Repower develops innovative power generation investment scheme for small and medium-sized utilities

(PresseBox) ( Poschiavo, )
To be able to ensure a reliable supply of electricity at guaranteed prices, providers increasingly have to have access to their own generation capacity. Since not all utilities want to invest direct in a diversified portfolio of assets, Repower and its partners have created a new investment scheme. The founding partners are local utilities Liechtensteinische Kraftwerke (LKW), Schaan, and IBAarau.

Repower's scheme, which has been developed together with the partners, gives small and mediumsized utilities the opportunity to invest in a broad generation portfolio. The plan is to establish a power generation investment company to bundle geographically and technologically diversified projects and capacity, and interests in long-term agreements for drawing rights. The investment company will serve as a vehicle for installed capacity of around 400 megawatts or annual generation of around 2,000 gigawatt hours. The installations held in the vehicle, some planned and some already in operation, and generation from long-term agreements, are located in Switzerland, Germany, France and Italy.

New challenges for utilities

Procuring electricity in the energy markets is a complex and time-consuming business for utilities. They will be more and more dependent on market prices as the market in Europe continues to open up. In the future there will also be bottlenecks in cross-border transit capacity. Gaining access to these markets and having the active presence to profit from them means having the corresponding capabilities. In many cases, however, this active presence in international markets is often not part of the core business of utilities focused on supplying their own customers. Even so, they have to be able to secure their long-term supply at favourable prices. The generation investment company will give organisations in this position the opportunity to acquire an interest in the necessary assets without having to develop projects of their own or operate on the international markets.

Greater independence

Partners investing in the company acquire the right to draw electricity in proportion to their interest. Depending on the size of their investment, this will make them more independent from fluctuations in market prices, enabling them to pursue a more stable price policy in the interests of their customers. It will make energy procurement more plannable and give partners access to a diversified portfolio of generation assets. Basically the power generation investment company has a similar role to a traditional partner plant. The only difference is that the investment company is diversified technologically and geographically in the electricity markets relevant for Swiss organisations. "Together with our partners we have developed an investment scheme geared to current market needs which makes energy procurement more secure for our partners," explains Giovanni Jochum, Repower's Head of Market and a member of the Repower Executive Board.

By retaining an interest of at least 51 per cent in the investment company, Repower will have access to a pool of long-term partnerships that will help it deliver its comprehensive project portfolio. The investment company will also create economies of scale that will benefit all the partners involved.

The founding partners are Liechtensteinische Kraftwerke (LKW, based in Schaan, Liechtenstein), and IBAarau. They and Repower laid the foundation for the partnership in a letter of intent on 16 December 2010. Repower will work with these founding partners to develop the scheme further before opening it up to additional utilities.
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