09.12.2021 | CEO Christoph Brand on the company’s results and its strategy
Only a strong Axpo can contribute to the security of Switzerland’s electricity supply and a successful energy transition. To remain strong, however, the company must become less dependent on energy prices. Axpo's strategy focuses on this goal and was pursued successfully during the 2020/21 financial year, benefitting not only the company but its home country, too.
Energy markets are undergoing fundamental change. Global decarbonisation efforts, the EU's ambitious climate goals, the Swiss energy strategy, the simultaneously planned nuclear phase-out, and ever-changing interventions in the market pose significant challenges for everyone involved. The unpredictability of this situation was brought into sharp relief during 2021 by the continuing turmoil on the energy markets.
One thing is certain. The energy transition demands new business models, making energy storage and trading more important than ever. But don’t be misled by the short-term electricity price increase. As price curves indicate, the market anticipates a significantly lower price in the medium to long term. Nevertheless, it is all the more important for companies like Axpo to decouple revenues from unpredictable prices. This is a conclusion that Axpo reached from the experience of previous crises.
Axpo's strategy is fixed firmly on this objective. The wind farm facilities of our subsidiary Volkswind provide a good illustration. While some installations remain in the Axpo portfolio, others are sold to investors in order to generate additional revenue. In July 2021, Axpo announced the sale in France of five newly built wind farms with a maximum output of 74.5 megawatts. In the previous financial year, we built wind farms with a total installed capacity of 132 megawatts, and the project pipeline includes an additional 3,000 MW.
Targeted investments in new innovative business fields such as green hydrogen are another example. We are planning the construction of the largest hydrogen plant in Switzerland at the Wildegg-Brugg hydro power plant, while in Italy we are researching new technologies with ABB along the entire supply chain.
The international trading and customer business once again made a significant contribution in the reporting year. Axpo has benefited from its early focus on becoming a reliable, innovative partner in the market for long-term power purchase agreements (PPAs) for electricity from renewable energy. In doing so, Axpo has established itself as the market leader in this area. Such a focus is not only financially attractive for Axpo, but also represents an important contribution to the successful realisation of the energy transition. Axpo is supporting corporate customers in some 40 markets on their journey to a CO2-free future. There can be little doubt that demand for PPAs will continue to grow in the course of the global fight against climate change.
Based on this and other strengths, Axpo achieved positive results in the 2020/21 financial year, with adjusted EBIT amounting to CHF 500 million. As in the previous year, this performance makes it possible to pay out a dividend of CHF 80 million to the owner cantons and their residents.
Axpo is successfully active abroad – with clear benefits for Switzerland. Thanks to this important activity, we can make the necessary investments in existing domestic infrastructure. Since 2013, we have invested three times more in Switzerland than abroad. Several billion francs went into maintaining hydro power, electricity grids and the safety of nuclear power plants.
Policy-makers now have it in their hands to improve the business and regulatory framework necessary for the construction of new renewable installations. At Axpo, we are contributing our extensive know-how and international experience to play an active part in developing constructive solutions. To that end, we presented a scenario in October illustrating how Switzerland could achieve both the energy transition and a robust security of supply at the same time. The scenario indicates that the necessary expansion of renewable energies is possible – but only if the right approval processes and financing options are put in place.
Also read the Financial Report and the media release: