, and inflation protection as well as multi-year regulatory periods ensure visibility and stability. With the framework currently under review, it will be crucial that the regulator puts in place an internationally competitive regime, one that ensures adequate capital returns to support sustained large-scale investments. Let us now turn to Sustainable Generation Infrastructure, our generation business and second pillar of our integrated portfolio. Smart, green, and flexible generation is essential for a resilient, affordable, and climate-neutral future. We continue to grow our portfolio from a position of strength. EnBW is one of the most experienced players in the European energy sector with deep expertise in developing, building, and operating complex generation assets.
Our teams on the ground in origination, engineering, and project development are doing an excellent job in driving this forward. Today, our generation portfolio is well-balanced between renewables and flexible assets, and both have made significant progress since 2020. We have added around 2 GW of renewables and substantially decarbonized our fleet, with renewables reaching 66% of total capacity by 2025. By 2030, we plan to double our net installed renewables capacity by 10 GW-11.5 GW compared to 2020, including large-scale batteries. To accelerate this system-supportive approach, we will increasingly leverage existing grid-connected power plant sites. Building on a 27 GW strong pipeline across multiple technologies, we can deliver this growth in a disciplined manner, selecting the most value accretive projects. Thereby, we maintain a clear geographical focus on Europe with Germany as our core market.
Having covered our renewables, let us turn to flexible generation. Let me be clear, when we talk about flexible generation, we mean low carbon dispatchable capacity that stabilizes the system and support a high share of renewables. In this area, we are also perfectly positioned. Today, EnBW operates around 4 GW of flexible capacities with further 1.3 GW under construction. Assets that act as key stabilizers in an increasingly volatile energy system. Demand for flexible capacity is expected to rise sharply across Europe, with Germany standing out as the only major market where almost the entire existing controllable capacity needs to be replaced. Our increasingly hydrogen-ready fleet in System Critical Southern Germany is well-placed to benefit from this, in particular from upcoming gas tenders and the future capacity market.
By the early 2030s, we plan to further expand our hydrogen-ready capacity, reaching around 2.2 GW. A key advantage is that our development pipeline is rooted in the potential of our sites, excellent locations with grid connections, nearby gas supply, and over time, hydrogen access. With our strong trading acting as the smart energy manager of these assets, we can optimize the value across markets and time, supporting both system stability and commercial performance. Based on our strong commercial know-how, we maximize the value of our portfolio through an active and disciplined hedging approach. We operate our assets around the clock, 24/7, and trade across all relevant energy markets, ensuring that our flexible and renewable generation is optimally positioned at all times. Through our forward-looking hedging strategy, we secure generation volumes up to three years in advance, providing prudent risk management and stable earnings visibility.
For our renewable assets, we also conclude long-term power purchase agreements with leading industrial partners. These green PPAs offer stable and predictable revenues over many years and support the decarbonization of industrial sectors. To date, we have signed more than 1 GW of such contracts already with terms of up to 15 years, including a recent 100 MW PPA with Google, and this portfolio continues to expand. In direct marketing, we manage around 10 GW of capacity, making us the second-largest player in Germany, a clear demonstration of the scale and expertise of our trading business. Looking further ahead, we are already exploring future imports of green energy with international partners, most recently with ACWA in Saudi Arabia, opening new avenues for long-term cost competitive supply. With that, I hand over to Thomas.
Thank you very much, Georg. Let us turn to our third segment, Smart Infrastructure for Customers with our retail and e-mobility activities. Here we effectively turn energy into action, close to the customers, deeply integrated with smart energy services, and at the forefront of electrification in households and mobility. Our retail activities are set to benefit significantly from the deep electrification of mobility and heating. As electric vehicles and heat pumps scale rapidly across Europe, and especially in Germany, household energy demand will rise sharply, creating strong long-term growth opportunities for EnBW. Serving more than 6 million customers across electricity and gas, e-mobility, and energy related services, we have a powerful base to capture this momentum. Customer loyalty remains exceptionally at EnBW, with relationships lasting on average around 10 years.
