E.ON SE (EOAN) Earnings Call Transcript & Summary

Hello, everyone, and welcome to our Capital Market Day. It's a pleasure for me to be welcoming you today to this completely virtual event from wherever you are attending. Today, we are going to present our growth strategy to you. And we are going to show you how we will connect everyone to good energy. For that, I have the whole management board of E.ON with me today. So let's take a brief look at the agenda. We will kick it all off with our CEO, Leo Birnbaum, who will provide you further details on his 3 core strategic pillars: growth, sustainability and digitization. This will be followed by 3 business deep dives from our COOs, Thomas König, Patrick Lammers and Victoria Ossadnik, who will provide you further details on Energy Networks, Customer Solutions and Digital. We will finish it all off with our CFO, Marc Spieker, who will give you further details on our new financial framework. So let me now briefly introduce Leo to you. Leo became our CEO in April this year. You probably already know him, given his significant industry experience, both from RWE and E.ON. Leo led the innogy integration project before he became our CEO. The innogy integration laid the foundation of our new E.ON as we are going to present it to you today. Leo has a significant track record of delivering profitable growth. And he is now going to show you how we will be achieving that in the future. Leo, let's get it started.

Thank you, Verena. Ladies and gentlemen, investors, analysts, journalists, friends of E.ON, welcome from my side as well, and it's really a pleasure to have you here this morning. I'm proud to present to you as Verena said, the growth strategy for E.ON today, together with my Board colleagues. As E.ON, we will benefit from the ongoing energy transition. This transition for us creates massive growth opportunities over the coming decades. It's the moment in time for utility like E.ON. And the result that you will see today is an even more aspirational E.ON that grows much faster than before. You will see an E.ON that has a significantly higher visibility for our investors. And you will see an E.ON that is a truly green investment proposition. And the results from that strategy, I will also show you in our revised financial framework, and I am committed to grow earnings per share and dividend per share despite the nuclear phaseout and despite regulatory cycles going forward. Earnings per share will grow 8% to 10% until 2026, dividend per share will grow up to 5% annually until '26, and we'll keep on growing beyond that. And for the fiscal year 2021, we start with a dividend commitment of EUR 0.49 per share. This makes us an attractive investment proposition. We combined the low-risk profile of a largely regulated business with attractive dividends and a 5% long-term earnings growth until 2030. So why do I feel so at ease to present you the strategy in this financial framework? And the answer is quite simple. There are 3 reasons: All 3 are opportunities for us, and they are the ones that I've been mentioning since I started in my new role. It's opportunities from unprecedented growth in our industry, it's opportunities from the quest for sustainability in our whole business environment. And it's opportunities from digitization to improve efficiency and to drive growth even outside our own customer and our own asset base. And again, these are the 3 themes that have been on the agenda all the time this year. And my Board, colleagues and I will share the whole story behind these topics. So let me start with growth. In the next 2 decades, we will see growth for all our businesses. Unprecedented growth, especially if you compare it with the growth that we have seen or not seen over the last 2 decades. And we at E.ON, we will benefit from that growth. And that's true for both for Energy Networks and for Customer Solutions. So where is this growth coming from? Well, first, it's the obvious one. We need to integrate a large number of new renewables into our energy system to make the energy transition a reality. But there's even more, not only more renewables, we have also complete industries moving our way. Complete industries are converging with the energy system. The best-known example is e-mobility, where mobility converges with the power sector, but the same is true for all energy-intensive industries. Just take steel. So we have more industries coming into our system. And there is even more. We see a huge amount of new energy-intensive customers coming to us, data centers, the new mega fabs, battery factories and so on. And finally, we need much smarter grids. So we have even the need to modernize and smartify our grids. And the bottom line is it's a huge growth opportunity in Networks, a huge growth opportunities driven by all these 4 factors. And I can put that also into numbers what that means. We will ramp up our investments into networks while gradually increasing our annual CapEx by EUR 1 billion up to '26. And this will translate into higher power RAB growth of at least 6% annually, and it will deliver 3% to 4% EBITDA growth per year until 2026. And Thomas König will present this in much more detail in his presentation directly afterwards. But to be clear, to make the energy transition a reality does not only drive growth in Networks. It also drives growth in Customer Solutions. And why is that? Because every one of our customers is looking for his or her own way to decarbonize. We have 50 million B2C customers that eventually have to decarbonize their personal carbon footprint. And that means more business for future energy home, more business for our e-mobility business. We have cities and municipalities that need to decarbonize the heat supply. And that means more business for our Energy Infrastructure Solutions. We have energy-intensive industries that need to move towards net zero. And that offers optionality for example, in hydrogen. The bottom line is the same in Customer Solutions as a network. It's a huge growth opportunity. Again, also for customer solutions, I can put that into numbers and specific commitments. We will grow in Customer Solutions, our EBITDA with a CAGR of 5% to 8% until 2026. In Energy Infrastructure Solutions, we will ramp up our growth investments to EUR 600 million annually in our infrastructure. And to achieve ambitions in our customer business, digitization is and will be the key. Only digitization allows for the necessary efficiencies. And therefore, we will migrate all our customers to state-of-the-art digital platforms by 2026. And regarding our solutions in the hydrogen sector, we are uniquely positioned to take over a crucial part of the hydrogen value chain. This is driven by our experience in operating the infrastructure and supplying the customers, especially the medium-sized customers that are looking for their decarbonization solutions. And again, this opens additional growth potential for us. We have not yet included this in our numbers, which we'll show you today. So there's more to come, and Patrick will give you details on that when he speaks later on Customer Solutions. So much for growth. Now let me move on to sustainability. Actually, the story on sustainability for E.ON is quite simple. What you need to remember is that for us, the quest for sustainability is an opportunity. And why is that an opportunity? Because we are sustainable by definition. We heard it in the video in the intro. We at E.ON, we do not need to replace our products and services, which we have today by new products and services. The faster the society moves towards net zero, the more we will need every part of our today's business and the more sustainable we will be. So that means that for us, sustainability translates into growth in all our existing businesses. And this is what I just talked about when I talked about growth in Networks and Customer Solutions. But it's not only the businesses that will be sustainable, also we as E.ON as a company, want to be sustainable, we want to be a sustainable company ourselves. And this is where I could basically stop. But again, also in sustainability, let me give you some quantitative targets and commitments. What are our commitments on sustainability? First, regarding the sustainable business. We will develop our business towards even more sustainability. 85% to 90% of our investments in eligible activities are and will be aligned with the EU taxonomy in the planning period. We've also ambitious carbon reduction targets. They will finally lead to full carbon neutrality, including Scope 3 by 2050. And regarding Scope 1 and 2, we will be there already in 2040. And Thomas König and Patrick Lammers will explain the specific business targets, how to get there in their speeches. And now it's obvious that our targets are consistent with a 1.5-degree centigrade aspiration, and we are in the process of getting them also scientifically certified according to SBTi. Now on the sustainable company, E.ON, I want to make sure that sustainability is and rooted in everything we do day by day because sustainability happens in all functions in all areas day by day. So what have we done? We have broken down the sustainability targets on our operation units as part of the planning process. We have integrated ESG into our risk management processes. We have established green financing as the new normal by our green bond framework, we issue large debt volumes. And we have even integrated the most important ESG targets into our compensation scheme for executives. So I can summarize, E.ON means sustainability in our whole setup in the things we do and in the targets we pursue. So let me now move on to our last topic to digitization. Digitization, it's pretty straightforward. If you're not fully digital in the future, you will not be around in the future. The future energy system will be much more complex than in the past. We will have millions, but really millions of consumers that interact with each other on a constant basis. Flexibility will become a key topic every second -- in every second and in every location on a regional basis. The demand to be able to observe the status of our systems and to control it again in every second in every location will explode. And customers will expect a full digital service as they know it from other industries, and that again drives the need for digitization. So our systems, processes and structures work today, but they will have to be transformed to match the needs of the future that I just described. We need new processes, structures and systems. And only and if I'm deeply convinced, only is in all digital companies can be master the challenges of this future energy world. In this sense, digitization is an enabler. You need to do it. But only as an all-digital company will be competitive in the future. Only digitization allows for the necessary efficiencies. And last, but not least, digitization also supports growth as we can develop completely new value proposition for our customers. And this is our chance to tap this potential, and this is why we will become an all-digital company. So that you understand better what we really mean. Let me share with you our definition of digitization. We want to use digital technologies to radically change our products and services. And the emphasis in the sentence is on radically change, not incrementally change. And we want to transform our products and services into data-driven and connected solutions. And the emphasis here is on transforming into something new, not just digitizing the old stuff. And we want to monetize these solutions via efficiencies and completely new value proposition. And the emphasis here is on 2 ways of monetizing. So much for our definition and aspiration, shows you how fundamental we want to attack this topic and Victoria will detail later how we will make digitization work for us, how we will make it a reality. And she will also show how digitization will create value by driving efficiencies and growth both for our network and solutions business. Digitization, by the way, is obviously also an opportunity to make us more efficient, which Patrick and Thomas will explain. Before I conclude with summarizing, I have one last point to cover, efficiency. I personally believe that any company, but also E.ON needs to earn its right to grow. And the way to earn that is to be efficient and will continue to be efficient. And it's hard work. It's hard work to grow earnings in Energy Networks despite shrinking regulatory returns. It's hard work to grow EBITDA in our competitive Customer Solutions business, but we will not shy away from that. We will strive for excellence in everything we do. And hence, we have incorporated in our new financial framework also additional efficiency gains. Until 2026, these efficiencies will gradually ramp up to around EUR 500 million per year from '26 onwards on top of the synergies from the innogy transaction, which we are still ramping up, and Marc will show you some details later. And on top, we strive to realize the CapEx growth without a parallel OpEx growth. And that means an additional productivity increase, which Thomas will explore in some detail. So let me just conclude with the 3 reasons why I really believe that this is the moment in time, this is the industry to be in and why I'm so excited about the future of our E.ON. E.ON benefits from the necessity to decarbonize. We are really facing unprecedented growth opportunities. And they're stable and robust, and we will make this growth work in our favor. We are sustainable by definition in our business. We are a truly green investment because we are connecting everyone to good energy, and we will make sure that we are sustainable ourselves as well. And we will be an all-digital company, which will provide us with many opportunities for efficiency and growth even beyond our own business, our own customer and asset base. And this will pay off for you as shareholders, as you heard in the beginning, as Marc will detail in the end, this means 3 commitments. We deliver continuous growing EPS and DPS despite the nuclear phaseout and despite regulatory cycles. We will grow our earnings per share by 8% to 10% until '26. And we will grow dividend per share by up to 5% annually until '26. And we will make sure DPS keeps on growing beyond that. And again, that makes us an attractive value proposition, low risk of a largely regulated business, attractive dividends, 5% long-term earnings growth. So stay tuned. I see you at the end of the session. And Verena, I hand over back to you.

Many thanks, Leo, for these great insights. Many thanks actually for sharing with us your optimism, for highlighting our growth opportunities and for delivering your commitments that we will deliver on these growth opportunities. So let me now move to the business section and kicking it all off with our COO, Energy Networks, Thomas König. Thomas is a real network expert. He has more than 25 years of experience in the field, having served as both CEO and CFO of E.ON's subsidiaries before becoming our COO, Energy Networks in 2018. Thomas has a significant track record of delivering large-scale CapEx projects as well as significant efficiency projects. And he is very well known to us of delivering to his promises. So Thomas, we are very much looking forward to hear about the grids of tomorrow from you today. The floor is yours.

Okay. Thank you, Verena. And good morning, ladies and gentlemen. A warm welcome also from my side. It's my pleasure to share our strategic ambitions in Energy Networks with you. I have 3 key messages for you. First, fueled by the energy transition, we will accelerate our power rep growth to at least 6% per year until 2026. And second, we will leverage digitization to increase our efficiency and to capture regulatory outperformance. And third, we will sustainably grow our EBITDA by 3% to 4% per year until 2026. And take this as my personal commitment to you. We will deliver. And let me now explain how we get there. With 1.2 million kilometers of power lines and the regulated asset base of EUR 35 billion, we are the largest power distribution network operate in Europe with strong footprints in Germany, in Sweden and Central Eastern Europe. Germany represents around 2/3 of our RAB. The remainder is a diversified portfolio of economically robust and attractive regions with established regulatory regimes. E.ON's networks are the backbone for European's green energy transition. We are connecting renewables and enable our customers to participate in the energy transition. Our networks actively contribute to Europe's net zero targets. With every new connection of a renewable energy source, we replace a fuel -- fossil fuel and get closer to the Paris Climate Agreement goals. So far, E.ON has already connected nearly 1 million renewables to its grids in Europe, with a capacity of around about 80 gigawatts. That represents a European market share of more than 20%. And this renewable capacity is increasing day by day. In the next 5 years, we expect to connect additional 40 gigawatts. Renewable energy and Energy Networks are 2 sides of the same coin. The energy transition will only succeed if we expand renewables and networks synchronously. In the coming years, we will not only integrate a huge number of additional renewables. We will also connect millions of new customer-friendly consumer store networks, such as electric vehicles, heat pumps and energy storage. With the connection of every new electric vehicle, we replace a fossil fueled car. And with the connection of every new heat pump, we replace a fossil fuel gas or heat or oil heater. The recent [indiscernible] study assumes that 70 million electric vehicles and 50 million heat pumps will be connected to the distribution grid in Europe by 2030. What a great outlook for us. Furthermore, we are connecting large industrial customers in key technologies such as e-mobility, battery production and data centers to our distribution networks. In Germany, for example, in the area of Frankfurt, we recently confirmed new connections for data centers with a capacity of more than 1 gigawatt. And we have additional requests for more than 2 gigawatts for data centers in total. To give you another example. Our German DSO [indiscernible] in the Northeastern part of Germany, has requested for 6x renewables capacity than currently installed. To sum it up, we have more than enough requests for connections to support our growth targets. And as Leo already flagged, we not only empower our customers to reduce their CO2 emissions. We also make our own contribution. We have committed ourselves to carbon neutrality for our biggest network operators. In Germany and in Sweden, we will be carbon neutral already by 2030. We have clearly defined the path and measures how to achieve our targets. We will technically enhance our networks to avoid grid losses to the highest extent possible. And in addition, we will make our own buildings and our car fleet completely CO2 neutral within the next couple of years. We are committed to creating and maintaining healthy ecosystems and increasing biodiversity. Across Europe, we measured [ red ] corridors in an ecological way and will turn around 70,000 hectares along 13,000 kilometers of high-voltage power lines into valuable biotopes and habitats. With the ecological corridor management, we make an important contribution to protecting ecosystems. At the same time, we increased the security of supply for our customers by an enhanced monitoring of our power lines. For us, sustainability is the core of everything we do. And this holds also true when it comes to gas as there will be no energy transition without molecules. Thus, E.ON's assets will also play an important role in the decarbonization of gas. We see a high potential for the conversion of our existing gas networks to hydrogen from the second half of the decade onwards. My colleague, Patrick, will tell you more about that in a moment. Sustainably, sustainability creates a multitude of long-term business opportunities for us. And to capture these opportunities, we increase our annual networks CapEx gradually by EUR 1 billion per year from EUR 3.5 billion in 2021 to EUR 4.5 billion in 2026. More than 90% of that CapEx is aligned with EU Taxonomy. With these upgraded investment targets, our regulated asset base will grow sustainably for many, many years. We accelerate our power RAB growth outlook to at least 6% until 2026, and we plan for a similar growth even for the years beyond. The power RAB growth will drive an attractive earnings trajectory. Despite the challenges from lower allowed returns, we will grow our EBITDA by 3% to 4% per year. And this translates into EUR 6 billion to EUR 6.2 billion EBITDA for Energy Networks in 2026 across Europe. To deliver attractive growth, of course, we need regulatory schemes that ensure an adequate level of allowed returns. And this is especially true for the return on equity in Germany. The announcement of the final return on equity of 5% or 7% is disappointing. We appreciate the roughly 50 basis points increase compared to an initial proposal, but the uplift is well below expectations. The market risk premium calculation is full of errors, and the premium itself, it's way too low in international comparison. We therefore decided to pursue legal proceedings against the decision of the German regulator. But please keep in mind, allowed returns are only one element of the total regulatory package. Outperformance opportunities, especially on OpEx can and are substantial. In Germany, we have a long-standing track record of being the cost efficiency leader in our industry. E.ON is prepared to take a big step forward and to support the energy transition by increasing our investment significantly. We trust and expect that the regulator will reward this effort. Now let me come to the third pillar of our strategy, and this is digitization. The Future Energy [ void ] will be extremely complex, as Leo already explained. The number of network participants is exploding with millions of connected renewables, new electric applications and new grid assets. Only with digitization, it will be possible to keep the system stable. With digitization, we are managing the increasing complexity. We are optimizing the utilization of our networks, and we are increasing efficiency, and all for the benefit of our customers and the environment. We are building one digital ecosystem for energy networks with a focus on standardization and scaling. In Germany, we operate one of the most complex distribution networks with a high amount of volatile renewable feed and a high number of connected customers. Despite these complex challenges, our network operators were confirmed by the regulator having world-class security of supply. We can only master this complexity because we are continuously investing in the modernization and the digitization of our grids. We digitally interconnect all our physical assets like power lines, transformers, substations or smart meters with the control centers. That allows us to react faster and master the challenge of volatile grid loads much easier. For example, in case of an outage, we can easily check where exactly the problem occurs and potentially fix it purely remotely without sending technicians to the site. We have set ourselves ambitious targets for digitization. In Germany, we will make a medium voltage grid, 100% observable and 20% controllable by 2026. And on the low voltage grid layer, we will increase the observability to 30% from basically 0 today. Based on mathematical models, our low-voltage system operations have good controllability already with 30% observability. To achieve these targets, we will install more than 4,000 smart substations every year. And we will operate one single data platform for our international energy networks by 2026. This single data platform will be the centerpiece to manage complex power flows, realize efficiencies and scale solutions. My colleague, Victoria will explain that in more detail later. Our digitalization efforts are an important building block for our performance to ensure operational excellence and cost efficiency. It is embedded deeply in our DNA to strive for the highest cost efficiency in every market we operate. 8 of our 9 German power DSOs obtained the highest possible efficiency score of 100%, 3 of them have been even awarded with a so-called superefficiency bonus which grants additional revenues for an exceptionally strong performance. To further improve operational excellence and cost efficiency, we established a highly sophisticated benchmarking system for all our network operators across Europe. In this exercise, we analyze a total cost base of more than EUR 5 billion via more than 200 KPIs, and we benchmark more than 60 grid processes. Thus, we are very confident regarding the expected efficiency scores of the upcoming regulatory benchmarking in Germany. We expect to permanently increase our productivity. We measure productivity by the total OpEx that we need to operate a significantly growing RAB. We expect to continuously increase our productivity by improving OpEx over RAB by 4% to 5% per year until 2026. Ladies and gentlemen, let me summarize. We will significantly accelerate our power RAB growth to at least 6% per year until 2026. And we will increase EBITDA by 3% to 4% per year throughout regulatory cycles. And we will set the benchmark for efficiency through digitization. Our networks will actively contribute to the success of the energy transition in Europe and at the same time, deliver solid profitable growth for E.ON and for you. You can rely on us. We will deliver. Thank you for your attention and back to Verena.

Many thanks Thomas. Energy Networks are clearly the backbone for E.ON. Many thanks for highlighting to us how you will accelerate our investments into the grids and digitization to deliver the energy transition and attractive returns. So let me now introduce Patrick Lammers to you, thinking about how we are all connected and how this affects our customers. Patrick Lammers, our COO for Customer Solutions has a truly diverse professional background. He started his career at Shell, successfully scaled a startup, became CEO of Dyson Plc before moving to RWE in 2012. Since 2017, he has served as CEO for Essen, our Dutch subsidiary. And since 2019, he and Personal Union led our Western European customer solutions activities. Patrick, the floor is yours.

Many thanks, Verena. Good morning to you all, ladies and gentlemen, a warm welcome from my side as well. I'm very proud to present to you today. Our customer solutions will capture tremendous opportunity Leo was talking about and also Thomas was talking about in the energy position across Europe. Just to make sure everybody understands what is customer solutions. Let me give you an overview what we mean when we are talking about E.ON customer solutions. So we are truly a European player with 50 million customers, our biggest asset base. These customers trust us and our operations to deliver to their daily energy needs. We are their reliable energy supplier. We have earned that trust by delivering on our promises every year to connect everyone to good energy. On our customer relationships span over 3 main business areas. Three. And each of these will make a significant contribution to the overall growth of E.ON. First, energy retail. This includes the energy sales business, the capital-light Future Energy Home and our eMobility solutions. We will grow our Capital Light Energy Retail EBITDA by 3% to 6% per year until 2026. Second, Energy Infrastructure Solutions. These are infrastructure-based decentral energy solutions to enable municipalities and industries to participate in the energy transition. We will significantly grow our decentral Energy Infrastructure Solutions EBITDA by 9% to 12% until 2026. Third, we will capture enormous growth opportunities in 2 rapidly accelerating fields: eMobility infrastructure and very exciting hydrogen markets. Let me explain where these unpresent options come from and how we take more than our fair share of the market. Our strategy fully reflects our claim to connect everyone to good energy, enabling households, commercial and industrial customers as well as cities and municipalities to shift from fossil fuels to green energy. A shift that's no longer a nice to have or it's in a distant future. A shift is really part of our lives, how we use electricity? How we move around? How we produce and make our things? And how we heat like today or cool in the summer. A shift is nothing less than a global transition from a fossil-based equilibrium to really a green energy equilibrium. And that's a huge movement. And our customers are fully aware of this development. And with their commitment, the demand for green electrons and green molecules in mobility, buildings and industry will grow exponentially over the coming years. In our view, the transition towards a green equilibrium will take approximately 15 years. And this period opens up tremendous opportunity for us to capture the sustainable value, and this is where we will make a difference. This is our -- really our ability to deliver. Our portfolio of both capital-light and infrastructure-based models is best positioned to benefit from these opportunities. Now let me give you some more detail on how we will deliver the growth and share some proof points, starting with the Energy Retail business. Across our footprint in Europe, we have experienced unprecedented developments in the recent weeks and months with all-time high prices, but also extreme volatility in those markets. It's especially in these situations when we are all reminded of how essential energy is to all our lives. And these are also times when we are reminded of our resilient business model, our retail excellence, our robust risk management principles and long-term hedge policies. For players like us, we enable players like us to weather such environments either strengthen our position going forward. Enabled by our E.ON business system, we are keeping pace with every market and deliver excellence in our operations. Thus, we will be able to increase our energy retail EBITDA over the next 5 years to an EBITDA of EUR 1.2 billion to EUR 1.4 billion in 2026. We will achieve this through operating a healthy and stable customer base. We are continuously looking for additional value in our customer portfolio. That means more focus on the higher-margin end and reducing exposure to market volatility and low-margin segments. Our plan for the B2B commodity business is an important proof point. Already last year, we took a proactive decision to half our supply volumes from 300 terawatt hours to 150 terawatt hours by 2024, whilst increasing our overall earnings and reducing our risk exposure. Another driver for increase in retail EBITDA is digitization. It's a key enabler to achieve maximum efficiencies, and we will have an upgraded digital platform in all markets in 2026 and serve our mass market customer digitally. Proof point is in the U.K., we are reducing the cost per customer by 50% through the introduction of E.ON Next for 8 million customers. My colleague, Victoria will tell you more about our group wide digital transformation and go into more detail for that. Now let me highlight how we will capture value from -- the other 2 units in our Retail Energy business, Future Energy Home and eMobility Solutions. Our capital-light Future Energy Home business strongly benefits from the energy transitions around the home, the house of our customers. With our 0 emission products and solutions like solar, battery, heat pumps, cooling and insulation, we already gained market-leading position in several markets with strong acceleration in 2021. Our revenues were increased by 20%, and we are ready to profitable with an expected EBITDA of above EUR 50 million, and it's growing further. We see this market size doubling by 2030, fueled by increased customer demand and government support, and we will capture these opportunities and grow our business substantially. Now how will we do that? How will we deliver? First, we use extra 50 million customers by leveraging our strong brand across Europe. This is our really earning capacity. Second, we use our proven focus of standardization, industrialization and to rapidly scale every solution we do. Third, we will continue to develop new and digital propositions like E.ON Home or Grade x ecosystem. These 3 drivers allow us more than double of which E.ON revenues for the current EUR 800 million to EUR 1.7 billion by 2026. Now moving to the third unit of our retail business, eMobility. Here, we've seen even faster development in eMobility in the coming years as electric vehicles will grow. People will not be longer able to buy a combustion engine car by 2030. And already today, we see strong customer awareness and commitment to the mobility transition, which is also supported through significant government incentives. E.ON will strongly benefit from this development because we are the partner for charging solutions. We showed this already today how strong partnership help us towards this ambition. With another proof point being our recent ventures with BMW and the ADAC. Another very recent example is E.ON Drive Booster, which we just launched together with Volkswagen. This plug-and-play fast charger solution works with a storage battery and no civil engineering work is required. All of this enables us to grow our revenues from double-digit million level today to EUR 1 billion by 2026, in line with strongly growing market. Altogether, we see strong growth in Energy Retail, both from our core business and from our new initiatives. But not only retail energy is driving energy transition and our earnings. Let me shed some more light on how we capture the opportunities from helping municipalities and industries to enable the energy position with our Energy Infrastructure Solutions business. Our customers, cities, municipalities, commercial and industrial customers are facing unprecedented challenges in how to decarbonize all their processes, their services and their solutions? We are supporting them to reduce their carbon footprint with decarbonization solutions for district heating and cooling systems, city quarters and industrial and commercial customers. And with our broad solutions portfolio, we are taking market-leading positions across Europe, a market that we see growing at, at least 6% per year and again, is accelerating. How do we capture the value of this development? We have a multitude of innovative solutions to help our customers. Just to give you 1 proof point, our E.ON-patented ectogrid, a unique low temperature solutions that delivers both heating and cooling in a 2-pipe system, balancing as much energy between buildings as possible, and therefore, reducing the overall energy demand. It's a cloud-based solutions with a unique proposition that was developed in-house, which is decentral, modular and 100% utilized from day 1. We have applied this already, for example, the Medicon Village in Sweden, and we will deploy and multiply this across Europe, exactly like we do with other successful projects like in London and Berlin. Through scaling our business model across the regions, we will take more than a fair share of the market. To capture the growth, we will see EUR 500 million to EUR 600 million of growth investments annually in Energy Infrastructure Solutions at a target IRR of 7% to 10%. This will lead to the increase of Instructure Solutions business EBITDA to a level of EUR 700 million to EUR 800 million by 2026. Last, but not least, we will capture enormous growth opportunities, 2 business fields that are rapidly accelerating. First one, eMobility Infrastructure. In addition to charging at home or at work, an area-wide charging infrastructure is key to the transition of eMobility. So far, it's lagging behind the EV car sales. Here, e-mobility industry will take an instrumental role in closing this gap. In our view, now is the time to act. We intend to enter into partnerships to help accelerate the growth of an ultra-fast charging network. Over the coming decade, more than 1,000 charging points per year will be added to reach top 3 network position across E.ON regions. We will deliver this by partnering our business to further increase value and to accelerate growth. The second rapidly growing area where we'll capture growth is hydrogen. Thomas mentioned it, Leo mentioned it. Hydrogen will play in a central on energy mix. It will be the major energy carrier for decarbonization on the way to net zero. Actively, we are already pursuing 50 projects in development in infrastructure and solutions in relevant demand clusters. One example is our partnership with [indiscernible], where the switch to wind generated hydrogen will result up to 95% reduction in CO2 emission from steel production. Additionally, as a European CEO alliance member, we were recently announced the H2 Ruhr project. Here, we will supply our customers in industrial rural area with green hydrogen and actually will make a difference also there in the future to go to net zero. Mainly based on strong customer demand, we will use the next 12 to 18 months to scale up and to establish E.ON as a trusted player in the hydrogen market. One last important point. that offers a true advantage, our complementary geographic footprint across Germany, the Netherlands, the U.K. and Sweden, gives us a real ideal match for the rapidly evolving hydrogen play centered around the North Sea region. This is why we believe it all will start. This perfectly positions us to shape the hydrogen economy and our place in it. We are, therefore, very excited to add hydrogen to our business portfolio and to enable our customers to shift from gray to green molecules. Now let me finish my presentation with a short summary. First, we will grow our capital-light Energy Retail Business by 3% to 6% per year until 2026. Second, we will the partner of choice for cities and industries in the decarbonization journey, leading to a significant EBITDA growth of 9% to 12% per year in our Energy Investor Solutions business until 2026. Third, we will capture enormous growth opportunities in eMobility infrastructure and hydrogen. So in total, we will grow our Customer Solutions EBITDA from EUR 1.4 billion to EUR 1.6 billion to a range of EUR 1.9 billion and EUR 2.2 billion by 2026. This is how we make sure we deliver on our promises to our customers, our employees and to you as shareholders. Thank you very much for your attention, and now back to you, Verena.

Many thanks, Patrick, for highlighting our growth opportunities in the Customer Solutions business to us. I'm very much looking forward for us to deliver on that growth. and to connect our customers to green energy. As Leo already pointed out, digitization is a key enabler for our growth ambitions and will be at the heart of everything we do. So that's why I'm very much looking forward to introducing Victoria Ossadnik now to you, our COO Digital. Victoria is a true digital expert. She has been serving in management positions at Oracle and Microsoft before she started leading our German energy sales activities in 2018. She successfully digitized our German energy sales business, and she will be now applying her full experience to the whole of E.ON, Victoria. I'm excited to hear from you, the floor is yours.

Thank you, Verena, and welcome. Digital is key for E.ON. And this digital transformation actually is key because it's driving efficiencies and profitable growth. And this means for us and actually for somebody who loves technology, this is super exciting to share that. This means for us, the better we are in digitization, the more we can profit from the transition in our energy world. This means we are becoming a truly all-digital company. Already today, we have a good technology base, which gives us a good starting point. And we have already demonstrated how we significantly can improve efficiencies by digital transformation. We have done this and are doing this in our retail business, both in Germany and U.K. But there's much more and this much more is complexity. You heard about the rapidly rising complexity. And we can only manage this complexity if we do a really good digital transformation. Digitalization enables us to manage and to benefit from this complexity. And given where we are, this is giving us a great opportunity. Looking a little bit into the complexity. You heard this complexity actually comes from 2 sides, and we are sitting in the middle. The 1 side, it's the generation side. The other side is the end customer side. From the generation side, you heard from Thomas that we are moving towards a feed in, which is decentral, volatile and even sometimes local weather dependent. Only smart energy networks and digital standardized platforms can deal efficiently and reliably with this. Patrick explained how the demand side is growing, which gives us a great growth opportunity if we can handle this. It is growing in the electrification of transport, heating and production. We only will retain and win our customers there if we have an attractive customer interface. For this, we need intelligent retail systems, and then we will profit from this growth and develop into new markets. We operate 1 of the largest energy goods in Europe, and we are serving 50 million customers. We are in a good starting place under digital and actually complexity is helping us. And this is why we are in the right place to use digitalization as a lever for both growth and profitability. To get this right, we are taking a very structured approach to digitization. Our transformation is following a plan, and we are delivering on it. As Leo shared, we have our definition of digital transformation. For us -- and this is something we always remind each other of. For us, it means applying technologies to radically change traditional processes, products and services into data-driven, highly connected solutions. And we do this consciously. Having a structured approach, we are following a strategy based on 4 main pillars. These 4 main pillars are we optimize our operations. And you heard quite something about this, and I'm going deeper into this. We are transforming our products and we grow into new businesses. We engage with our customers and partners, and we empower our employees. Let me go to our first strategic pillar, optimizing our operations. Our operations are the foundation of everything we do. And this means the more efficient and the more flexible we are here, the better the business can grow and adapt, especially in fast-changing circumstances, which we are currently seeing. We are moving our technology foundation towards modern and modular systems and we are changing our operations to benefit from modern technology. Doing all this, we're taking a big step. We are cloudifying all our applications until the end of 2023. And we are doing this in a very conscious way. We want to do it fast because we need it. But we also are doing it smoothly with a highly regard of to really operationalize this for our business in the best way to gain efficiencies and to sustain the growth. We're working together with Microsoft and Wipro to get this done within 2 years to be able to close our data centers and to move the hosted applications into the cloud. We're doing this for very, very solid reasons. It reduces our costs. It increases security. It enables standardization on modern technology and it reduces our carbon footprint. Based on this technology foundation, we are digitally transforming our energy networks. We are smartifying a large part of our grids over the next years. For this smartification, we are spending EUR 300 million to EUR 400 million each year into our regulated asset base. Doing this, our digital CapEx is directly enhancing the earnings of our regulated network activities. The smartification gives us the opportunity to make rich planning management and the maintenance more efficient, and it will support efficient growth. That way, digital technologies improve our cost efficiency. As Thomas highlighted, this is key for network performance, and it supports our ambition to improve our productivity, which we measure on OpEx on rep by 4% to 5% annually. In the retail business, we are optimizing by implementing digital sales platforms. And you've seen us starting this already in U.K. and in Germany. The platforms cover the entire customer journey end-to-end, and they allow us to use data to optimize and to grow our business. Moving on from there. We look into how can we achieve that? And now I'm going to spend some time on technology. And I'm spending this time because it's so essential for us. Technology is the link. Digital technology is the link between all our different businesses, and we need to use it like that. And this is what we are doing. We are using 1 strong platform architecture across the company. You've seen this in the presentations of Thomas and Leo mentioned it. 1 architecture for the company, 1 data platform. This enables us to save cost to drive process excellence and to set high security standards for everybody in our company. It also allows us to develop our own digital energy solutions, which we can leverage across our company. Establishing this standard architecture as a group-wide common technology platform, is a big step forward for us. And it's actually changing the way we operate towards more efficiency and towards us leveraging more chances for growth. This is a massive improvement to where we come from, from a locally-driven architecture approach, which was optimized for local use. Now we are using our size in digital as a strength. We have a highly standardized data and service architecture and our common technology platform is driving harmonization and standardization across our entire company. From this, I would move on to our second pillar. Here, we are focusing on developing new products to drive revenue and profitable growths. I described our digital solutions. So in addition to using them for ourselves, we will offer a targeted selection of digital solutions to our customers. We are creating a portfolio of energy-centric digital solutions that will step-by-step grow into an ecosystem called E App. E App will provide external customers with digital energy services. Examples for this are B2C retail platforms, electric vehicle load management and connection services for energy networks. E App gives us a chance to combine something where we are historically best our deep industry knowledge and our common technology platform, which is optimized for Energy. Every solution we built for E.ON is based on our common technology platform, and we're designing it for external customers. We will generate revenues with this approach starting next year. An early proof for the demand of such products is our digital sales platform in Germany, which we already started to sell as a service to municipalities, besides developing our own products. For some functionalities, we will make targeted acquisitions. An example is the recent acquisition which we made of a Germany-based startup gridX. GridX has developed best-in-class technology to steer decentral energy production, storage and consumption assets. So using gridX, you can intelligently steer photovoltaics, batteries, wall boxes and many more assets. From this, I'm coming to our third pillar. Everything we do at E.ON is centered around our customers. This is so important for us because we can drive customer growth, upsell at customers and customer value through the way we connect with customers via our upgraded sales platforms in all our retail markets, we will not only -- and this is very important, but still not only gain efficiencies, but we assure a great customer experience. Examples, why we would do this come from upselling and come from customer value. Looking into upselling, we are aiming to upsell if somebody in their home is having their electricity home tariff, we want to sell them photovoltaics or we want to sell them electric vehicle loading or if somebody is buying a car by just selling them the electricity for the car, we also want to win them as a customer for other parts of our solutions. An example for raising the margin per customer is using data analytics and artificial intelligence to create optimized and personalized bonus schemes for potential and the new customers. We are creating a better customer proximity to continue improving our efficiencies. We're doing this on our digital platforms by digitized customer interfaces, automation of tasks on the platforms and standardization across all retail business units. Now I'm moving to the last strategic pillar. And this is actually which is really close to my heart because I deeply believe if you don't get this right, the rest is nice, but it's not bringing us towards growth we are planning and we want to exceed. And this is about people. Digital transformation is not just that we transform what we do, but how we do it. And if you look at it, how we are driving our business, everything we do is done by our people. Our people, our teams need to design, believe and pave the way for our E.ON's best digital transformation. And for this, we empower our people. We empower our people to get this right, to really grasp this big opportunity we have. And we are convinced, we can train our employees in all roads to make the best use of their world-specific digital technology. And let me give you a few examples what we mean by this. If you look into a call center agent taking calls, a call center agent working for us will now start to train chat box. An energy network designer, who's designing the networks will use digital twins for optimization of current and of future networks. And our management teams are learning and already using collaboration tools to work more efficiently and more focused on their management problems. We have started the Digital Academy for fostering employee development journeys and all our employees will be involved by 2024. We are supporting a growing number of learning paths for different careers and we will measure the skill development of the organization. In addition to this, what is true for the entire company, we are significantly strengthening the digital and IT capabilities within E.ON. We upskill our people, and we hire highly qualified experts. We will increase our digital capabilities and double the experts in data science, application development and automation to 500 employees by 2024. And we are already successful in attracting top IT talent in the market. So now let me summarize the key takeaways. The growing complexity of the energy systems can only be handled with this modern technology. This is a great opportunity for us. We are on our way to build and own the digital technology platform, the skilled workforce and the digital mindset to lead the energy transition. Digital transformation will support significant growth and deliver digitally enabled efficiencies in Energy Networks and Customer Solutions. Ladies and gentlemen, our digital transformation is driven by our people and enables us to connect everyone to good energy. This makes E.ON, one of the most exciting and rewarding places to be. Thank you very much for your attention, and back to you, Verena.

Many thanks, Victoria for highlighting to us how E.ON will become an all-digital company with our own technology and with our own know-how. This concludes our business section for today. Many thanks to our COOs, Thomas, Patrick and Victoria for highlighting the growth opportunities in the respective business fields to us. and to show us how they are working together to achieve our goals. So let's now move on to the numbers and to our CFO, Marc Spieker. Marc Spieker is already probably well known to most of you. So I'm not going to deeply introduce him here to you now. Just one thing. Since Marc became our CFO in 2017, a he made reliability, the cornerstone of our financial framework. Marc, the floor is yours.

