Axpo

COMPANY PROFILE

2014

AXPO: LINTHAL 2015 PROJECT

www.axpo.com | +41 56 200 41 78

Swiss energy is getting pumped up…

Editorial: Roland Douglas

The CHF 2.1 billion Linthal 2015 expansion project is set to be completed in 2015/16. This is a major energy project that looks set to safeguard the future security of electricity supply for north-eastern and central Switzerland.

Switzerland is one of the world’s interesting cases when it comes to energy production and usage. With approximately 56% of the country’s energy coming from hydroelectricity and 39% from nuclear power,

or three decades.

“The government has voted for a phaseout because we want to ensure a secure and autonomous supply of energy,” she said at a press conference in Bern in 2011.

more hydropower? Or maybe other renewable sources; wind or solar?

Well the answer is a mixture of these ideas and one company that will play a prominent role in the further development of the nation’s energy

Switzerland has a nearly CO2-free electricity-generating network. And the plans for this network to become even more efficient are already afoot with Energy Minister, Doris Leuthard saying in 2011 that the country will end its use of nuclear energy in the next two

“Fukushima showed that the risk of nuclear power is too high, which in turn has also increased the costs of this energy form.” The first reactor will reportedly be taken offline in 2019.

So what is the future of the energy industry in Switzerland? Perhaps

sector is Axpo.

Axpo is a Swiss energy company active since 1914 with local roots and a European focus. The company is active in the production, distribution and sale of electricity, as well as in international trading and natural gas

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AXPO: LINTHAL 2015 PROJECT

business. Axpo has grown significantly in the last century and today boasts a market position which sees it operate in over 20 locations throughout Europe. Bearing testament to its position, the company is accredited on some 20 energy exchanges and numerous broker platforms throughout Europe.

Currently, one of the major projects that the company is involved in is the Linthal 2015 Project that is seeing Axpo build a new underground pumped-storage power plant in the Canton of Glarus in the Swiss Alps.

Pumped-storage plants are designed

of the first countries to use such a system.

The system stores energy in the form of gravitational potential energy of water, pumped from a lower elevation reservoir to a higher elevation. Lowcost off-peak electric power is used to run the pumps. During periods of high electrical demand, the stored water is then released, flowing back to the lower reservoir, through turbines to produce electric power and this is exactly how the system will work in Switzerland.

“The pumped-storage plant in the Glarus Alps is the largest expansion project of Axpo and a big investment in the security of supply at CHF

up water,” explains Axpo Media Spokesperson, Daniela Biedermann.

“From the end of 2015, the water from the Limmernsee reservoir will be pumped back into the Muttsee reservoir, 630 m higher in the Glarus Alps and re-used as needed to generate electricity. The new plant will have a pump power and a turbine output of 1000 MW. Construction is on schedule; the first group of machines to produce electricity are on track and will be ready, according to the plan, at the end of 2015,” she adds.

“The fourth and last major transformer (each 220 tons) was delivered to the transformer cavern at the beginning of October 2014. This

with load balancing in mind and are not generally considered as a base load supply system like a coal fired power plant or nuclear plant. The history of pumped-storage plants dates back to the 1890’s and many consider Italy and Switzerland as two

2.1 billion. Linthal 2015 provides a highly flexible system which will produce within a few minutes both large amounts of electricity and also accommodate temporary overcurrent shots. The system can also store power for later use by pumping

means that all major components for the project Linthal 2015 are now on the site.”

This is a project that has been going on for some time; the amount of planning and development involved in construction in such a complicated

LINTHAL 2015

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location is mind-blowing. After much consideration and many surveys and consultations, the project began in 2005.

“The initiative arose from the findings of a study on the development potential of a large hydropower system in Switzerland. The responsibility for this from the very beginning fell to the hydro energy division of Axpo.

From several preliminary studies, ‘Linthal 2015’ emerged as the most promising project, based on extensive considerations of technical, economic and political feasibility. The project started in early 2005,” Biedermann explains.

After this, progress moved swiftly and relationships with a number of contractors and suppliers were established ensuring that each party bought experience to the relationship.