This reflects the strength of our strong brand and the quality of our offerings providing a stable earning space. Our retail strategy is to turn the traditional household power contract into a digital energy ecosystem. As electric vehicles and heat pumps multiply, roughly fourfold and threefold respectively by 2030, customers want to steer their higher consumption more intelligently. Bundled digital offerings drive volume growth, strengthen customer retention, and unlock meaningful cross-selling opportunities in a competitive market, supported by our strong and loyal customer base. Alongside our retail activities, our e-mobility business is a true success story. One way EnBW is actually setting industry standards through the country's largest and densest fast-charging network. Supported by strong market fundamentals and accelerating electric vehicle adoption, our charging business has developed extremely well, as shown on Slide 23.
We reached EBITDA breakeven in 2024, and one year later, earnings already moved into a solid double-digit EUR contribution. With more than 8,000 fast charging points, mainly located across Germany, EnBW operates the largest high-power charging network. Carefully selected, our sites rank among the most attractive, which is critical to profitability. Based on a 20% market share in Germany, EnBW sites deliver an impressive 1/3 of all fast charging sessions nationwide. Our strong brand further amplifies this. The EnBW mobility+ app exceeds 3 million downloads and has around 500,000 active customers. The seamless integration of customer front end and charging infrastructure drives traffic to our sites and supports recurring revenues. Building on this success, we will continue to expand our charging infrastructure in line with electric vehicle adoption, strengthening our leadership position in one of the most attractive and scalable growth markets in Europe.
This brings me to the final part of our strategic update, our capital allocation priorities, and our financial targets for 2030. At the core of this chapter is one message. Our future growth is predominantly low-risk, highly visible, and grounded in strict value-driven capital allocation. Focused on regulated grids and other low-risk activities, EnBW is stepping up its efforts to shape the clean energy transition, including gross investments of EUR 6.2 billion and EUR 7.6 billion in 2024 and 2025 respectively. We intend to invest up to EUR 50 billion by the end of this decade, mainly in our home market, Germany. Project selection and decisions follow strict investment discipline, safeguarding value-driven and efficient growth. This policy is built on our integrated setup, which enables swift and flexible deployment of capital to the most value-creating opportunities across our portfolio.
Every investment decision is based on clear hurdle rate requirements, typically 100 to 300 basis points above the respective weighted average cost of capital, depending on the specific risk profile. This is consistent with project IRRs of around 8% for FID in 2024 and 2025, particularly across renewables, dispatchable generation, e-mobility and broadband. Grid projects are not part of this calculation as earnings in this segment are regulated. All investments undergo thorough payback assessments and sensitivity analysis. We also conduct regular portfolio reviews to confirm decisions and maintain a disciplined capital allocation approach. In parallel, we are driving efficiency across all functions. Our continuous improvement program targets sustainable savings of around EUR 900 million by 2028. Roughly 1/3 has already been delivered and another third is identified. Key levers include process optimization, standardized procurement, and the broader use of AI.
Let's now have a look on how we fund our strategy. Our investment program is fully funded and structured to ensure both robustness and flexibility in execution, with roughly 50% CapEx being discretionary. EnBW's funding mix is well diversified across multiple sources. Retained cash flow is the largest and most important single source, contributing around 40% of the total program and underlying the strength of our internal financing capacity. Capital markets account for roughly 25%, excluding refinancing, complemented by our EUR 3 billion capital increase in 2025, which further strengthened our balance sheet. In addition, partnership models, including asset rotation and disposals, will contribute around EUR 13 billion, with execution already well underway, with more than 85% or over EUR 11 billion already secured today. That leads me to our financial outlook for 2030 and the final part of our strategic update.
This is where our strategic priorities translate into clear financial ambition. We are set to grow the business steadily over the coming years. Between 2026 and 2030, adjusted EBITDA is expected to grow at a compound annual growth rate of around 6%, driven primarily by regulated activities. This takes us to our ambition of EUR 5.8 billion-EUR 6.6 billion by 2030. For 2026 and the midterm, our guidance is based on a normalized price environment and reflects our internal market outlook. We have not factored in any effects from the next regulatory period, as key elements of the new grid framework are still pending. Any upside would come on top of our earnings guidance. The same applies for any book gains from divestments or asset rotation. Our financial strength supports this trajectory.
We continue to steer net debt using our debt repayment potential key KPI that relates retained cash flow to net debt and reflects our ability to repay our debt from our underlying earnings. We target at least 15% by 2030, aligned with our solid investment grade ratings. Our dividend policy remains unchanged, with a payout ratio of 40%-60% of adjusted net profit. Altogether, this positions us to deliver resilient growth and long-term value, supported by disciplined balance sheet management and prudent capital allocation. With that, I'm handing back to Marcel.
