Welcome, ladies and gentlemen. Thank you also from my side for joining us for today's Investor and Analyst Conference Call on EnBW's results for the first nine months of 2023. As always, our CFO, Thomas Kusterer, will kick off today's session, providing you with details on the developments in our business during the first three quarters, and an update on our outlook for the remainder of the year. Afterwards, as always, we look forward to your comments and questions. With that, I'll hand over directly to Thomas.
Thank you, Marcel, and ladies and gentlemen, a warm welcome from me, too. As already stated, on October 31st, Adjusted EBITDA on group level increased by 65% to EUR 4.9 billion in the first nine months of this year. Based on the significant earnings increase in the third quarter, we consequently revised our guidance for Adjusted EBITDA at group level to between EUR 5.9 billion and EUR 6.5 billion for 2023. I will share some more details on the primary drivers of this update towards the end of this presentation. With EUR 6.5 billion, the liquidity position of EnBW Group remains very comfortable as of September 30th, 2023. In addition to that, we continue to have undrawn credit facilities totaling more than EUR six billion at our disposal. So much in brief on the financial situation.
Ladies and gentlemen, as you know, we at EnBW focus on the entire triangle of the energy transition, expanding renewable energies, reinforcing and building out grid infrastructure, and ramping up low CO2 dispatchable power generation. This reflects our unique setup as the only fully integrated utility in Germany. We continue to implement this strategic agenda, as evidenced by a number of developments in the recent weeks. First of all, the transaction for taking on board long-term investment partners for a minority stake of up to 49.9% in TransnetBW, one of four electricity transmission grid operators in Germany, is now concluded. Last week, the German state-owned KfW bank exercised an option to acquire another 24.95% stake in TransnetBW.
The terms are the same as those offered for another minority stake of the same size by a consortium of more than 30 banks, insurance companies, and pension funds from Baden-Württemberg at the end of May. The transaction, which we now concluded successfully, supports the vital expansion of grid infrastructure in Germany. When it comes to the expansion of renewable, of renewables, we made significant progress in managing the merchant risk of our 960-MW offshore wind farm, He Dreiht, which, as you will recall, is subsidy-free and will start operation at the end of 2025. In August, EnBW signed a 20-MW long-term power purchase agreement with Deutsche Bahn. At the beginning of November, another long-term contract for 100 MW was signed with a subsidiary of Deutsche Telekom. Contracts with financially very solid off-takers, Fraport, Evonik, Salzgitter, and Bosch, were already in place.
Hence, with now 455 MW, EnBW has already secured about half of the capacity of He Dreiht via PPAs. Moreover, we are making progress with the build-out of low CO2 dispatchable power generation. Following the start of construction of a new gas power station in Stuttgart-Münster in spring, construction work has already begun at the Altbach Deizisau site at the beginning of November. And construction of our third gas plant in Heilbronn is expected to start at the beginning of next year. The modern H2-ready gas-fired power plants will reduce CO2 emissions by around 60% immediately, and in the future, the plants will be operated on a climate neutral basis using hydrogen. And finally, as the operator of Germany's largest quick-charging network, EnBW has set the benchmark for e-mobility.
In September, EnBW was the first company to reach the milestone of 1,000 quick-charging stations nationwide. Ladies and gentlemen, let us now have a closer look at our figures for the first nine months, 2023. I would like to start with our operating earnings on slide three. With an adjusted EBITDA of EUR 4.9 billion, the financial performance was very strong in the first nine months of 2023. This marks an increase of some 65% compared to the restated figures for last year. Like in the prior quarters of this year, the increase of adjusted EBITDA was largely driven by higher hedge prices and the fact that last year's nine month figures were negatively impacted by the curtailment of Russian gas supplies and the resulting costs to replace the shortfall at our subsidiary, VNG.
Just as a reminder, to reflect the economic success of our segment, Sustainable Generation Infrastructure, even more accurately, from the first half of 2023 onwards, EnBW reclassifies temporary valuation effects on hedging transactions from adjusted EBITDA to non-operating EBITDA. Prior year figures were adjusted accordingly. Based on the adjusted EBITDA development, adjusted group net profit also increased significantly by roughly EUR 1.3 billion compared to the corresponding period in 2022. Let's now dive deeper into our operating segments on Slide four. Adjusted EBITDA on smart infrastructure for customers was at EUR 225 million, and therefore, below the prior year level. The decline is attributable largely to charges related to the deconsolidation of BMP, a green gas supply, and sales company within EnBW Group, as well as the associated write-downs on receivables.