“After intensive engineering and preparatory work, including relicensing, preconstruction work on plant site began in 2008 with main construction work starting in early summer 2009,” says Biedermann

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“Electricity is the key energy of the future. In 2014, 100 years after its founding, Axpo is once again faced with great challenges.

Axpo will meet these with courage, determination, and perseverance, and continue to advocate secure electricity supply”

Along with its main contractors, Axpo as an organisation has much experience with hydro operations (as mentioned above, Switzerland is big on hydropower) and this wealth of experience was put to good use during the planning and implementation stages of this project.

“The Linthal 2015 project has new dimensions in several respects. But Axpo Hydro Energy operates several power plants with pump storages and therefore has many years of experience in the operation and maintenance of such facilities. This experience could be used in project planning and implementation.

“After completion of the expansion Kraftwerke Linth-Limmern ((KLL) a partnership between the Canton of Glarus, 15%, and Axpo, 85%) will operate the most powerful pumpedstorage power station in Switzerland.

Power is currently at 460 MW and following the expansion from the end of 2015, when the first group of machines to produce electricity, approximately 1460 MW will be

AXPO: LINTHAL 2015 PROJECT produced,” Biedermann explains.

CHALLENGING CIRCUMSTANCES Of course, a project like this, involving so many people, so much money and such challenging logistics, will present challenges. One of the main hurdles is organising the many contractors carrying out a wide-ranging list of activities.

“The cooperation with numerous companies which are involved in the project is extremely challenging due to the complexity of the project and the many interfaces. The coordination effort is therefore understandably large.

The project is on track and overall, indicating generally good cooperation between all parties,” says Biedermann.

Then there is the logistics; operating underground, on a mountain is not an everyday task. To assist in this regard, the decision was taken to install an enormous cableway for the transportation of equipment up and down the mountain.

“To build in the mountains places extreme demands on logistics,” says Biedermann. “For example, all building materials had to first be transported to the different construction sites - each machine and also cement and gravel for concrete production. For this, two construction cableways were built with a capacity of 25 tons.”

After logistics there is the raft of technical challenges that involve everything from scientific research through to construction, electrical engineering and safety verification; each area has to be carefully considered by a specialist.

“A major challenge was when the construction work on the pressure tunnels ran into geological fault zones. But thanks to the long tunnel experience of the parties, this challenge could be overcome. Another challenge is the commissioning of four groups of machines. The technical

design of the motor generators is an innovation which is tailored to the needs of the power plant’s operations in the future,” Biedermann says.

And even with all of the intensive research, planning and construction, the project has been welcomed by the local community and the wider Swiss society with government and regulators all showing support.

“The cooperation, especially with the Canton Glarus and also with the relevant federal authorities, was very constructive from the beginning. The necessary permits were available within a relatively short time period.

“The acceptance for the pumpedstorage plant was very positive and on the engineering side, we have not received a single complaint,” says

Biedermann.

This is unusual for energy projects of this size, there is usually at least a few objections, sometimes relating to concerns over environmental impacts but Biedermann says that a special programme was developed to ensure all views were taken on board and regular updates are given, involving all parties, in order to minimise any negative environmental effect.

“To minimise environmental impact, the Environmental Impact Assessment findings have been integrated into the project framework. This has included feedback from all parties including a support group, specially set up with representatives of agencies and conservation organisations, which has set out procedures and

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eco-logical measures. In addition, dialogue with stakeholders from the beginning of the project has been well maintained and will continue throughout the construction period.

This open communication led to a solid foundation of trust and jointly supported solutions. All the planning and approval processes were handled very efficiently,” she says.

AN AXPO FUTURE Axpo’s plans for the future, post Linthal 2015, are big. The company is seeking to invest further into onshore wind power to ensure the primary goal of continuing profitability as Biedermann explains: “Low wholesale electricity prices in Europe and increasing regulatory requirements pose a major challenge for the energy market. Aided by its strong fundamentals, Axpo can meet these challenges by building on its 100 years of experience. We are strategically well-positioned and flexible with a healthy financial

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situation, low debt and broad expertise from production to socket.

“These strengths must now be expanded and consolidated. The primary goal is to maintain the group’s access to the capital market and to ensure its profitability.

