All our investments are required to meet strict internal hurdle rates, buildup of project in country-specific WACCs plus risk-adjusted spread ambitions. Turning to our 2028 outlook, as we roll forward our 5-year guidance horizon. Our operational achievements in 2023 and our transparent value creation set the starting point for a unique green growth story. Of course, we need to discount for the significant positive nonrecurring effects that we saw in 2023. Doing this, we will increase our underlying earnings by 6% per year or in absolute terms, EBITDA will grow on an underlying basis by more than €3 billion to more than €11 billion in 2028. In the same period, adjusted net income will grow by €0.9 billion on an underlying basis to €3.3 billion.
And this should provide for you a feel for the underlying robustness and strength of our earnings trajectory also well beyond 2028. As a reminder, our net income line is now protected against any further change in interest rates due to the remuneration scheme for new investments in German Energy Networks. Finally, we focus on value creation and increase our ROCE guidance by 100 basis points to a range of 8% to 9% on average for the coming years. Our green growth story is supported by all 3 business segments. Close to 90% of the EBITDA growth can be attributed to our 2 infrastructure business segments. Growth in Energy Networks is driven by our growing investments. Our power RAB CAGR of 10% translates into an underlying EBITDA CAGR for energy networks of 7%.
Energy Infrastructure Solutions is expected to grow at a CAGR of 13% until 2028. This is supported by a total investment plan of €5 billion. Be reminded, the segment will be a stand-alone segment from Q1 2024 onwards. We will then share with you additional details on the business. Finishing with our Energy Retail business. Based on the strong recurring earnings growth in 2023, we envisage our Energy Retail business grow gradually by another €0.3 billion to around €2 billion by 2028. Growth will be driven by an increased focus on high-quality customers, excellence in operations and an increasing share from our decarbonization products and services. On to our balance sheet and capital structure commitments. We have a strong financial position with ample headroom to further accelerate the clean energy transition going forward.
We remain fully committed to our strong BBB/Baa rating commitment. With our accelerated green growth plan, we will remain comfortably below our up to 5x debt factor commitment. In terms of rating relevant ratios like FFO to net debt, we look at an additional balance sheet capacity of €5 billion to €10 billion by 2028 on top of our current €42 billion CapEx envelope. We explicitly reserve the option to carry out additional opportunistic portfolio measures over the course of the next 5 years. This would provide for even more balance sheet headroom. Importantly, for you, executing upon such disposals should still leave us in line with our EBITDA and adjusted net income guidance for 2028. All this sends a clear and simple signal to you, there is room for much more.
Let me conclude on what all this means for our shareholders. We are fully confirming our long-term dividend growth commitment with annual increases in our dividend per share of up to 5%. This commitment is backed by a strongly growing earnings per share of 6% on average across the next 5 years. We will propose to payout €0.53 per share for 2023. And based on yesterday’s closing price, our financial commitment to you translates into a total annual shareholder return of significantly more than 10% for the next 5 years. And if there is one thing that you can continue to rely upon, and with that, I’m getting back to my first message, we will deliver what we promise, and we always strive for more. And with that, back to Iris.
A – Iris Eveleigh: Thank you very much, Marc and Leo. And with that, I’ll open our Q&A session and we start with Harry from Exane.
Harry Wyburd: So 2 as usual for me. So firstly, you mentioned several times that you could further increase CapEx beyond what you put in the guidance today, which obviously begs the question, how much could you increase CapEx buy? And you sort of mentioned you got €5 million to €7 billion of spare balance sheet headroom plus potentially some more on top from disposals. So does the additional CapEx headroom kind of conveniently match that €5 billion to €10 billion? Or could it even be more than that? So that’s the first question. And the second question is on timing effects. I think — and on a very simple level, it seems like what’s happening this year is a repeat of last year. I guess the regulator sets the expected grid losses and redispatch costs in Q4, and then power prices fall significantly in the beginning of the year — this year as well as last year.
So the question is, what have you assumed for basically, I don’t know what the right word is it’s not our performance, but gains that you’ll make on timing effects this year because of the fall in power prices. Have you assumed everything you could get based on today’s low power prices? Or could there be more timing effects that go in your favor throughout 2024 like we had last year?