Thank you very much, Verena. Dear analysts and investors, ladies and gentlemen, good morning, and a warm welcome also from my side. My colleagues have presented exciting strategic and operational ambitions. My part of the presentation is now to show you how and why it will pay off to connect everyone to good energy, how good energy will turn into great returns for you as our investors. I want to highlight 3 things right from the start. First, we confirm and extend our existing dividend commitment to annually grow the dividend per share by up to 5% for the next 5 years and promise further growth beyond. Second, we upgrade our investment budget and earmarked a total of EUR 27 billion for the next 5 years. With this, we will accelerate the speed at which we realize the unique opportunities from decarbonizing and electrifying European energy systems. Third, efficient use of capital. And the relentless focus on operational efficiency will stay high on the agenda and result in strong organic earnings growth. Our earnings per share will grow by 8% to 10% per year on average until 2026. We have consistently delivered against our financial frameworks in the past. We will continue to deliver against it in the future. Our updated financial framework remains the compass for our decision-making as a management team. We have extended the time horizon of our framework to cover the next 5 instead of as previously just 3 years. This underscores how confident we are to execute against our targets. Going forward, we will focus on EBITDA as our key metric for operating profitability. You already have seen this in the targets highlighted by my colleagues. Looking at EBITDA instead of EBIT, we give you a much more adequate view on the earnings momentum resulting from our growing asset base. We will continue to manage for bottom line results. Earnings per share stay a pivotal part of our financial network. Earnings per share also remain a cornerstone of our management incentive scheme. We'll give you a much more adequate view on the earnings momentum resulting from our growing asset base. We will continue to manage for bottom line results. Earnings per share stay a pivotal part of our financial framework. Earnings per share also remain a cornerstone of our management incentive scheme. All our accumulated average growth rates and related commitments will only focus on our core segments, that is Energy Networks and Customer Solutions and Corporate Functions. This gives you a clean template on which to assess the long-term growth potential of our company even beyond 2026. We introduced CapEx and return on capital employed targets as new KPIs to the framework. Next to the relentless focus on operational efficiency, our capital expenditure will be the key engine for earnings growth. We, therefore, add a return on capital metric to our framework to underline that capital efficiency will remain our key attention point when spending more CapEx. The ROCE metric is also part of our long-term incentive scheme for management remuneration. Last but not least, we keep our strong focus on managing our capital structure in a sound and sustainable way. Let's now move to the numbers and our concrete pledges for each of the mentioned KPIs. The most important and overarching element of our financial framework remains the dividend. We commit to annually increase our dividend per share by up to 5% until 2026. And for the fiscal year 2021, we commit already today to a dividend of EUR 0.49 per share. Our dividend pledge is very solidly backed up by our earnings development. Based on core earnings, we commit to around 4% annual growth in EBITDA leading to EUR 7.8 billion EBITDA by 2026. Bottom line, this translates into 8% to 10% annual growth of earnings per share, leading to roughly EUR 0.90 earnings per share by 2026. Within the next 5 years, we will invest a total of EUR 27 billion, and this is a sizable uplift compared to our previous plan. With an unchanged debt factor of around 4.8 to 5.2x, we reiterate our capital structure commitment to a strong BBB/Baa rating. And in terms of capital efficiency, we target for ROCE between 7% and 8% for the next 5 years. Our long-term earnings growth is fueled by investments. We continue to apply a strict capital allocation framework. We allocate EUR 22 billion of CapEx to regulated networks. This will drive our growth of at least 6% for Power Networks. Regulated returns in our markets vary between 3% and 6% post-tax nominal WACC. In addition, these regulated returns are meaningfully enhanced by varying our performance incentives. Thomas has demonstrated how well we have performed in the past and will continue to perform in this respect. The remaining EUR 5 billion investments will be allocated to our Customer Solutions segment. The main share of this CapEx is reserved for highly efficient decentral energy projects as part of our growing Energy Infrastructure Solutions business. Our return requirements for projects in this area vary between 5% to 7% post-tax WACC. CapEx towards B2C retail business is mainly targeted for renewing our core IT platforms as well as helping our B2C customers to decarbonize as well. Our return requirements for capital employed in this area vary between 7% to 10% post-tax WACC. 85% to 95 -- to 90% of our CapEx plan is aligned with EU taxonomy. You should expect that we will continually increase this share even further in the future. Let's now move on to how our investment strategy translates into continually growing operating earnings. During the past years, we have built a strong track record of delivering on each of our financial ambitions, and we will continue to do so. Until 2026, our group EBITDA will grow to roughly EUR 7.8 billion. This target implies that our core EBITDA, so excluding the earnings from PreussenElektra, will grow by 4% per year on average until 2026. In Energy Networks, we expect sustainable organic growth in all our countries. This results in earnings to increase by 3% to 4% for the period up until 2026. And we will achieve an EBITDA of EUR 6 billion to EUR 6.2 billion by 2026 in that segment. With these targets for energy networks, we will have fully absorbed the impact of the low interest rate environment in all our regulatory regimes. With those targets, we also see ourselves only positively geared to rising inflation rates in the mid or long term. We expect continued strong earnings growth also in our Customer Solutions segment. A growth rate of 5% to 8% for the segment will lead to EUR 1.9 billion to EUR 2.2 billion EBITDA by 2026. Until 2026, our Energy Infrastructure Solutions business will grow by 9% to 12% per annum, driven by EUR 500 million to EUR 600 million of annual growth CapEx. With this, we target to achieve EUR 700 million to EUR 800 million EBITDA by 2026 in Energy Infrastructure Solutions. Retail earnings will grow by 3% to 6% per year until 2026 to reach EUR 1.2 billion to EUR 1.4 billion. The increase is driven by relentless digitization, efficiency measures and a substantial increase of our Retail Solutions business. All these earnings growth targets imply that the delivery of the innogy takeover synergies remains fully on track. 2021 synergies in the magnitude of EUR 300 million are already locked in. And for 2022, we will realize more than EUR 400 million additional annual synergies fully in line with our communicated integration plan. Beyond the realization of synergies, we will naturally strive to further increase our efficiency year-over-year. Thomas and Patrick have demonstrated how much efficiency and performance are embedded in our culture. In addition, Victoria and our far-reaching digital transformation will lay the ground for additional improvements. Until 2026, the numerous optimization measures embedded in our business plans will gradually add up to another EUR 500 million of annual efficiency gains, on top of our communicated transaction synergies. And on top, of those EUR 500 million efficiencies, we will increase the effectiveness and, with that, the productivity of our cost base year-over-year while increasing our asset base. Thomas and Victoria have extensively elaborated on this. On net income level, our strong EBITDA growth will be further accelerated by lower financing costs. Over the next 5 years, we have bond maturities of roughly EUR 2 billion to EUR 3 billion annually. These still include several historical bonds with high coupons of more than 5%. We plan to issue EUR 2 billion to EUR 4 billion of bonds per year. More than half of this amount will be covered by our successful Green Bond program. On this basis, we expect our net interest line to further improve by EUR 100 million during the next 5 years. Assuming a constant tax rate of 25%, we expect our earnings per share to grow significantly over the next 5 years by 8% to 10%, and we guide for an absolute level of around EUR 0.90 by 2026. The average annual growth rates of 8% to 10% during the next 5-year period mean 3 things in particular. First, we will deliver a step change in earnings in 2022 already. This reflects our successful implementation of innogy-related synergies, which will boost our core earnings. Second, we will successfully mitigate the negative impact of new regulatory periods. And we do so by implementing additional efficiency measures on top of our communicated synergy targets. Third, we will deliver an underlying earnings per share growth of at least 5% annually, reflecting our organic investment activity. Actually, we will deliver this minimum of 5% earnings per share growth for the rest of this decade at least. For 2021, at the very near end of our financial horizon, we expect to reach the upper end of our communicated guidance range. In this kind of performance, in line or at the top end of our guidance, is what you are used to from us. And this is what you can rely upon in the future as well. Finally, our commitment to a strong BBB/Baa rating remains of utmost importance to us. A solid rating guarantees access to debt markets at any time at reasonable levels. But it is also a testimonial to the solidity and reliability of our financial pledges. We continue to translate our rating target into a debt factor corridor of 4.8% to 5.2%. This target is unchanged compared to the past. We will continue to optimize our portfolio and foresee proceeds of about EUR 2 million to EUR 4 billion during the next 5 years. You should expect that we will specifically earmark assets, which contribute the least to our strategic agenda of growth, sustainability and digitization. Portfolio optimization will involve both straight disposals as well as selective partnerships. The net earnings impact from portfolio optimization is already fully reflected in our earnings outlook for the group. All in all, our financial framework sets out a consistent set of targets, combining an attractive dividend policy, strong organic growth and a solid balance sheet. We, the Management Board of E.ON, are committed to delivering on our 5-year financial plan. We will execute and we will deliver. E.ON stands for a unique opportunity to invest into the decarbonization and electrification of the distributed European energy system. E.ON stands for strong organic earnings growth with EPS growing 8% to 10% per year on average until 2026 and continued growth of at least 5% per year thereafter. And E.ON stands for an attractive annual dividend growth of up to 5% for the next 5 years and further growth beyond. Thank you very much for your attention, and over to Verena.

Many thanks, Marc, for highlighting our long-term financial ambitions and targets to us and for reconfirming our attractive dividend commitment. Before we close off this session, I would now like to hand over to Leo again for some closing remarks.

Marina, thank you, and thanks to you for listening. My colleagues and myself, we have really enjoyed sharing our vision with you today. Why? As you've heard, the energy transition is creating massive opportunities for E.ON. And we, as E.ON, we are ready for this energy transition. And we will turn these opportunities into growth for all our businesses, networks and Customer Solutions. And as we grow, we will also grow sustainability, and we will digitize all our businesses to drive efficiency and again growth. And this will really make us a winner of the ongoing energy transition. And finally, we will translate all of that into strong financial performance for E.ON, and in the end, for you, our shareholders. Thank you again, and I look forward to the Q&A sessions later today.

Many thanks, Leo, and many thanks to the whole Management Board for this insightful session. This concludes our main session for today. I hope you feel energized and connected. We will now take a short break until 10 past 12 before we continue with our Q&A session. So see you in a bit. [Break]

Dear analysts and investors, welcome back for our Q&A session. Again, I'm joined here with the whole Management Board of E.ON, and we are very much looking forward to your questions. Before we actually kick it all off, just one brief administrative remark from my side, just to let you know that we are both all vaccinated and tested as we are actually sitting quite closely together here as health is important to us at E.ON. So let's now move over to our team session. [Operator Instructions] And again, a reminder to you, the 2 questions per person rule also applies today to give everybody the chance to ask a question. With that, I'm looking forward to the first question, which comes from Wanda from Credit Suisse. Wanda, go ahead.

I hope you can hear me. Two questions from me. The first one is on networks. Does your 2026 guidance include any uplift in the regulatory returns in Sweden and Germany? And the second question is on the dividend. Under what circumstances would you go for a flat dividend or go below 5%, especially given that the implied payout ratio on your 2026 guidance is below the regulated peers? Thank you very much.

This is pretty straightforward.

Yes, Wanda, I can make this answer short. Both in Germany and in Sweden, we kept in 2026, the current regulated returned flat. So no deviation from today's regulated returns.

And Marc, the details...

Look, Wanda you can imagine that we run a comprehensive risk management system, look at our long-term plans also, including chances and risks. And in that context of the chances and risks which we see, currently, we do not see a scenario where we would keep the dividend flat.

Okay. A very quick follow-up. So if there is a favorable decision in the court on the returns in Germany, there is upside to your guidance in 2026?

Thomas?

I think it did get -- they're getting...

Upside to the -- in court...

Yes, that's, of course, Wanda too early to say it now. But of course, if we wouldn't see an upside, we wouldn't give it to court then. But so early to give this estimate today.

Thank you very much, Wanda. And next question comes from Vincent from JPMorgan. Vincent, over to you.

Yes. Thank you for the presentation. I'd like to dive very quickly on the EUR 2 billion to EUR 4 billion of disposals. So in your presentation, retail remain quite a focus for you. And if most of the CapEx will go in district everything. But how do you look at retail in U.K.? Would be one of the element. Do you foresee any sort of disposal in the retail space? Or should we consider noncore specific geographies like Turkey or some countries in Eastern Europe. So how do you look at that?

Yes, let me take that question. So generally, on our portfolio optimization measures, the EUR 2 billion to EUR 4 billion will be a combination of things. It will be straight disposals, or fully consolidated. It can be straight disposal of minority -- minorities, which we have in the portfolio, and it can also be financial partnerships. And what we can give you the guidance is that obviously, it will have to match our strategic triangle of sustainability, digitization and growth. And so that is what you should expect where we will focus on in terms of portfolio optimization. When it comes to the U.K. We're actually quite happy about the progress which our management team is doing. You have seen that we have been delivering a very nice restructuring success so far and will continue actually next year in migrating also all of our legacy E.ON customers onto the new platform. And I also think that in the current market environment, it demonstrates that it pays off to be a reliable long-term oriented player in that market. And so we are focusing on actually making both the self-belief measures making us robust but we are also looking forward that often will have to work on the market design and actually improve it materially because it's quite obvious, it's not working right now in the market context in which we are.

All right. Okay. So moving on to the next question, which comes from Deepa from Bernstein. Deepa, please go ahead.

I have two questions, one nitty gritty and one bigger picture. Let me start with the bigger picture. So you've outlined a step-up in CapEx of EUR 1 billion in networks. I just wanted to understand what would be the cadence in the later half of this decade be? Do you sort of see that as being stable? Or do you actually see some of the opportunities you've outlined on new customers or EVs, et cetera, probably getting even more accelerated in the second half? So that's the first question. And second question -- apologies Marc. Just to clarify some numbers because given the segmental guidance, and I believe that those don't include the disposals. So I just wanted to clarify, the EUR 7.8 billion, that includes the divestment, but can you just clarify overall maybe what haircuts you've taken due to divestments? What happens to the Corporate Function. I mean, this year, the guidance is minus EUR 200 million. So in '26, is that basically 0, which I think it should be for synergies, but what's the assumption for corporate? And then I believe, even after closing all the nuclear, you will still have the Urenco stake, and there's also the Turkish hydro. So I think together, that's EUR 80 billion of EBITDA. So I just want to know where that figure is in this EUR 7.8 billion? Is it included? Or is that outside? And maybe it fits in the disposal camp, but I know you've been trying to sell Urenco for a number of years. So I'm not sure if it will happen in the next 2 years. So if you can just clarify the numbers and the mismatch between the segmental guidance and overall.

Yes. Deepa, let me just take the big picture question first, and then Marc will clarify the details there on. The numbers requested. Now you're asking what exactly is driving the growth in post 2026? And now we have broken down in the chart pack, which we have given to you, how much of our investment is driven by more renewables, more industries coming into play, modernization and more connections. But we see all these trends to be fundamentally robust. You have seen that we have presented, for example, on the renewables side, an addition of 80 gigawatts, and we've said in the next 5 years, roughly 40 or half of it. But we see absolutely the need to continue to invest into renewable at the same pace, if not higher, if you really want to make the green transition a success. So we do not foresee that, for example, to slow down. We do not foresee actually EV penetration to slow down. Actually, we are seeing a more exponential curve accelerating versus the second half of the decade. On smartification, we do not see that smartification and modernization of the grid is going to slow down in 5 years, and we are done with it because there's nothing that we need to invest anymore. So in that sense, all the drivers that we have described and which are underlying, the 26% growth are also driving growth afterwards. So I would not expect a slowdown afterwards, actually quite the opposite. Now it might be that modernization is 5% less or 5% more. But in the end, that doesn't really matter. The growth is fundamentally robust, and that's our personal underlying assumption for the whole decade also, even though we are giving numbers guideline in detail, which Marc will do now -- right now only until 2026. Marc.

Deepa, on the numbers. This is actually pretty straightforward, there is no miracle between. So if you add up the segments indeed, you come up to a difference of about EUR 300 million. And this is what we simply have taken out as a net earnings impact for any portfolio optimization measure. And for you the message here is that if you look at our group numbers, you don't need to worry, we will make sure we will deliver that including any kind of portfolio measure, which we will then take during the next 5 years while implementing our strategic plans. On corporate headquarters, specifically, we actually made series with efficiency also in Corporate Functions. That's actually the functions which Leo and myself are most responsible for. And after realizing the synergies, we have a pretty simple plan there. Every department every year needs to cut cost by 2%. No discussion, no reasoning why any burden comes on top, which needs to be covered by more FTE or more expense every year 2%. Everyone knows that, and that's a pretty simple template on which we will run our functions in the corporate headquarter in a very lean way. And they will become leaner and leaner every year. yet that will not explain the EUR 300 million. That's the net earnings effect from portfolio optimization. And I don't want to come across a defensive, but we will not make it within the next 5 years to a 0 corporate headquarter line. But Leo and I, we are working hard on it.

Okay. So the EUR 300 million is at the EBITDA, but also similar at the net income level. Did I hear that? Or is EUR 300 million at the EBITDA?

No, that's the impact on the EBITDA side.

You said net income.

Did I say net income? Sorry, then if I said net income, I want to correct myself here, the EUR 300 million is the impact on EBITDA level. .

All right. Many thanks, Deepa. And the next questions come from Peter from Bank of America. Peter?

Yes. So first one on German regulations. So you mentioned that you're going to launch legal proceedings against the 5.7% ROE. But then sort of, in the same breadth, you said that you trust the regulator to reward the extra CapEx that you've announced today, which seems a bit of a contradiction. I'm not quite sure I understand what the message there is. So could you elaborate why you feel comfortable ramping CapEx up by EUR 1 billion a year against what you think is an inadequate return? And then a sort of second related question, I'm just wondering what assumptions you've made about the next regulatory review in your guidance for 2026. So obviously, you're using the 5.07% return. But have you made any assumptions about what additional incentives you might be able to earn in the new -- in the next regulatory framework? Have you assumed any kind of offset against that cut in ROE? Those are my questions.

Thomas?

So obviously, these are questions for me. Thank you very much, Peter. The first one, why am I optimistic? As I told you already in my speech, this return on equity is only one part of the complete regulatory package. And if you look back, for example, 2019, we had a rate cut there as well and was higher than 2%. And at the end of the day, we managed to keep earnings flat and then steadily rising again. So we have the cost outlet in front of us. We have many open parameters like the Xgen, the individual efficiency rate. And therefore, I'm really optimistic because the peer experience of the past that will come to a good solution for everyone. Because the regulator and all the politicians knows without adequate returns and adequate regulatory environment, this money will not flow to Germany. And this is clear for everyone. And therefore, I'm optimistic given the experience in the past. So for me, there is no contradiction at all. With the second question, 2026. Our main assumption is that we -- that the whole system is more or less stable. Of course, and otherwise, we couldn't give you such an earnings expectation of 3% to 4% a year despite the lower earnings. We have assumed additional efficiency measures there. But I ask -- for your understanding as we are really in the midst of the cost audit both in gas and in power, that I can't be more precise today.

And the next question comes from John Musk from RBC.

Can I come back to the Networks business, and there was a lot of information really around the electricity side, but very little on gas. So the 6% CAGR in power, what is the relevant number for gas? And perhaps also if you could split the CapEx between gas and power, the EUR 22 billion. And then secondly, on the retail business or the customers' business, you mentioned it briefly there, but can you give a bit more color on what you would like to see in terms of the regulatory reforms on the price cap in the U.K. and how that might impact your business?

Let's start with Customer Solutions for a change before you go on...

It is fine. John, yes, obviously, we would like to see a functional market really with a market master from the Ofgem. We've seen recently, obviously, by the wholesale price impact and the SVT that doesn't match, and that is where we will see a new equilibrium. Because now, we can see also a lot of prices going really bust, which is on one hand also an upside for us because we're now able to take them without acquisition, consolidating the market. So what we would like to see is a more, let's say, regulated towards normal wholesale or normal retail market.

But also to be very precise, I think we have the consultation, which Ofgem has started, which is going to conclude over the next months. And certainly, we're going to insert our asks in the proper way on a very detailed level. It is -- I think it is important that we come to a long-term stable system that doesn't try to fudge around to somehow solve a short-term issue with market design issues, which then are going to explode in our face later on. And actually, the price cap is something that we see very critically. And we see now the downsides of the price cap after 2 or 3 years.

Dysfunctional market.

Dysfunctional markets. So please, Thomas.

So then back to networks and to gas. Our gas investments are pretty stable, and you can estimate EUR 400 million a year. And therefore, the regulated asset base in gas is more or less stable as well. We will see only a very, very slight increase there, but not comparable with the 6% I explained for the power networks.

All right. Many thanks, John. So now who's actually next one in the Q&A section.

No questions left.

No questions. Very clear.

I'm happy to volunteer, Verena.

Alberto. I know this voice. I cannot see you, but I can hear you.

Yes. I lost the connection from my mobile, so I had to get back during the break.

Sorry, I also lost connection here, that's why.

Congratulations on the presentation. Two questions on my side as well. The first one is trying to talk about the EUR 500 million efficiency you put through, is there any chance you could give us a bit more details in terms of how much is Customer Solutions, how much is networks? How much is maybe Corporate Function? And I was mostly curious to see where does -- what does EUR 500 million do in your long-term journey towards achieving optimal efficiency, if we can call them? And if you can answer that, maybe can you tell us how many employees do you think you will have by 2026? The second question is on the bottom line. Could you help us find a little bit more in detail what could be the dilution on net income from optimization? Should we take a typical 30% ratio of the EBITDA impact? Or is there more maybe below the line items we should be thinking about? So I mean, is it EUR 100 million or more? Along these lines, cost savings impact on the bottom line. So basically, those 2 items on the bottom line would be very helpful to understand.

Yes. I guess, Marc, the breakdown of the EUR 500 million you take?

Yes. Alberto, this -- it's roughly, as you saw it in the synergy package, a third will come from the networks business, a third will come directly from the Customer Solutions business. And a third will be stemming from our group-wide support function. And obviously, what comes from the support functions largely is the service for our 2 operational segments. So at the end, probably you can take those EUR 500 million and they will be split roughly equally between our 2 segments. Those efficiency measures are embedded in our business plans. And as an efficiency measure, they would actually flow through to our net income line, just deducting taxes. So take off the 25%. This is about the impact. So usually, there's no depreciation or anything in between, which is affected by that. But again, keep in mind, this is something which is embedded in the segment-specific guidance which we have given today, both for Energy Networks and Customer Solutions. When it comes to the disposal and portfolio optimization impact on the bottom line, here, I would assume that this is 30% of the EBITDA package and the number which you referred to is a good estimate. So if you take around EUR 100 million, you will not be far off. But again, it's going to be a mixture of different things. And so the ultimate impact of it can vary what we have done is a prudent assumption so that you can or investors can be sure that from implementing that program, that will not be any distraction or negative deviation on our group guidance numbers.

Yes. And maybe on FTE, we don't give guidance on the '26 FTE numbers. We actually -- we will actually see that we do whatever we have just laid out and if we can successfully grow in the different businesses, maybe even with some upside, we would have more. And if we would have detrimental effects somewhere, we would have probably less. It's not a steering measure for us. It's a result of our success on other target dimensions, which we have defined -- So our framework includes the numbers which we have seen this morning, but it doesn't include the target number for FTEs.

Thank you very much, Alberto. And the next question comes from James Brand.

Thank you for the presentation. The first question is just on trying to square a bit the guidance with some of the comments on the German regulatory review because we had Thomas earlier saying that he was very optimistic that you wouldn't see a big negative impact from the German regulatory review in 2024 from the returns being cut. But on the other hand, your guidance for 2026 is in line with consensus for 2023 in spates very high levels of investment and EUR 500 million of cost cutting side. So I just wanted to ask maybe -- are you in your guidance, assuming that there's not going to be an impact from the general regulatory view or maybe your guidance is more conservative, but you're optimistic that it could be better than that? Or maybe there's something else I'm missing. Maybe you could just help square the circle between these dynamics and the 2026 guidance. And the second question I have is on disposals. Clearly, you kind of haven't said what you might be looking to dispose of. Is there any kind of guidance in terms of maybe what assets might be more likely to be disposal than others? And also, when should we expect the disposals? Is that likely to be kind of soon or any time in the 5 years that could happen?

Yes, I guess, we expected it from the beginning that German regulation would attract a lot of attention. So Thomas, again to you.

So to be clear on that, the more or less 200 basis point lower return will definitely hit us and will lead to lower earnings, but we are quite optimistic that with internal efficiency measures, we will compensate that. So this is the key message.

Yes. And on the disposals, that one, I can make very sure. We're not going to comment on specific targets or speculate on anything, you will have to wait and see.

So next question comes from Manuel Palomo from Exane.

Thanks for the presentation and also over taking my questions. I mean I'm sorry to insist on the 2 key topics, but it looks like everyone is interested in disposals, everyone is interested in the German regulation. So I'll try to phrase it in a different way. Conceptually, it looks like your disposals will be looking to make the company more ESG eligible in the future. So my understanding is that part of those disposals could be in the supply business. So I wonder whether you could share with us what markets are, let's say, for you less attractive from a risk return perspective on that point? And secondly, it's just about the well, a bit of sense about the timing of these regulatory changes and well, the legal actions that you've launched whether you could tell us when do you expect or when we could expect those core rulings to take place and whether this could be, to some extent, due to backload the CapEx throughout the period.

Same sequence. Thomas again, first. And I'll take it on the disposal side.

Thank you very much, Leo. We estimate that we have to wait for around about 2 years for a legal decision. But until that, the old regulatory returns are in place, and we will invest according to our plans. And as I explained this morning, we will gradually increase CapEx. So we are very cautious. And the full EUR 1 billion, you will only see if the regulatory environment really is okay as a package.

Yes. And on the disposals, I was obviously not clear enough, so I'll give it to Marc for another try.

Manuel was a very elegant way to address the same topic again. And so we can now play the boards back and forth. No, pretty straightforward on that. I think we are clear with the magnitude EUR 2 billion to EUR 4 billion during the next 5 years. We included a net earnings impact on group guidance so that you do not have to worry about that anything will kind of deter the picture. And otherwise, we will then execute and communicate once we come to a signing as usual.

Yes. So thank you. And next question comes from Rob from Morgan Stanley.

We can't hear you, Rob.

Is that better?

Yes.

Now we can hear you. Wonderful.

Excellent. Well, I'll reiterate for the presentation. Lots to digest. If I can ask 2 questions. The first one is, in your 2026 net income, could you give us a bit of a steer as to what you assume the financing cost would be given the ongoing successful refinancing of legacy bonds and something you talk about in the presentation? And the second one, also on 2026, which I believe is a photo year for the German power system. Can we expect a similar quantum or proportion of costs in 2026 as to what you're seeing in 2021 as we try and think about how earnings progress post 2026 and then to the end of the decade?

Rob, let me take the net interest line question upfront. That's pretty straightforward. I mentioned the EUR 100 million net improvement due to refinancing the higher-yielding legacy bonds that will bring our net interest line to about EUR 850 million going forward, i.e. actually already by 2024. As if you look at our bond maturity profile, the high-yielding bonds actually come during the next 2 years. So that will be digested within the next 2 years, EUR 100 million benefit EUR 850 million is about the net interest line, which you should then assume.

Yes. And on the 40 year, do you want to take that, whether this is included in numbers as well?

With regard to the 40 year assumptions, you should -- at this stage, this is kind of 5 years out, you should assume that we applied a consistent set of assumptions around how we manage the regulatory framework, but it's still quite some time to go. And our focus actually now is very much on the front end, as Thomas laid out. So it's on the allowed return on equity, which must be approved from our point of view, and we go to court with that. And it's a very important part of cost efficiency with all the factors, which Thomas already alluded to, that's where we are now fully focused on. In other words, you can trust that we present a consistent framework also over time.

Okay. I understand that. If I may, just add a follow-up, given you raised it, Marc, on the process for contesting this final determination ROE you give us an indication on when we could hear the outcome of that?

Yes, I think, Thomas, you just said it.

Yes. I already gave an estimate, it will take us at least 2 years. The last final decision we got took even 3.5 years. we should not expect anything concrete within the next 2 years, better calculate with 2 to 4 years.

Okay. Apologies. I didn't hear that before. Thank you very much for clarification i'll hand it over.

Many thanks for your questions. And the next one is Peter Crampton from Barclays.

Peter, we still can't hear you. Maybe you on mute. So we can't hear Peter.

Okay. Yes. Given that there seems to be some technical issues here with Peter. I bet you can place your question later. So let's now move on to Lueder Schumacher from SocGen.

Yes. Let me stick to the script and ask the first question to Thomas. Why does compound RAB growth of 6% only lead to EBITDA growth of 3% to 4%. If you are saying that you expect the regulatory pressure to be offset by efficiency measures. That's my first question. The second one goes in the direction of what James was asking earlier, bearing in mind that 2023 consensus estimates seem to be roughly where your 2026 targets are. Is the consensus too optimistic for 2023 or could there be room for upside in your 2026 targets? Or rather, would you describe them as quite conservative?

Thomas?

Let me start, and Lueder, thank you for that question. Let me try to explain that. Our RAB -- power RAB will grow around about EUR 2 billion a year. So you should expect a higher RAB in 2026 by EUR 10.5 billion. And we have assumed an EBITDA return on that EUR 10.5 billion of around about 8%. So that makes EUR 850 million return on that. So -- and why does that not fit with the compound average growth rate in EBITDA, and this is purely a basis effect. If you look in our slide deck on Page, I think it's 54. There, you can see a breakdown of the different EBITDA components. And you can see there that the return and the depreciation, and these are the most important components that really drive this EUR 850 million are only 55% to 60% of the whole EBITDA composition. We have, for example, income from participations in there. We have other businesses there, like water and so on, which has nothing to do with the RAB growth, and which is more or less stable over the period of time. And therefore, you have a deviation between the compound average growth rate in RAB and EBITDA. So if you take out the more or less stable components in the EBITDA, then the EBITDA growth more or less in line with the 6% I explained for the regulated asset base.

Yes. Marc, on the net income.

Yes. Lueder, maybe you just said you can rest assured that wherever we invest growth CapEx, you will also see then the incremental earnings from that flowing into our EBITDA and our net income. And a good example is how Thomas explained how our growing rate base will 1:1 then also be earnings accretive, initially quite nicely because it's pretty instantaneously in many markets and maximum 2-year delay before we see then additional earnings flowing into our P&L from those investments. On your question on 2023 earnings, you can be assured and I can confirm here that all the numbers which we have presented today are fully in line with guidance which we have given in the past with regard to 2022 and '23 on a like-for-like basis. And like-for-like basis means, obviously, that if in any given year, we would implement part of the portfolio optimization measures that can have then a temporary impact but that would only be temporary in a year. But on a like-for-like basis, our guidance is fully in line with '22, '23 and between '23 and '26. Therefore, what you indeed see is growing asset base but also, obviously, an unavoidable impact on earnings from lower returns against which we will then gradually work against with increasing efficiency.

Thanks, Lueder. And yes, let's give it another try with Peter now from Barclays, Peter? We are very much looking forward to your questions, but we still cannot hear you nor see you. So otherwise, I would suggest maybe that you pick up the question differently, and then we can answer them. As this still doesn't work. I would now like to hand over to Sam Arie from UBS. Sam? Also, we cannot hear you nor see you.

Sam, any sign of live or Peter?

Yes. Otherwise, we continue the session with Piotr from Citi. Piotr?

Can you hear me.

Yes, wonderful.

Yes we can.

Thank you very much for to ask questions. I have 2, please. So the first one, I wanted to ask your opinion on the supply market in Germany. We've seen crisis across Europe in a number of markets like U.K. and so on. But do you think this crisis can also change landscape for Germany? And how do you see this changing? Can we see a consolidation maybe over the next 5 years? And -- So one is energy crisis, but also digitalization effort upfront to these 2 smaller players. And second question, I wanted to ask you about your -- how much of the EUR 27 billion CapEx you want to spend on digitalization and innovation as a figure? And how do you think about the returns just on this type of activities when you think about innovation?

Okay, Patrick. On Germany and then Victoria on the digitization CapEx.

Okay. Piotr, thanks for the question. Obviously, the German market is an open market as well. All sorts of things can happen in the market. What we do see now is that the suppliers in Germany are more conservatively financed and also there has path-forward doesn't hear them so bad as it is in the U.K., where people have taken other risk profiles. We've seen small pockets happening in Germany. And on your question of does it really consolidate it in a different way. We don't see those signs yet, but we're not through the winter yet, so that things could be coming. We don't know. We don't have the crystal ball. I can tell you that we are very well positioned conservatively we hedge forward and we can actually serve all our customers. And you have taken on board new customers that didn't have a supplier anymore, not in the extent that we've seen in the U.K. or other markets on that.

Yes. Can I just maybe say one thing. And I said it also earlier, it is important that across Europe, we get a better understanding that our markets are -- have to function for the long term short-term interventions to sort out distortions -- temporary distortions are always detrimental in our markets. And therefore, what we are really trying to do is to work with regulators and with politics to put in positions into place, conditions and rules into place, which work over the long periods of time. Now mostly, we have been successful. Actually, I'm optimistic for Germany. We have not seen any signs of short-term interventions I'm also very grateful to EU Commission that has a very clear line on that one, and we applaud the efforts of the EU Commission to prevent actually implementing our short-term actions for this winter. But the temptation is always there because it's so crucial for our populations. Energy is so important so that this will be a constant debate. But I mean you said it perfectly right. There might be even an upside in the long run from the current distortions.

Then moving on to investment in digitization and innovation. So the biggest chunk of investments into digitization goes into our networks. And in our networks, you've seen both Thomas and me talking about smartification of our grids, which is around EUR 2 billion. And then we are also investing into having sustainable platforms across all regions to work for our grids, which amounts then to EUR 3 billion -- EUR 3.5 billion just on grid. We are adding up another EUR 1 billion for customer solutions, which goes into our retail platforms, artificial intelligence and data analytics to make sure we serve our customers, right? So in combination, we are coming to EUR 4 billion to EUR 4.5 billion investment into digitization, innovation and site digitization.

And if I may add, when it comes then to the return profile of the business, obviously, that then very much follows the businesses where the money is located. So with the EUR 2 billion in smartification, that's pretty much the return numbers, which Thomas alluded to. And when it goes into energy retail. And I mentioned that there our return post-tax WACC requirements are between 7% and 10%. And so in that bandwidth, you're going to find then also the returns on that investment, which is for us pretty much it is business. I mean it's not something on top or at the side or anything at the core of what we do, and it will therefore also provide the returns for the core as any other business activity.

Marc, I think it's an excellent point. Victoria is Chief Operating Officer. She is not an IT support function officer. She is part of the business, and this is the way we think also about digitizing investments.

All right. So let's try again with Sam now. Sam? Still no sign from your side. Otherwise, let's move on to Louis from ODDO.

Yes. Can you hear me?

Yes.

Yes, we can.

Yes.

Sorry, it was a safety question, but...

That was your first one.

Maybe a follow-up question on the ones that has just been asked regarding indeed the digitalization and the process. I see that you mentioned EUR 500 million of OpEx efficiency. In the meantime, you mentioned as well that you have an OpEx on RAB target of minus 4% to minus 5% per year that is expected on the energy network. Should we consider it to come from the digitalization investment first? And also shall we consider this minus 4% to minus 5% target OpEx on RAB to be part of the EUR 500 million OpEx efficiency total package that you mentioned. This is, if you don't mind, and if you agree my first question. And the second question, sorry to come back to this one, but maybe to understand a bit better, what would be your reaction? And the evolution of the market. You mentioned indeed at least 6% per year RAB growth in the next a few years on the Energy Network divisions. We understand that you could indeed go further. But the question would be, what would prevent you going for further? Do you have any financial constraints as of today to go above this 6%? Or is it only the regulated environment?

Victoria, go ahead.

So I'm starting with a question on digitization. What we see in our energy networks, and this is why both Thomas and I picked this up, it's actually digitizing the way we operate our grids, we plan our grids and our ability to get the information from our smart assets around our grids, which is helping us coming to this efficiency gains of 4% to 5% OpEx to RAB ratio. So it's a combination it wouldn't be possible without the consistent digitization we are driving. But on the other hand, we also need to have the right people. We need to have our networks in place, et cetera. So without digitization, it wouldn't happen. So it's caused by digitization. So Thomas is nodding. So we -- if you then look into the further efficiencies, especially in sales. We are operating in a highly competitive market in sales. So the first thing on digitalization and sales, this is our license to operate because otherwise, we will lose our customers. We think which is now happening in these markets, and we are seeing a lot of market dynamics can only react to and win customers and keep customers if we are highly digitized. So number one, license to operate. And then number two, a couple of options to create efficiencies with utilization, and I alluded to a few of them, higher customer value, automization of call centers. So all of this adds up together to the EUR 500 million.

Yes. And the RAB question was really a finance question, so I'll give it to Marc.

Yes. So the 6% is an average for the next 5 years. And when we say at least, keep in mind that Thomas explained earlier that we will gradually now increase our investments into our regulated asset base. And so yes, this is presence a certain optimism that over time, it may be more, and we will see that's also this question of how the regulators will honor that. At what speed we will ultimately then increase those investments. But what in any case, you should keep in mind is that we invest in a way that we have an eye on our customers and affordability question and our focus on digitization and productivity is also a focus on keeping electricity affordable, and that's our big contribution to that. And secondly, we want to make sure that it pays off financially. And that's why we also make sure that we gradually invest our investment that with that, we will not jeopardize our efficiency scores. And Thomas has also explained to you how important specifically for Germany, performance efficiency incentives are. And so don't think investments too simplistically, It is a optimization of multiple elements, and that is what you can trust, which we will be doing so that the financial returns for what we invest will be optimized.

All right. We now have a follow-up question from Rob from Morgan Stanley, Rob. It worked previously, so I'm pretty confident...

So I just wanted to follow-up with the answer from Marc earlier because it sounds from some of the conversations on the sidelines that we all heard a slightly different answer regarding the [ 40-year ]. And so the question, again, to be maybe more explicit in the question is, does the guidance include the 40-year impact in 2026 of enhanced costs, Or is that not included? That was the follow-up just to clarify.

Rob, I can only repeat what I said that we apply a consistent framework. And apart from that, I cannot now provide you any further reference of what that in terms of full year may mean for 2026 or not. But what you should keep in mind is that we manage efficiency and provide guidance in a consistent way.

Many thanks, Rob. And next question comes from Martin Tessier, Martin?

Yes. Can you hear me?

Yes, wonderful, thank you.

Great. One question from me regarding the networks guidance for 2026. Could you tell us what are the assumptions that you take for investments in the grid business in terms of average period permitting processes. The underlying idea of my question is that if we have with the new coalition strong measures to cut [ retape ] for the development of energy projects, be it project or production projects. Would you be in a position to increase your guidance of annual investments into the group?

Thomas?

Martin, thank you so much for this question because as Marc already said, financially, we are not constrained. And our whole team is really prepared to accelerate growth in CapEx. But what you mentioned, the permission processes. They are definitely too long, and we clearly expect the new government that they speed up the processes in the same way that we speed up our capital expenditures. So here is still a long way to go. There are many, many concrete proposals on the table, especially from the BDEW more or less 25 concrete examples how to accelerate the processes. And let me be very clear on that. We need this acceleration and processes to really to speed up CapEx. That goes hand in hand.

Thomas, if I may add, we have been as E.ON. I myself also in my function at BDEW, I've been very explicit. We need to at least reduce by a factor of 2. We need to have permit times, if not more. We have seen that the new correlation or potential new government or likely new government, whatever you call it, is actually very willing to claim that they're going to accelerate it, yet we have not seen specific measures that would really make the processes as they stand today faster. This is yet an open issue that the new government has to sort out. On the other hand, I'm optimistic because if this government canceled it out, which one would ever and this government cannot afford to not get this right. So I'm actually quite optimistic that we will really see a change here, even though, right now, we don't see the measures yet and certainly not to a sufficient extent.

But Martin, the big chunk of the investment I explained will go into the medium and in the low-voltage grid levels. And here, the permission time is much, much shorter than the 110 kV or even the 380 kV level. So we are pretty optimistic that we can really realize, especially with the ramp-up that I explained, the higher CapEx over the next 5 years.

So there is definitely no downside.

Thank you, Martin. And we take a follow-up question from Deepa.

My follow-up question was on the e-mobility infrastructure. So I think in the past, both Innogy and E.ON have talked about it, and then there wasn't much talk of it. And it was my understanding that these charging networks were not really making money. And I don't want to outline that you want to make 7% to 10% post-tax return. So I just want to understand what is behind the now more bullish statement? Do you now see the situation changing maybe because the utilizations are -- rates are different or these are ultra-fast chargers. And is there like a level of utilization you need to hit to make sure that these investments basically deliver the returns you want.