Thank you, Georg and Thomas. Ladies and gentlemen, we'll now begin our Q&A session. You may ask questions live or submit them via the chat. For technical details, let me now hand back to Sergen, the operator.
Thank you very much, Mr. Münch. Ladies and gentlemen, we'll now begin the questio- and- answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the bottom left side of the screen and then click the Raise Your Hand button. If you are connected via phone, please press star followed by one on your telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press the Lower Your Hand button from the webinar or press star and two on your telephone.
Webcast viewers may submit the questions in writing via the related field. Anyone who has a question, make queue up now. We don't have questions from the webinar yet. I would now like to turn the conference to Marcel Münch for questions from the webcast.
Yeah, thank you, Sergen. Let me start with the questions that we've received via the chat. First slot of questions relates to a rather topical situation right now in the Middle East. These are a few questions on the situation in the Gulf from Michael Charlton from Banco Santander. First part of that question: Has EnBW fully contracted its gas procurement needs for 2026 and 2027? Second leg of the question: Is the portfolio fully hedged between gas consumers and power generation on one side and procurement on the other? What are the main sources of EnBW's natural gas supplies?
Yeah, let me take this question. Thanks a lot. I mean, you might be aware of our hedging policy. We are fully hedged for 2026. We are roughly 70% hedged for 2027. When it comes to our customers, we do back-to-back sourcing, so our customer base is fully hedged in our underlying hedging policy. We do not have any exposure currently to the Middle East when it comes to sourcing. Our main sources are pipeline gas from Norway, the wholesale market in Europe. Besides that, we do have contracts with the U.S. and other countries, so we have no exposure to the Middle East. I think that was the question, if I'm not mistaken.
Yeah. Thank you, Thomas. I would just follow up with another question that Andrew Moulder raised via the chat, and that goes into a bit more detail. The question is whether we have any specific exposure in our gas subsidiary, VNG, with regards to the Middle East.
Andrew, good question. Actually, we do not have any exposure from VNG to the Middle East. We do not have it group wide. VNG is sourcing LNG through EnBW trading with internal contracts, so there is no exposure, LNG exposure or Middle East exposure from VNG.
Thank you, Thomas. Let's continue in the chat. A question from José Ruiz from El Periódico de la Energía. Would you expect any initiative from the German government to cap electricity bills or intervene in the power wholesale market by decoupling power and gas?
Yes, I will take this, Marcel. We have in Germany clearly this discussion, especially in public. Let me compare with the situation that we had during the energy crisis as a result of the Ukraine war. We had at that time structural differences to today's situation. We had a security of supply issue at that time, and we had a much higher level of pricing issue compared to today. With the current situation, we do not think that it is necessary that any measures will be taken, especially if you look at the electricity sectors.
In the electricity sector, the introduction of CFD mechanism in the framework of the Erneuerbare-Energien-Gesetz law and the adjustment and revision of the EEG law is foreseen, and therefore you have already there the possibility to have a cap on electricity on energy prices. For gas, we think it is important to keep the market signals also to the consumers. If something needs to be done, it is to consider the creation of a strategic reserve of about 7-10, corresponding to the consumption of around 7-10 winter days, and have this reserve in place when it is really needed, when the markets reach their limits. Other than this, we do not see any necessity, and we also do not think that the German government will proceed in this direction.
Yeah. Thank you, Georg. We have no more questions in the chat, so let me just check in with Sergen whether there are any questions directly in the call.
Yes. We now got a question from Andrew Moulder from CreditSights. Please go ahead, sir. Mr. Moulder, you need to unmute your microphone from the webinar because you're still muted. I opened your line, you need to now.
Can you hear me now? Yes. Good. Okay. No, I just had a question about your net debt. I mean, I'm certainly expecting it to be more than sort of EUR 14 billion-EUR 15 billion, around that sort of level. And it's significantly lower than that. Can you just give me a little bit more color on your net debt number? I mean, I know you did the capital increase, but even with that, I was still thinking it was gonna be higher than EUR 14 billion-EUR 15 billion or so. Have you sort of slowed down investments or something like that? Why is debt a lot lower than I expect, really? And the second question, I just wanted to be clear on your investments and your guidance.
