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Lucrative electricity production – The Alpiq electricity company is profitable like never before – News

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Lucrative electricity production – The Alpiq electricity company is profitable like never before – News

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Only recently, Switzerland’s second largest energy company was on the verge of collapse. Now he is reporting a record net profit for 2023.

In 2022, with the major Russian attack on Ukraine, electricity prices rose to unprecedented heights. Russian gas was no longer wanted in Europe, and at the same time several French nuclear power plants failed. But last year the situation calmed down again and prices fell significantly.

Accordingly, the energy company Alpiq’s sales shrank by 40 percent compared to 2022 to just under nine billion francs. At the same time, Alpiq increased its profits by more than three and a half times to 1.3 billion francs.

Alpiq has no end customers itself

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Legend: Alpiq CEO Antje Kanngiesser. Alpine

While Alpiq’s profits are bubbling, customers are suffering from high electricity prices. Antje Kanngiesser, the boss of Alpiq, says: “We produce electricity – and have no end customers.” The electricity produced by Alpiq is delivered to local energy suppliers, who in turn serve the end customers. And: “Consumers’ prices are set by their suppliers – based on their purchasing strategy,” says Kanngiesser.

Just a few years ago, Alpiq almost collapsed under a heavy burden of debt. Record low prices on the electricity market had affected the company. In order to save itself, Alpiq sold the flourishing building technology division.

Lucrative reservoirs in the Alps

Now the company is making billions in profit again for the first time. This is primarily because it is less dependent on the so-called base load, on long-term and permanent electricity supplies.

Alpiq has very big ambitions when it comes to sustainability.

With flexible power plants such as the Nant de Drance pumped storage power plant in Valais, Alpiq can produce electricity exactly when it is needed: “We feed in electricity when there is a lack of energy in the market,” says Alpiq boss Antje Kanngiesser.

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“And we take electricity from the market when there is too much energy by pumping water up into the reservoir.” This results in high prices for the electricity produced.

Huge investment in Nant de Drance

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Legend: Keystone/Jean-Christophe Bott

Just the big one Pumpspeicherkraftwerk Nant de Drance im Wallis cost more than two billion francs. Alpiq has a 39 percent stake in the plant, and a further 36 percent belongs to the SBB. The pumped storage system has an installed capacity of 900 megawatts – almost as much as Switzerland’s newest nuclear power plant in Gösgen. Nant de Drance can theoretically produce this amount of electricity for 20 hours if the reservoir was previously full. However, the pumped storage power plant does not produce electricity in continuous operation. Rather, it only produces when there is no electricity in the grid. If, on the other hand, there is too much electricity in the network, water is pumped up, which is then turbined to produce electricity when necessary. By the way: The power plant can be switched from full turbine operation to full load pumping operation in less than ten minutes. The efficiency of the Nant-de-Drance pumped storage power plant is stated to be 80 percent.

Kanngiesser is convinced that this business model – pumped storage power plants take on the role of huge batteries for temporarily storing electricity – will remain attractive in the future. The fluctuations in electricity production in Europe are likely to increase.

Flexible and renewable energy production

80 percent of the investments and facilities owned or partially owned by Alpiq relate to this flexible area, as Kanngiesser emphasizes. This will be further expanded. Alpiq will also continue to invest in renewable energy production.

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Who owns Alpiq?

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Alpiq is one of them alongside BKW and Axpo three largest, systemically important electricity companies in Switzerland. Alpiq is two-thirds owned by other, majority state-owned Swiss energy companies such as EOS and Primeo Energie. The third third of the group belongs to a private fund in which Swiss pension funds have invested their capital.

What doesn’t quite fit into the picture is that Alpiq still produces almost a quarter of its energy in gas-fired combined cycle power plants in Europe.

When asked about this, the Alpiq boss says: “These are all supply-critical power plants at network nodes that are being operated must. If Alpiq didn’t do it, someone else would.” That is why these gas power plants will not be sold.

Will gas power plants be replaced with batteries one day?

Gas-fired power plants are also financially interesting because they can react much more quickly to surpluses and shortages on the electricity market than, for example, nuclear power plants.

After all: “We hope that other, CO₂-neutral storage systems, such as large batteries, can one day be built at these network nodes,” says Kanngiesser. Because Alpiq has “very big ambitions when it comes to sustainability”.

Alpiq’s future challenge will be to remain flexible and highly profitable while becoming more climate-friendly.

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