Patrick?

Yes, Deepa, thank you for the question. It is indeed a timing question. I mean, in the past, Innogy and E.ON, I think they have been going in and out and in and out and mainly because, obviously, the returns have been volatile as well because this market is emerging. Now it's very clear that the underlying market dynamics really bring us on to the forefront of doing this. And also, we believe also in working together with Thomas' departments, we, especially in the core markets, can deliver an infrastructure, which is also then be connected proof point, as I said, is really the partnership we have with BMW, ADAC, but also with Volkswagen and more to come, I believe. And equally, we don't want to actually go into this all alone. We're going to carve out a lot of the stuff we have now in our companies. and then make it into a unit, then look for partners to really excel this forward and exacerbate our impact for the customer. I mean, the projections of the cars coming will be more in '22, '23 and then accelerating '24, '25, where we believe we can really make a difference and then actually also can be bullish on it because we have the vehicles to deliver.

Okay. So this concludes our Q&A session for today. Many, many thanks for your questions. We obviously, especially for Sam and for Peter make sure that we answer your question as soon as possible now. Sorry for the inconvenience that we could not hear you here. And yes, apart from that, we are obviously very much looking forward to any other questions and the IR team is available to you for anything that you are still missing. So many thanks again. We are looking forward to seeing you all on road shows and hearing from you. Thank you, and stay healthy. [Break]

[Interpreted] A very warm welcome, ladies and gentlemen, to the press call on the occasion of the Capital Markets Day of E.ON. Now this morning, we presented our growth strategy reaching to 2026. And we're very happy to see that many of you have made use of the opportunity to join us on that occasion. Now our CEO, Leonhard Birnbaum and our CFO, Marc Spieker, will now be available for any questions that you might have for approximately 45 minutes or so. Before I hand over to Leo Birnbaum, a few housekeeping remarks for me. Now it's quite important in this day and age. For All of those who are working here in front and behind the scenes have been tested and have had 2 shots. If you want to ask a question, please raise your hand in MS teams. You'll be familiar with how that works from other conferences, and I'll call you one after the other. The event will be broadcast live on the Internet. It will also be recorded. And if you object, if you don't want to be recorded, please leave the session which we don't hope you will. So there will be simultaneous translation into English for the English-speaking journalists. All questions will be answered in German stage, and that will be translated simultaneously for your benefit into English. So for the English speaking journalists, everything that is being said here on the stage will be translated simultaneously into English. That's it. On that note, I'd like to hand over to our CEO, Leo, you have the floor.

[Interpreted] Thank you very much, Lars. A warm welcome from me, ladies and gentlemen. Now many of you, perhaps all of you may have listened to our call this morning. You may have read the documents. And there should be plenty of time for your questions, which is why I'm not going to repeat this morning's presentation so that we can get through the questions as quickly as possible. Now, Just very briefly a few upfront remarks for me. This morning, we presented a growth strategy, a growth strategy towards a sustainable anti-digital energy world. Now why is that? Well, it's quite simple. We are facing a decade, perhaps a key decade of growth. So what we've done at E.ON over the past few months is work out in a detailed fashion how this growth can be put a good use for us for our customers, for our shareholders. Now we are confident and we are convinced that E.ON is rightly positioned to benefit from this growth, both in terms of energy networks and in terms of customer solutions. The energy networks, the benefit from the energy transition because they form the very backbone of a successful energy transition. And customer solutions, we give customers the option to do their own decarbonization. So we need to tackle the energy transition more aggressively, which will lead to more opportunities for us. And we want E.ON to emerge as a winner of the transformation that lies ahead of us. So what are we going to do in more concrete terms? Well, at E.ON, we want to build a platform, perhaps the sustainability platform for the green energy transition in Europe. On this platform all the millions of participants, which will make up the energy world in the future, there will be networks to form one sustainable ecosystem. More completely, we presented it this morning, this means that we will launched one of the biggest innovation initiatives over the past 3 years. EUR 27 million are to be invested by 2026, EUR 22 billion in networks and EUR 5 billion in Customer Solutions. Now this growth, and we showed that is relatively -- well, it's sustainable. And it is driven by fundamental drivers, which will remain stable over the next decade. We also told you this morning that we have an uncompromising focus on sustainability. Our business is a sustainable per definition, more of an energy transition needs -- requires more energy. And as a company... We also told you this morning that we have an uncompromising focus on sustainability. Our business is sustainable per definition, more of an energy transition needs -- requires more energy. And as a company per se, we are going to put ourselves on a more sustainable footing. So sustainable business from a sustainable E.ON. In fact, we are going to become a fully digital company in our products and services because only if you do full digitization can you supply the services that society expects from you. And the same goes for efficiencies and growth that is part and parcel of our plans going forward. Now we do not simply want to grow for the sake of growing. We want to become more profitable, at the same time, improving our efficiency. And that's why we presented a plan to continuously improve our productivity and efficiency. It's a program worth EUR 500 million, which is already part of our figures on top of the synergies that we are also going to realize. So this is what we are going to deliver. And last but not least, we said that whenever it makes sense, we would be open for our partnerships, of course. Now I'd like to leave it at that, ladies and gentlemen. And I cannot think that there would be a better prospect for a new CEO because I moved to this position where the whole industry is facing huge growth perspectives. So this is what we can expect. It's a point in time where entire industries are converging with us. E-mobility is coming towards us, industries that are coming to us, heat is coming to us. And this is a great starting point for a company as E.ON, which is as well positioned as E.ON. So looking forward to the next decade, looking forward to your questions.

Thank you very much, Leo, a decade of growth. We have already received 3 questions, Christoph Steitz from Reuters. And there's Antje Höning from Rheinischen Post and Tom Käckenhoff from Reuters once again. So Christoph, why don't you start?

I've got 2 questions. First question, Mr. Birnbaum, is as follows: your predecessor, Mr. Tyson, when he became the CEO, the company looked completely differently. Now you are taking over a company which has been completely revamped in solid structure. Where do you see the company in 5 years down the road? Will it be mostly the same as today? Or perhaps you can tell us what might potential structural changes under your aegis? And second question, when it comes to the asset disposals and portfolio adjustments and you already shared with the analysts that you're not going to comment that, but I'm going to ask you nevertheless because I would like to find out more about these EUR 2 billion to EUR 4 billion, what is this all about? I know this is a topic that you're not so happy with for many years now. But is it safe to assume that this is already included in that?

Okay. I'd like to start with the second question, and I would like to repeat what I said this morning when I spoke to the analysts, you're not going to get an answer. So now coming back to your first question, it's a good question, thank you. So does this mean that nothing is going to change except for a number of additions, acquisitions, I think that's not the write-downs. Of course, there are still going to be networks in 10 years down the road. We're going to be offering customer solutions still. But let me also tell you that E.ON will look completely differently in 5 years down the road. E.ON will have fully digitized its networks by then. The networks will be fully digitally operated. There will be visibility at all levels of the network, and they will be controllable locally. So the network business will look completely differently from today. I said it in my speech this morning. The very fact that we continue to operate the grid does not mean that the systems, processes and structures shouldn't change. They will be changed fundamentally, you can believe me. And honestly speaking, if you compare our networks and the way they were operated 10 years ago and the way we do today, you will come to the conclusion that the network business is a completely different story compared to 2010. So the answer is, we're going to have the same kind of business, but the way we go about the business will be very much different from today. And the same goes for customer solutions. Energy retail will only be available if you do it digitally. And as I said, our customers will be migrated to digital platforms, and this will be completely different from the business the way it looked like 5 years ago, et cetera. So massive changes lie ahead. The headline, however, remains unchanged seemingly.

Then there is Ms. Höning from Rheinischen Post and then there's Tom Käckenhoff and another new question by Rouben Bathke from Energate. First, Ms. Höning, please.

I have 2 questions, really. Now the shareholders are not so convinced because the share price is down. What's your explanation? And how are you going to change that? You also announced another efficiency program worth EUR 500 million. So what does this mean in terms of job cuts or additional jobs? And how many jobs were cut in the context of the energy integration, up to 5,000? Have you taken care of that already? Or how many redundancies are to be expected still?

Thank you. Well, this morning, we presented a program which would describe the next decade. And we also issued a guidance up until 2026. So what we want to do is over the next decade to convince our external stakeholders and convince you over the next 5 years and deliver the figures we are committed to. So currently, we are going through the energy transition, a restructuring of the customer business, new customer business will be added. It's a marathon that's going to last years, and it won't be decided in a matter of hours or on a given day. So the answer I'd like to give you is we will convince you, hopefully, that we will continue to deliver on our promises. And hopefully, we will be impressive by our consistency in our performance. That would be the answer I'd like to give to your first question. And in terms of job cuts, well, we made it clear this morning that we don't issue any guidance in terms of FTE, so I'd like to answer your question as follows. We should do everything we can to grow successfully, and this is exactly what society expects from us. And so let's try and deliver what the energy transition is calling for. And if we do so, there's going to be prospects for our members and staff, too. But that's not an answer. So will there be further job cuts or no, the answer is we don't have any specific job cutting plans in terms of concrete headcount figures, if this is what you're after.

Thank you very much, Ms. Höning. Thanks for your follow-up question. On that note over to Tom Käckenhoff from Reuters. Mr. Käckenhoff, you have the floor. Unfortunately, we cannot hear you, Mr. Käckenhoff,

Can you hear me now?

Yes, we can hear you now.

Here's my question. The hydrogen business, what are your future plans? What's the next milestones? Are you planning a dedicated hydrogen division? And when are you going to be able to actually make money based on hydrogen?

Well, here is the answer. So it's Leo Birnbaum. It's a 3-pronged answer. We never said that we would set up a hydrogen unit that would look into that. Second, the next milestones, as far as we are concerned, would mean that the projects which are already in the pipeline that they will be turned into a profitable project. So we are going to come up with a business case for hydrogen. The boundary conditions have to be right, subsidies, European subsidies, national subsidies. Once we are there, the next step would be to try and bundle individual activities to form a critical mass, perhaps in the rural region or along the North Sea coast. So we would start with individual project, turning them into profitable business cases, changing them into profitable clusters, leading to solutions for industrial regions, ultimately. And once we get there, we're also going to be able to generate the economies of scale, so to be competitive. So that's the sequence of events that we are going to pursue. Let me also point out how good our starting position is. We are very well presented in a number of markets, and we are very strong in the regions, we're deeply anchored in the municipalities. And if you look at where the hydrogen demand will come from going forward, you will see that in a country such as Germany, it will be the medium-sized companies. And they cannot build their own electrolysis plants. They need companies, such as E.ON who are in the position to link different companies and players with one another. And this is exactly the great starting position that we currently have. We are so present in almost everywhere in our markets, and this comes with an excellent value proposition in terms of hydrogen.

So what about the profitability? When is this to be achieved?

Well, the investment cycles for this kind of infrastructure, well let me tell you, we're talking about 3 to 4 years. This is the minimum amount of time that is going to be required from the letter of intent until the termination of the plant, so 3 to 4 years as a rule of thumb. So this is not something that you should expect to happen next year. It won't come up on our profit and loss statement next year. It's going to take a couple of years. So perhaps over a period of 5 years, we're going to have to do a lot of work identifying potential customers, entering into partnerships. And profitability may only be expected later than that towards the end of the decade.

Thank you very much, Marc. There's a whole string of questions that we've received. First question from Rouben Bathke from Energate.

I would like to ask the following question. Now I've heard a number of things already, Mr. Birnbaum. In your initial statement, you spoke about the role of partnerships. Now these may be manyfold. Perhaps you can tell us what's the direction that you are thinking of? What kind of companies are you thinking of when you think of partnerships? Perhaps you can be a little more concrete.

Well, let me answer as follows. There's at least 3 ways to think about partnerships. First, partnerships which would allow transformation by which you would acquire capabilities which you couldn't develop on your own. In terms of digitization, I can tell you that we cannot do everything in-house. We're going to have to acquire state-of-the-art from external partners, of course. And we are an interesting partner for external partners, too, because we come with a broad base upon which they can apply their technology. So then there's partnerships for investment purposes. There's partners who would like to invest funds in businesses which come with special characteristics, thereby helping us ramping up a business that we could do with our own funds. So these would be partnerships that I would find interesting from the point of view of economies of scale. Then there's partnerships that we have traditionally had in the industry with customers when it comes to the reconfiguration of networks, when it comes to setting up a hydrogen industry. In this context, not everybody should reinvent the wheel themselves. And that's why it would make sense to team up with others, with partners, to do so in a more efficient fashion. So there's partnerships for financing, for competencies and for driving the energy transition. And if you think about it, there might even be a fifth or a -- fourth or fifth category for partnerships. But the takeaway message is partnerships are part of the solution, and we can think of most varied partnerships for a whole number of different purposes.

Now there's a whole range of questions I'd like to take now Vanessa Dezem Bloomberg, then there's [indiscernible] Eckert from Reuters and [indiscernible] from WAZ, a whole range of questions. Let's start with Ms. Dezem from Bloomberg. Ms. Dezem, what's your question? I hope you can hear us because unfortunately, we cannot hear you yet. Now we can see you. But we cannot hear you, even though we can see you. Perhaps you are still on mute. Otherwise, we would try again in 1 minute. Okay, we'll come back to you, Ms. Dezem. Let's continue with [indiscernible].