You were talking about some of the investments were proprietary investments that you would be looking at. They weren't committed investments. I think you said you had about 50% of the investments weren't actually committed, and yet you're talking about aiming for guidance of around EUR 6.2 billion or so for 2030. What percentage of those uncommitted investments are you actually expecting to materialize in order for you to hit that EBITDA guidance in 2030?
Andrew, welcome to the call. Let me get started with the second question and the discretionary or non-discretionary CapEx, respectively, how much of it we do assume to be needed for the guidance. Most of it is actually relevant to get to the guidance of EUR 5.8 billion-EUR 6.6 billion. However, I think the point we are trying to make is we are flexible in terms of which kind of investments we are investing our capital in. Secondly, also from a timing perspective, so we can move investments from one year to another. That goes back to your first question regarding our net debt. We also assumed at the beginning of 2025 that our net debt is above EUR 15 billion.
Effectively, what happened, some of our investments slipped into 2026. We had some delays at He Dreiht, our offshore wind park. We originally assumed it's going to be fully constructed by the end of the year, and it's now mid of 2026, so some delays here. Likewise with our two still under construction, our hydrogen-ready gas power plants. They also had some delays in construction, which means that our investments overall, our gross investments and also our net investments, were below our original expectations. That's the reason for the reduction in net debt. Does it answer your question?
Yes. Yes, it does, Thomas.
You're sitting in the middle of a control center, if I'm not mistaken.
Yeah.
That's fabulous.
It's a bit cheating, to be honest, actually. It's Battersea Power Station. I don't know. It's been, you know, upgraded into a fancy residential and shopping destination.
Right.
They've still kept the old power station.
Great.
Anyway, I just had one more quick question. It's just a very small point actually. On the EV charging, I mean, I can remember when people were starting to build EV chargers. Everyone was saying it wasn't a profitable business, it needed subsidies, and now you're talking about it being a double-digit EBITDA. I mean, I know it's not really huge in the context of the group, but is that purely in terms of sort of EnBW's performance, or are you getting subsidies for the electric vehicle charging? Why, what's making it profitable?
It's not subsidies, Andrew. It fully relates to our performance. However, it's on EBITDA level, as you just said. I mean, we still have a way to go to recover all the investments in the next years. On EBITDA level, we are already and we are happy that that's the case. However, having said that, the utilization of charging infrastructure in Germany, I said not the German, not the EnBW numbers, but Germany-wide for fast charging is 15% currently. What we are looking for is a higher uptake of e-mobility to further utilize our charging infrastructure, and that would increase actually profitability also below EBITDA level.
However, having said that, I think we're doing a good, a really good job in also being already in an investment case. We shouldn't be forgetting that we're investing EUR 200 million annually still in this business, that we are already on an operational perspective, we are already positive.
Okay. Maybe if I could ask one more question, unless there's someone else, Marcel, that you want to bring onto the call. There was some speculation. I mean, obviously we've got all this volatility in the Middle East.
Right.
There was some speculation in some headlines under Bloomberg that RWE, I believe, was positioned the wrong side of the gas price increase, i.e., they were short gas and so they needed to buy in the market. Now, I'm not going to say. I don't know how positive or negative or whatever that would be for EnBW, but trading is always a black box. Really my question is, how are you positioned now that we've gone into this business? Markets are clearly volatile, which I would expect would help the trading business.
Yeah.
If you're in a short gas position, actually maybe you're not doing so well. Can you give me some comments on where you're positioned on your trading business?
Yeah. First of all, we are not on a short position, which is good news. Then we shouldn't be forgetting, I mean, we are not talking about volatility and market disruptions that we have seen back in 2022, in the Ukraine, when the Ukraine war began. It's a totally different situation today. Again, with high volatility, there are opportunities also for our trading organization. I think I made a point earlier already. We are fully hedged for 2026, and we are hedged by 70% + for 2027 already. That's also true for gas. It's our overall hedge level. We are not directly impacted so far.
However, having said that, I mean, it very much depends on how long the conflict is going to last and what it really means for mid and long term supply chains in total, not just energy, but also energy related.
Right. Okay, great. Thank you.
Welcome.
As a reminder, for questions from the webinar, please click the Q&A button on the left, bottom left side of the screen and then click the Raise Your Hand button. If you are connected via phone, please press star followed by one on your telephone keypad. There are no more questions at this time. I would now like to turn the conference back over to Marcel Münch for any closing. Oh wait, we have a last-minute registration coming from Richard Sheridan from BTIG. Please go ahead.