Marc Spieker: Yes. Welcome, Harry. Thanks for the questions. Let me start with the second one. It’s too early to now talk about what does the current price environment mean. And you can rely upon that. We have built our guidance on prudent assumptions and as we — as the year unfolds, we will update you. But from today’s point of view, everything in our guidance looks robust that we will be able to deliver in the current environment, but also should environment change. That brings into the headroom, the €5 billion to €10 billion headroom should tell you 2 things. First of all, a message of comfort and strength that we have headroom to do more. And it should also send the message of comfort that we really stick to our value creation targets.
What you see with our current midterm plan is that we will pretty much keep our leverage factor constant. And that means the growth trajectory that we write or show you for the next 5 years is pretty much something which we could deliver for many, many decades to come at the same regulatory conditions. But what, of course, we foresee is that there will potentially be more investment opportunities and needs as we roll into — well into the next decade. And for that, we are now running the discussion with the regulator, what needs to be done in order to improve the conditions, in order to incentivize these investments. And so the message of the €5 billion to €10 billion for our investors should be one of comfort and strength.
Harry Wyburd: Just — sorry, just to follow on the CapEx envolop, how much higher could you go on CapEx?
Marc Spieker: Sorry, say that again. I didn’t get the question acoustically.
Harry Wyburd: So the question was, you mentioned there’s more to do on CapEx that you haven’t included in the guidance today. So how much more CapEx could you do relative to the program you just announced?
Marc Spieker: So we put out the €42 billion, and we are very comfortable to be able to deliver that. And then first of all, we will be looking at how will the incentives for further growth look like. And before that, it just doesn’t make any sense to speculate about what is in or what is not in, you can rely upon that we will deliver the €42 billion. I mean that we will continue when we further elaborate whether or not to step this up that we will focus very much on the potential to create value for our shareholders.
Iris Eveleigh: Next question comes from Wanda from UBS.
Wierzbicka Serwinowska: Wanda Serwinowska from UBS. Two questions for me. The first one on the Networks EBITDA guidance. I mean on Slide 8; you mentioned continued debating points on the existing assets. So could you please clarify what exactly was baked into the guidance? And what are the remaining points? And when do you expect basically the decision from the regulator? And also, you more than double the contribution from the operational excellence outperformance. I mean how sustainable it is in the longer term beyond the current regulatory period? The second question is on the dividend. If we assume a 5% annual dividend growth until 2028, the payout ratio will be still well below the regulated peers. We will be looking at 55% based on our guidance.
Fees are at 70%, 75%, and as a result, the dividend yield that you are offering your shareholders, is 100, 150 bps below the regulated piece. So my question is, you improved the earnings guidance, the outlook is much better than we thought is going to be. So why you capped the dividend policy unchanged?
Leonhard Birnbaum: So I’ll take the operational excellence. Actually, if you look at it, we are significantly more increasing our CapEx commitment compared to our OpEx target. So we are increasing year-over-year, the efficiency and we can tracked it also in operational KPIs. So we are confident that we can keep up with the track record that we have shown over the last years. Obviously, this is also partially dependent on the respective regulatory treatment that we are getting. So in that sense, we feel pretty comfortable around the sustainability of operational excellence, which we have included, the outperformance, which we have included. I would say that when it comes to the regulatory, I would not like to speculate now too much into the future.
We know that we have a significant additional investment need, but that will depended on the outcome of the new regulatory consultation, which just — now has just started. For us right now, we have planned for the next 5 years, which we know. And we are not planning beyond that before we have some more clarity about the outcome of what is being discussed right now in the appropriate circles. And on dividend, I’ll give it to you.
Marc Spieker: Yes. So Wanda, we see a unique green growth investment opportunity, and we reserve this balance sheet headroom in order to deploy this capital should the incentives be set at the right point that we can create value for our shareholders with that. And that is the reason why we have set the dividend policy as it is. You also asked about return on existing assets, indeed, existing assets for our power networks in Germany that stands for about €19 billion of regulated asset base. And here, the return, if you look at the allowed return on equity stands at 5.07%. And that should not come as a surprise. We have been outspoken about that in the past that we do not deem this market adequate, and this is why we have gone to the court, the outcome of that court case will probably not happen before 2025.