Pro forma, for these negative one-off effects, earnings for the sales business would have been significantly higher than the previous year, despite a continued reduction in gas sales volumes due to milder weather and saving behavior, given lower churn rates and lower seasonality in procurement prices. Compared to the previous year, adjusted EBITDA of our segment system-critical infrastructure on Slide five increased by 49% to around EUR 1.4 billion. The increase was largely driven by two effects. Firstly, a significant growth in revenues as a result of increased investment in grid expansion. And secondly, the fact that due to higher revenue caps, this year's grid usage charges already reflect the expenses expected for grid reserve and Redispatch to maintain security of supply.
In particular, the revenue caps for our transmission grid operator, TransnetBW, now fully include the planned expenses for grid reserve and redispatch for 2023, unlike the previous year, when the reduction of earnings was mainly due to the increased costs of grid intervention and grid reserve. This timely recovery of earnings underlines the stability of the regulated grid business, resulting in stable cash flows. On Slide six, let me turn to the segment, sustainable generation infrastructure. Here we saw the most significant increase in earnings compared to 2022. Adjusted EBITDA increased significantly to almost EUR 3.5 billion in the first nine months of 2023. Adjusted EBITDA in the thermal generation and trading increased sharply compared to 2022 and reached a level of almost EUR 2.7 billion.
Above all, this is due to the fact that we were able to lock in higher price levels by hedging our generation margin in advance. For 2023, we are already completely hedged at the end of last year. At September 30, we are hedged 90%-100% for 2024, 50%-80% for 2025, and 10%-40% for 2026. Moreover, the prior year period included significant negative effects from the curtailment of gas supplies from Russia. This impact no longer applies, since all supply contracts with Russian counterparties were terminated effective end of 2022. And of course, less electricity was produced at the nuclear power station, Neckarwestheim 2, compared to last year, since the final shutdown took place on April 15, 2023.
Furthermore, electricity generation also declined due to an outage at one of our power plants in Heilbronn. Adjusted EBITDA of renewable energies decreased slightly by 6.4% to EUR 786 million. Earnings from run-of-river generation increased, and the addition of wind farms and photovoltaic plants also had a positive impact. But these effects were more than offset by falling prices in the direct marketing of electricity generated by wind and photovoltaics. On Slide seven, let me comment on, in brief, on the development of our retained cash flow in the first nine months, 2023. Starting with a significantly higher adjusted EBITDA of EUR 4.9 billion, we saw cash outflows for income taxes of almost EUR 600 million and for covering pension nuclear liabilities of EUR 281 million.
Funds from operations came in at more than EUR 3.8 billion, which was also significantly higher than last year. Taking into account higher declared dividends of EUR 669 million, retained cash flow amounted to almost EUR 3.2 billion, exceeding the corresponding periods 2022 by more than EUR 950 million. This brings me to Slide 8. Let me explain the main effects when it comes to the development of net debt. During the first nine months, 2023, retained cash flow was largely offset by two effects. Firstly, an increase in adjusted working capital of roughly EUR 1.6 billion, mainly due to a lower positive margin balance and reverse effects of trade accounts payable from the year before.
And secondly, net investment of about EUR 2.3 billion, mainly in the following two segments. By expanding capacity, renewing the distribution grids, as well as the execution of the electricity network development plan, investment in system-critical infrastructure grows more than EUR 1.4 billion. In the segment, sustainable generation infrastructure investments were mainly related to our offshore wind farm, He Dreiht, in the German North Sea and our fuel switch project in Baden-Württemberg. In addition, the discount rate for calculating our pension provisions increased from 3.7% to 4.1%, which caused a decrease in pension provisions by almost EUR 300 million.
Summing all these effects up, net debt reached a level of EUR 11.2 billion as of September thirtieth, 2023, which marks an increase of 3.6% compared to the level at the end of December, 2022. Ladies and gentlemen, let me conclude today's presentation on slide nine, with our revised outlook for Adjusted EBITDA at both group and segment level for the financial year 2023. We reduced the forecast for Adjusted EBITDA in Smart Infrastructure for customers from between EUR 400 million and EUR 500 million to between EUR 350 million and EUR 450 million, mainly due to the negative effects related to BMP, the green gas supply company, which cannot be fully compensated by positive earnings developments in other areas.