Hi, can you hear me?
Yes, we can.
We can.
Thanks for the presentation. Very interesting. A few questions just to follow on from Andrew, if I may. Just on the uncommitted CapEx, the EUR 24 billion number you were talking about, could you just give us an update on your thoughts on the regulatory process and where that may go, and how much of that CapEx could be committed to extra regulatory investments if the returns are proven to be attractive, to be adequate? E.ON SE obviously have voiced some frustrations around the pace of that process. Any thoughts you have on cost of capital, where that is, where we might find that information would be helpful as well.
In terms of commitments to further renewable investments, I saw a banner headline today that suggested the German government might be increasing onshore wind auctions from 10 GW per annum to 12 GW. Have you seen that information? Is it something that might take you down a route to participate in that angle? I'm just interested in, as a secondary question, you're pursuing the hydrogen side of the gas auctions. Can you give us an update on what you think will be the timescale for that? Would you also participate in the national natural gas side of that auction if it's coming this summer?
The last question would be, just I'm interested on, following up from Andrew's questions around the very impressive performance in net debt, even though you've got some delayed CapEx slipping into 2026. I was just interested as to why you came below the 40%-60% dividend payout range, given you've had very strong cash generation, you seem to have decent earnings momentum, and also you seem to be quite happy with the start to the year, given you're not short gas. Just some thinking around that, please.
Good questions. Actually, let me get started with. I'm starting with your question four. We'll jump to one, and we'll hand over for two and three to Georg, if that's okay for you. Regarding net debt, I think I made a point why we were below our original projection of EUR 15 billion. Having said that, we do assume that we are going to see an increase in 2026 from EUR 13 billion to around EUR 15 billion, given that some of the CapEx is slipped into 2026. Regarding the dividend payout ratio, we are just below our self-set guidance of 40%-60%, and that was on purpose. We would like to show stability in our dividend payout.
EUR 1.70, that's something we can, we would also aspire actually going forward. It's about stability, and at the same time, actually, given our investment program, I think it makes sense actually to strengthen our balance sheet, and our shareholders are supportive of that. That's why we came out with this 39%. Regarding your first question on regulated business and the process of the new regulatory system going forward, I think the question you were asking was around how flexible are you to allocate CapEx. We do have some flexibility, not total flexibility of course, because some we do have to do because of network development plans and so forth. But we do have some flexibility to allocate more or less to also to our regulated business.
I think for us it would be important that we do see an increase in the equity return for the next regulatory period. What we are currently looking at is around 2% below the average in Europe, and we need to be competitive when it comes to international capital, because we do need international capital for the enormous investments needed in our networks infrastructure going forward. A 2% increase to something like 8% would be something we would strongly advocate for, and that's what we currently do. I hope that answers the two questions for you.
Yes. Yes. Thank you.
Okay, perfect. I hand over to Georg.
Yes, with pleasure. Thomas, you have asked about the new climate protection law that was announced almost in parallel to our press conference that we had before this call. I am not 100% informed on every detail of this new law, but the first points that I have seen are very encouraging. It is a commitment to the targets of the German government in terms of climate neutrality until the year 2045. There was an announcement made out of the Ministry of Economy in Germany for additional auctions in wind onshore of 12 GW. I mean, this is a strong signal also in Germany.
In the last years we had a rather restrictive auction regime and a rather restrictive participation in the auctions from all market players. This is not an EnBW specific. Therefore it is very good news for us that additional 10 GW-12 GW are going to be auctioned. Again, the last one on this question. We need first to see the details. We need to see how this is going to be realized, what is the timeframe, and what will be the speed of these auctions, how many are going to come still in the year 2026 or in the next years until 2030. Also you have asked about an assessment about the establishment of the hydrogen economy in Germany.
EnBW is participating at the core grid of hydrogen with an investment in total of approximately EUR 1 billion and a length of a pipeline of approximately 900 km. This is approximately 10% of the total length of this core grid. We are doing this investment for both the southwestern part of Germany, where EnBW headquarters are located, but also for the eastern part of Germany, where VNG is located. Nevertheless, in order to answer to your question, we need to know or to assess when hydrogen is going to come to this grid. The grid on its own does not help a lot, and this is where we see a difficulty in the market.
We try from our side to secure the upstream position. We have several projects, and we are still in discussions with hydrogen producers also outside the European Union. We have what we can announce, and we have already announced our quantities or options that we have secured from Norway and also from Saudi Arabia. The first starting in the year 2027, and the second starting in the year 2031. Nevertheless, we see the challenge at the downstream side. For sure, we need some hydrogen for our own power plants, but we know that the consumption of our own hydrogen-ready gas-fired power plants will not be enough in order to make this project sustainable and economically viable.
We need also consumers from the industry, from the chemical industry, from the steel industry, and the last year, the last months, the industry was very reluctant in committing to concrete agreements on hydrogen supply. We still work on this. I wanted to give you the framework and the background, and now the assessment is coming. I think we will be in a position by the end of the 2030s to see first projects and first fuel switching towards hydrogen.
Thank you. That's very interesting. Just following up on that, I had one more question on just the current status of the capacity auction. Could you just update us? The timetable's been slipping to the right, so do you still envisage that you will be bidding into that at, say, 2 GW-3 GW of capacity? Is it going to happen by the end of July, or will it be later? Will you bid for any natural gas as well as hydrogen-based gas? And have you also made any prepayments on turbine capacity to guarantee that you can deliver those investments if you're successful in the auction?
Yes. You're asking about the hydrogen-ready gas turbines. First of all, we need to see when the first auction is going to take place. We still do not have a law, not even a law in force, but not even a draft version of the law that will be discussed in the parliament and also with the stakeholders. It is promised by the federal government to be published by end of March, but I think this is a very ambitious target given the date that we are today. Why I'm saying this, we do not really expect the first auctions to happen by September, October this year. The most optimistic scenario we see is by the end of the year.
We have announced already. First of all, we need to consider that we have today in construction approximately 1.4 GW of hydrogen-ready gas capacity. The smallest of this plant is already in operation, and the two others are going to come into operation by the end of 2027. Beyond this, we have already announced a hydrogen-ready gas power plant of a capacity of approximately 800 MW. We have also additional sites where we have not announced it, but let me say in a total number, we target approximately 2 GW-2.5 GW. This depends also on the details and on the framework that the law is going to prescribe.
You have asked about the commitments that we have with gas turbine suppliers. We have such commitments that cover, of course, the projects in construction and also the one project of 800 MW for Karlsruhe, and we have the options for further capacity reservation at the gas turbine manufacturers up to a point of approximately 2 GW. We think from this point of view, we are not going to have a limitation. The limitation are the financial, the economics. If the framework is good and supportive, we will participate. If we do not expect this, we will not participate.
At the risk of asking a fifth or sixth question, can I just extend that then, that point you just made into your positioning with data center customers, hyperscalers. Do you envisage any sort of power plant-type construction deals where you might be building renewables or hydrogen close to data centers, coming out of that capacity auction or any other part of your CapEx plan?
We do not see ourselves directly in the construction of data centers, but for sure, we see ourselves in the supply of energy, of electricity to these data centers. I think we have a big advantage and good sites in terms of grid connection. These are the old nuclear and coal-fired power plants that were taken out of operation, but we still have the grid connection. We have enough capacity to supply these sites with electricity. First, low carbon electricity and after some years with net zero electricity. We are in discussions for several sites with interested companies, but we are not so far to date to announce something.
RWE talked about, I think, 10-20 sites in Germany and a similar number in the U.K. Could you put some sort of figure on that in sites or gigawatts?
I think this is very optimistic. We suppose that one site in order to be viable should have a grid connection of approximately one gigawatt. In the short term, let me say until the year 2030, we see maximum two or three such data centers in Germany, and maybe five in the European Union. After this, we need to see how the development is going to be.
Okay. Thank you. That's very helpful.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Marcel Münch for any closing remarks.
Yeah, thank you, Ser gen. With that, we'll bring today's call to an end. Many thanks, Georg, to you and Thomas to yourself, and obviously to everyone on the call and in the webcast for following us. We'll now be traveling to London, Paris, Amsterdam, and Frankfurt next, and look forward to picking up the conversation with many of you as we move along. If further questions arise in the meantime, please reach out to our IR team who is or who are obviously very happy to assist you. With that, many thanks again and enjoy the rest of the day. Bye.