“Where new energies like wind and solar power enjoy subsidies, the economic viability of nearly CO2free hydro and nuclear power is increasingly endangered. Axpo has adapted its strategy to respond to the changed market environment. The group strategy is based on four pillars: Optimising and strengthening the core business, significantly reducing costs, developing and expanding new business areas with attractive returns, and targeting investments even more selectively than before.

“Investment decisions will depend on two criteria: The safety of the facilities and the expected return.

For example, significant investment is being made in the safety of the

Beznau nuclear power plant. Proven nuclear power plants will continue to be operated as long as they are safe and profitable. Major projects currently under way include the mentioned Linthal 2015 project, the important gas project Trans Adriatic Pipeline (TAP) and the offshore wind farm Global Tech I in Northern Germany, and these will all push ahead. In the area of new energies, Axpo is focusing primarily on onshore wind farms in Europe,” she says.

And while much of the company’s focus right now is on Linthal 2015, Biedermann reminds that other projects that are underway are also major for the European energy market.

“We have Global Tech I in the German North Sea where we participate with a 24.1% stake. The facility is located approximately 180 kilometres away from Bremerhaven and 38 km to the northwest of Emden. With a water depth of 40 metres, far away from the mainland,

AXPO: LINTHAL 2015 PROJECT the construction of this wind field is a pioneering achievement. Global Tech l has an area of 41m² on which 80 wind turbines have been built. Each turbine has an output of five megawatts.

Global Tech I is about to be finished in 2015.

“We are also focussing on onshore wind farms in Europe. Axpo is shareholder (25.0%) in Terravent, a Swiss investment company with the intention of investing in onshore wind farms in Europe. The company has already acquired 90 megawatts of installed capacity in Germany and France. Further acquisitions are planned in total height of 20 to 30 megawatts of installed capacity.

“Axpo is also involved in the TAP project as a shareholder (5%). The gas pipeline starts in Greece, crosses through Albania and the Adriatic and reaches landfall again in southern Italy (Length around 880 km). The new southern corridor guarantees longterm diversification and security of supply for Western Europe with natural gas from the Caspian region. The natural gas will flow from Azerbaijan through TAP and the Swiss Transitgas Pipeline to industrial customers and municipal utilities.

The TAP project was developed by EGL (today Axpo Trading AG) for over 10 years. In 2013, TAP was selected and as of 2019 it will transport natural gas from Azerbaijan to Europe.”

Biedermann. “Therefore Axpo is committed to climate protection and improving energy efficiency within the company. Up to 2017, the energy company plans to reduce greenhouse gas emissions in Switzerland by 80% as compared to the base year 2008/09. Furthermore, Axpo intends to increase energy efficiency by 240 million kWh in the areas of electricity production and distribution, as well as operations.

“In addition Axpo introduces a specific codex for business partners. Axpo is taking a stand on sustainability that includes its suppliers. As of mid-2014, the company introduced a codex for adherence to business ethics, as well as minimum social and ecological standards for its business partners.

The Axpo codex is based on the principles of the United Nations Global Compact,” she says.

By 2017, at least 80% of the Axpo Group order volume will be awarded to suppliers that have signed the codex for business partners. With the introduction of the codex, Axpo is underpinning its social responsibility awareness as a

company owned by the Northeastern Swiss Cantons. Andrew Walo, CEO Axpo Holding AG said: “Our responsibility does not stop at our door, it also encompasses our suppliers. By introducing guidelines for our business partners, we are making clear how important it is to adhere to ethical, sustainable principles in our supply chain,” further reinforcing the company’s commitment to green values.

This is a company that has, and continues to, lay-down significant milestones and in its 100 years there have been many challenges that have arisen and that have been successfully navigated. And there is no expectation that things will get easier, but Axpo is certainly set for the challenge.

“Electricity is the key energy of the future. In 2014, 100 years after its founding, Axpo is once again faced with great challenges. Axpo will meet these with courage, determination, and perseverance, and continue to advocate secure electricity supply,” Biedermann concludes

COMMITMENT TO GREEN With Switzerland’s aforementioned impressive CO2 statistics, Axpo being one of the country’s energy industry leaders has an intention, and unofficial responsibility, to ensure the country continues to set an example of how green energy can be used to power not just a building or a town, but a whole nation.

“Green business becomes more and more important for Axpo,” says

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