Now I looked at your interesting presentation, and there was a lot of information on retail and hedging, et cetera. You've got a dedicated trading team, if I understood you correctly. In the gas market, there's a lot happening these days. There was a chart on the gas volume risk for 2020, 2022. Risk would be medium in 2022. Perhaps you could elaborate on that a little bit, the risk situation with regard to gas. There was also the new contracts. What was the situation like this year? And what are you expecting for the rest of the winter in terms of the gas market and procurement?

Okay. Why is there such a huge risk for gas? Well, I guess you know that better than we do or just as well. You just need to look at the development in the markets, and there's not a lot that I could add. I guess you won't know that volatility is very high. Nervousness is rife, so there's all sorts of speculation as to what the market participants might do. And this explains the risk in terms of gas, much more so than for power. Well, that's the way it is presented on that chart. The future course of the upcoming winter is like reading in a crystal ball. We've taken out hedges for winter as we know it from the past. It will very much depend on the weather of the winter, how cold will it be. That's the key question that might ultimately affect the price changes. Now prices are still going down. We are still assuming a normalization for next year. Whether or not it's going to happen, we don't know. That remains to be seen in February or March.

Thank you very much, Leo. What about Ms. Dezem? Do you want to try again? Perhaps you can try again, Ms. Dezem. Would you like to give it another go? Can you hear me now, Ms. Dezem? It seems like Ms. Dezem cannot hear us still. So Ms. Dezem, you won't be forgotten. We're going to come back to you after the end of the event separately. On that note, over to [indiscernible], you have the floor.

Okay, I have a question for Mr. Spieker. Now what about a few details on how to fund this huge investment program. You already shared a number of things this morning. I'd like to know whether a capital increase might potentially be a part of these funding activities or whether you can rule out a capital increase altogether.

Well, [indiscernible], now we've presented a financial framework, which is very much consistent in itself. And that's the way it should be. So the funds that we are going to use have to be adequately accounted for. The bulk of our investment from the dividend will be covered by our internal funding power. So the biggest share, more than EUR 13 billion, will come from the cash flow that we are going to be generating based on our operating business over the next 5 years. You may also remember that we pointed out that we still have to work on the portfolio in a number of areas. So basically, we still expect revenues between EUR 2 billion to EUR 4 billion, both in terms of financing and portfolio optimization. This will cover the investment requirements and the funds necessary for our dividend story and the associated growth rates over the next few years.

Ms. Eckert from Reuters. So I'd like to give the floor to you.

I'd like to come back to the winter issue, if I may. Now everybody -- it's everybody's guess when the announced gas amounts from Russia will come. I mean in the past, you've managed to join forces with Gazprom, the shareholders committee of Nord Stream 1. You may have information that you can share with the market, Mr. Spieker, don't you? So what do you expect, are you going to cut through this quarter or not over the next few years? What about supplies from Russia? Could that perhaps take out some of the nervousness? Now of course, you cannot predict what the weather is going to be like, but what is your assessment of how the protagonists are going to position themselves?

I think Russia's strategy of leaving people out in the cold is not a very good strategy at all. Now Ms. Eckert, we can certainly understand where you're coming from, but please bear with us that we cannot engage in speculation. If we were to answer, this would amount as speculation. Even though you may assume that we could do more than speculate, it would still be long in the realm of speculation and wouldn't benefit anybody. So the answer is, we are just -- we're none the wiser than you are.

Thanks, Ms. Eckert. I'd like to move on to [indiscernible] from WAZ Newspaper.

Now you've presented the first 5-year plan, if I may call it that way. You are promising a high level of stability and an increasing dividend. Here is what I'm interested in and a number of questions have already been asked. I am interested in the political ramifications because there's going to be a so-called traffic light coalition in Germany governing before too soon -- before too long, sorry. How much dependent are you on the results of the coalition talks that are entering the final stretch as we speak, climate and energy questions, the energy transition? This might be the biggest bone of contention. What do you need to see coming out of the coalition talks? And will you be able to deliver on your promises towards the shareholders if the results aren't in your favor?

Well, I'd like to give you a two-pronged response. First of all, we are not very much dependent and still we are very much dependent. Let me explain to you how that makes sense. So fundamentally speaking, all parties, the potential governing parties, they all agree that the energy transition should be driven in the known direction. And you may remember from when I spoke this morning, if the energy transition accelerates, there will be more requirements. But I cannot see anybody on the horizon that would stop the energy transition altogether. So we are not that much dependent on them, and we were not that much dependent even before September. We knew all along that the LNG transition would continue, innovation would be successful. And that's why our business will still be called for going forward, allowing us to grow. So it's a matter of how much the impact will be. And I don't -- it's not so important what the objective is for 2030. Is it 76% or 80% or 85%? I mean it's not so important what the objective is, but what this requires in terms of concrete measures. So we are not dependent on the outcome because the trend is so much in our favor. Nevertheless, and that's the second part of my answer, when it comes to the details, the new traffic light coalition could make our life so much easier and increase the likelihood of the energy transition to be successful, if necessary measures are taken. Let's take the permitting scenarios. We need to cut the permitting time by half generally speaking, for grid expansions, for great infrastructure measures. Second, we need a framework within which we can do digitization and innovation. We need to be able to access data to control our networks. You may remember, that I've spoken that I wasn't exactly happy about smart meters, you could read about that in the press. And when it comes to a new coalition government in Berlin, I hope that they would be as good as any other coalition when it comes to promoting the energy transition. So that's why I believe it's fair to assume that we are not so much dependent on the outcome. On the other hand, we are hoping that the new government will make our lives so much easier, so as to offer a more effective energy transition for everybody's benefit.

One follow-up question for me, if I may. So you are saying that in terms of your figures, you are not dependent on the outcome, you're going to reach these targets anyway, come what may. But the new coalition could still help you to even exceed your forecast. So for such a scenario, wouldn't you need a green traffic like coalition as it were?

Well, one more time, and Mr. König explained that. The biggest part of investment, which is dependent on the permits is to do with renewables where the 110 and 380 KV grids are concerned. Distribution networks, not so much of a problem. So most of the increase can be done, and I'm optimistic as regards to the rest. So we're going to be able to deliver on our promised figures. So it's not so much about the shade of green in the upcoming governing coalition. But what counts is for the upcoming government to be operational, I want the new government to come up with concrete measures. There's no point in promising green targets, but I want to see concrete measures, such as accelerating the rollout of smart meters, accelerating permit procedures, or what about cutting red tape in the context of the Renewable Energies Act, if it is to continue to exist to begin with. So my answer is, I'm not after a specific color. I'm after a new government, which delivers a hands on and concrete measures instead of lofty goals, which are not going to be achieved anyway.

Leo, we've got one more question from Deutsche Press Agency, [ Mr. Torben ]. Before we come to you [ Mr. Torben ] I'd like to hand over to Ms. Dezem because she submitted her question via the chat function. Thank you very much. Let's try and do that way. So let's try and translate it. Question is to Leo, I think. Now from this morning, I remember that you mentioned that to date, European networks have been able to keep up with the expansion of renewable energies. But sooner or later, now, actually, they are reaching their limits. So perhaps you can briefly comment on the associated risks. And also, what do you think is the further prospects for grid development?

Okay. There's 2 aspects. In terms of renewables, I'd like to tell you that they have been implemented and integrated rather smoothly.And I'd like to focus on wind for a minute because from a network point of view, it comes with the biggest challenge because we have to transport it over great distances. So we've said we've used up the reserves, and this has 2 consequences. You may remember, Mr. König's example from this morning. [indiscernible] which is operating in the Northeast of Germany, as you may know, if [indiscernible] receives 6x the amount of requests they can actually deliver, which is what they're currently receiving, this goes to show that the amount of renewable energy is so much higher than the peak than what the network is designed for. So 6x the number of requests they can accommodate. And if you add to that renewable energies to be rolled out going forward, you will understand that the network will be out of its depth, it will be overtaxed, which means that we're going to have to scale it down. There's going to be many more hours during the year when we cannot take up the wind from the [indiscernible] region to Berlin, which means the existing will get stuck in [indiscernible]. Either it's not going to be generated to begin with, or you might as well heat the ground. So once the net grid capacity is utilized, you're not going to be able to transport electricity, first effect. Second effect is as follows: the existing power motor-wise for the 380 kilowatts and 110 are fully utilized. You have to conceive it as a motorway. All lanes are blocked, quite traffic. And the smallest interruption will cause a traffic jam, and this is exactly what happens to the networks. Every lane is full of congestion, and this means that it's going to be so much more difficult for us to allow smooth operations. So if there were a disruption to the system today, if something were to break down, if a power pole were to topple over for whatsoever reason or if we had to switch off a source, there would be massive difficulties out of the blue because this would lead to all sort of blockages. Technically speaking, we could manage, but nevertheless, we would soon be reaching our limits. We cannot simply double our expansion speed and trust in the networks to be able to cope because they won't. We're going to be -- we're going to have to protect them by keeping the renewables out of the network, which is not the purpose after all.

Mr. Torben, I'm going to call you in a minute, but I'd like to briefly let Ms. Dezem in, she spoke about the European perspective.

Leo, could you perhaps comment on the European network situation?

Well, let's look at the expansion objectives all across Europe. And we want to be climate neutral by 2045, we're going to have to see similar problems going forward in most of the European countries. I think that's a fair assessment.

[indiscernible] from German Press Agency DPA, you have the floor.

It's about the EUR 27 billion total in CapEx. What share will go to the German markets? And perhaps you can give us a breakdown for customer solutions and the network expansion. And second, expansion. I'd like to come back to that. Could you perhaps elaborate on that? What do we have to understand by the term expansion? Is it about upgrading existing power lines or would that also mean building additional new lines? And perhaps you can even give us concrete figures as to that.

Okay. [ Mr. Torben ] as regards to the investment plans, now the EUR 27 billion, they can be broken down as follows: EUR 22 billion for the European energy network and EUR 5 billion will be spent on the customer solutions, of which a large part will go into distributed energy infrastructure, CO2-neutral solutions, et cetera. Now the EUR 22 billion, how much will go to Germany, I'm going to give you this figure later on. I can't give it to you off the top of my head, but it will be more than 50%, which will end up in Germany, but more on the figures, I'd like to give you later on.

What do you mean by upgrading the network, well, let me tell you, it's not always about building a new 110 kv power line with the large poles. Take a standard village road where you have to install such a line and where in 10 years from now, 40 world boxes might be installed to charge e-vehicles, difficult situation and perhaps there's going to be PV systems, solar power in the same road. In such a scenario, perhaps the substation might have to be replaced. So we might have changed the control approach to the substations so as to allow for power supply to such a road. I said it this morning, our challenge is not so much to keep the balance between supply and demand going forward, in every second, we're going to be required to guarantee an adequate balance in every single road in Germany. And that's going to be so much more ambitious because we will have to feed in so many more participants into the network than today. So part of the solution will be building a new power lines, new substations. Every winter generator will have to come with a substation and a transformer. So this goes to show that a whole lot of new assets will need to be built. Well, take thermal generation. Most of the substations will have to be replaced and configured for different performance levels. So when it comes to the details, the transformation is truly daunting. It's not like it's good enough to add a couple of kilometers new power lines, everything will be changed fundamentally.

There's the last question on the chat, Klaus Hinkel from ZFK. Mr. Hinkel, you have the floor.

Question on the network, the returns. If I understood you correctly, you intend to take legal action against the German regulator, Federal Network Agency. Perhaps you can briefly explain what your objectives are. And what about a time line of such legal action? Perhaps you can also point out what the German regulator's decision to reduce returns. What does this mean for you economically speaking, over the next couple of years?

Well, It's true. Mr. König said that we would take legal action against that because we believe that the decision-making process and the reasoning for this decision is very open to legal challenges. And we're not the only ones. Similar markets or other market participants announced that they would appeal against this decision for a number of reasons. It's important to keep our legal position also. Regardless of the potential outcome, we have to do so by principle. The time line where you're talking about 2 to 3, 3.5 years. Last time around, it took 2 to 2.5 years. And this time around, it took another -- this is going to be 3 years, give or take, lower court of appeal, higher court of appeal, et cetera. So economically speaking, we said there's 2 factors. You have to look at the overall regulatory package. We've got the cost review for gas, cost review for power. And we have to look at the overall package to be able to assess the impact of the new regulatory regime. When it comes to the sensitivity, I'd like to tell you that there is one factor that we don't really want to highlight because we've maintained all along that regulation should come as a joined up a package. And we also assume that the Federal Network Agency, the German regulator, even though the decision is not exactly popular with us, I believe that they understand that they have to make sure that we are able to make the required investments. So hopefully, the overall package will be acceptable, that's what we believe.

So currently, there's no further questions. Thank you very much for the question, so far. Also, we are almost at the end of our press call. Perhaps a last call, do you -- are there any further questions, ladies and gentlemen, counting down 5, 4, 3, 2, 1, 0, no further questions. Okay. On that note, I'd like to thank you for participating. I guess it's going to take some more time before we'll get together in a real-life setting. At the last press call, many of you came to see us in Essen. But then it's working pretty well, even though you are not here. Still, hopefully, we can welcome you back in person. Thank you very much for your participation from this stage today. Bye-bye.