In System Critical Infrastructure, we continue to expect a significant increase over last year, with an Adjusted EBITDA between EUR 1.6 billion and EUR 1.9 billion. As outlined already, the negative effects in 2022 for grid reserve and Redispatch do no longer apply in 2023, and grid revenues will increase due to higher investments in projects associated with the electricity and gas grid development plans. Last but not least, the expected earnings increase in Sustainable Generation Infrastructure is decisive for the upward revision of our forecast. Renewable energies are expected to remain broadly at the previous year's level, with an Adjusted EBITDA of around EUR 1 billion. We expect higher generation volumes in 2023 from more favorable weather conditions and from a moderate increase in the number of renewable energy plants.
Having said that, these positive effects will be more than offset by the falling price level compared with 2022. Continued volatility on commodity markets is expected to lead to a substantial earnings increase in thermal generation and trading. All in all, we now expect adjusted EBITDA on group level to exceed our original forecast of between EUR 4.7 billion and EUR 5.2 billion. Instead, we now anticipate earnings in a range between EUR 5.9 billion and EUR 6.5 billion. And with this, I would like to hand over to the operator to kick off our Q&A session.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from James Sparrow from BNP Paribas. Please go ahead.
Yes, good afternoon, everyone. Thanks for taking my questions. Two, really. First of all, just, I mean, obviously, very good set results and very positive kind of outlook. I just wonder if you could talk a little bit, if you give any sort of guidance on how much the sort of exceptional conditions in thermal generation and trading, you know, might continue through into next year and whether this has changed any of your sort of approach to kind of funding, given the, you know, effectively a EUR 1 billion additional of EBITDA you seem to be getting from them. And then the second question is a bit of a more general one of, you know, relating to the Transnet sale. Obviously, there's a lot of different stuff in the German press about, you know, potential German transmission consolidation.
We all, most of us on this call are following the TenneT situation. But I'm just curious as what you—if you can give any sort of indication of how you think that this could eventually play out. There's talk of, you know, consolidation, the German government being a minority shareholder. I guess my question would be, do you know, are the kind of synergies to be had from combining the German transmission grids, even if they're sort of still majority-owned by people such as yourselves? You know, is there a benefit from combining without having to have sort of full, sort of legal consolidation? Thanks.
Hi, James. Good afternoon. Actually, here from Karlsruhe, and thanks for your question. Let me get started with the first question regarding the exceptional situation on the market you were referring to and obviously the additional operating results and cash flows we incurred this year. Actually, we had quite a good hedge level also already for 2024 last year. So to a certain extent, and already also hedged part of our 2025 production. So to a certain extent, we will also see the positive impacts next year and the year after. Obviously not to the extent we are going to see it this year in 2023, because we were fully hedged by the end of last year already for 2023. So, yeah, we'll see the impact.
On the other hand, you are certainly aware that electricity prices came down significantly in the course of 2023, quite rather quick and quite steep. So that's the contrary to what I just said regarding the 2022 impact. And regarding to Transnet, yeah, I'm following the same discussion as you, James, when it comes to the consolidation and talking about TenneT. I think actually if a consolidation of the transmission grid operator could make sense from a German government perspective, if it really makes sense from a synergy perspective, I'm not that certain, to be honest with you, because I think the German transmission grid operators are quite efficient as we speak. So that needs to be seen.
However, from a political perspective, I will not argue. Does that answer your question?
I guess as much as you can, but I mean, I guess just follow up on that side. Would, you know, would you want to sell out, sell down the other 50%?
James, we're just about to close the 49.9%. So, we just signed a contract and if everything is going to plan, we will close the transactions with both partners by the end of this month. And we're happy with the situation as it is for the time being, and anything else needs to be seen.
Okay, fair enough. So you can't blame me for trying. Thanks.
No, no, no, no.
As a reminder, anyone who wishes to ask a question may press star followed by one at this time. Seems there are no further questions at this time, so I hand back to Marcel Münch for closing comments.
Yeah, thank you, Thomas, for your answers and comments. I'll take it that the comprehensive presentation and Thomas's previous comments have answered most of the questions that might have arose. So, thank you all for taking the time to join today's call. We look forward to welcoming you again when we present our figures for fiscal year 2023 on our next conference call, taking place on March 27, 2024. We now wish you all the best in the run-up to year-end and look forward to seeing and hearing from you again in next year's conference calls. Until then, all the best, and goodbye.