"The machine is running"
Axpo and wind power
The New Energy Investor Summit in Zurich is a meeting place for industry decision-makers. Christoph Sutter, Head of the New Energies division, will be a speaker at two of the podiums as a representative for Axpo. He says: "Renewable energies are also a very interesting opportunity for institutional investors." A conversation on the potential of renewables at Axpo and the latest tenders for wind farms in Germany.
The New Energy Investor Summit will take place for the 7th time in Zurich on 22/23 May. The event has established itself as an industry meeting point for renewable energies. Over 130 selected participants from Switzerland and all of Europe will take part in over 250 meetings, present their projects, power plants, investment vehicles and services to strong investors, and exchange views on current issues. The infrastructure investments offer high quality: The renewable energy projects that are presented at the New Energy Investor Summit feature an average cumulated capacity of three to five gigawatts. So it's no wonder that investors come to the event with full coffers: As a rule, they have up to a billion Euros for investments at their disposal. The fact that in past years a number of major transactions were arranged and realised proves that they are also willing to use these financial resources.
The New Energy Investor Summit is a must for those who want to target project developers and providers, energy supply companies, municipal utilities, asset managers, banks, insurers, pension funds, family offices, investment funds, and service providers. And Axpo is no exception: The company is a project partner for the event.
In Energy Dialogue, Christoph Sutter, Head of New Energies, explains why Axpo's presence at the New Energy Investor Summit is so important and what's happening with the renewable energies business at Axpo.
Christoph Sutter, Axpo is participating in the New Energy Investor Summit again this year. Is this truly the place to be, or do you go mainly to chat and have a drink with long-time cronies from the industry?
(Laughs) Well the latter can certainly be the case during the evening get-togethers. One sees a lot of familiar faces at the event. But the dimension is much more than a pleasant gathering. The New Energy Investor Summit is a very important business event for us where project developers and investors can meet in a fresh, efficient congress format. In addition to the quality of the presentations and workshops, the participant group has also impressed us over the past years.
So it's really the who's who of Swiss industry that meets and exchanges ideas here?
Absolutely. Key industry players meet at the New Energy Investor Summit. I have rarely experienced an event where the benefits exceed the costs to such an extent. Obviously Axpo, as the largest producer of renewable energies in Switzerland and given its significant commitment in European wind energy, is part of the event.
What's the focus of this event for you?
Maintaining contacts with potential wind farm buyers and other wind farm developers. In particular, we want to meet the management of other European wind farm developers and decision-makers for institutional investors. I am also representing Axpo at two podium discussions. One is a workshop on "The Asset Class Renewable Energy: Attractive investments for institutional investors". The other one is a discussion under the motto "Breakthrough of renewable energies: Will the vision of comprehensive, sustainable, stable power supply become reality?"
That sounds interesting – please tell us what viewpoints you will be presenting.
The trend is clear: Renewable energies, particularly wind and photovoltaic, are expanding strongly worldwide. Last year, the volume was a massive 160 GW of wind and photovoltaic. This development will continue and most likely become even more pronounced. Renewable energies are a very attractive asset class, particularly for institutional investors.
What are the drivers of this development?
The drivers are both technological and economic. It is becoming clearer that subsidy schemes required by many renewable energy forms today will gradually develop toward more market in the future. That is a very important step and indicates that the branch is moving in the right direction.
There must be a good example for this.
Sure: This year the guaranteed feed-in tariffs for new onshore wind power plants will be auctioned competitively for the first time in Germany and France. This is very significant for Axpo because these are markets that are important for our own business with renewable energies. Furthermore, we are seeing more and more sub-markets where subsidy schemes for renewable energies are no longer necessary because the applications have become economically competitive. An example here is photovoltaic systems with high internal consumption.
One could even read recently that the first offshore wind farms can now do without subsidies. Will these expensive technologies be ready for market soon?
Offshore wind is a very interesting example that shows how quickly renewable energies can become profitable. Last year, many energy industry representatives were astonished how strongly costs for this previously, very expensive technology have dropped. In 2016, feed-in tariffs in Europe were auctioned between 4 and 7 Euro cents/kWh, which was a drastic reduction compared to the previous tariffs of about 18 Euro cents.
At 4 to 7 Euro cents we are still relatively far away from zero subsidization.
That's true. The step toward 0 Euro cents this year in Germany is largely due to the fact that we are talking about plants in operation as of 2021. So this result has a certain speculative element because future costs as well as power price developments had to be predicted. However, overall it shows how quickly renewable energies have developed recently.
Development is a good keyword: What's going on at Axpo in terms of wind energy?
Axpo has clear plans for growth, particularly in onshore wind, and will actively shape the future in this area on a national and international level. With the acquisition of Volkswind nearly two years ago, Axpo has entered the lucrative business of wind farm development, and that was an important milestone under our strategy.
Is Axpo perceived and recognised as a wind farm builder in the industry?
Yes, that is certainly the case. We get a lot of positive feedback from the market. Volkswind is seen as a solid company and Axpo has gained recognition for having pursued the business of wind farm development in a very consistent, targeted manner.
And how satisfied are you with the development of Volkswind two years after the acquisition?
I am extremely pleased with the development at Volkswind. In the past year, we made significantly more money than expected with the sale of four wind farms. In the current financial year we will put six newly built wind farms comprising a total of 35 plants into operation. The machine is running, and can keep going like this.
Which wind farms will this be?
These are plants in the Volkswind portfolio in France. We already commissioned three farms. The other three construction projects are on schedule.
A year ago, you explained why the possible sale of wind farms was part of your strategy in Energy Dialogue. Will you be selling the new plants in France?
I have always emphasised that Volkswind is a vehicle for us to generate targeted, additional revenue. This includes the development, construction and subsequent sale of wind farms, in addition to the operation of our own plants and those of our customers. We will continue to have the freedom of choice to sell or keep plants in the future. Thanks to the extensive Volkswind project pipeline in France and Germany that includes 500 MW with construction permits and 2,500 MW in various stages of development, we have all the options in our hands.
What goals are your pursuing in the medium and long term and where is Axpo headed in terms of wind energy?
We are currently evaluating various possibilities to further expand the wind business. In concrete terms, we want to increase the annual number of new wind farms, and at the same time expand the service business for wind.
The service business includes, for example, operation mandates for wind farms belonging to third parties.
Exactly, we have a great deal of know-how in this area. Alone in wind energy, we are now managing energy amounting to an installed capacity of several thousand MW's from customer plants. In the future, we can offer these customers additional services.
What new opportunities will "Axpo Solutions" offer your department?
The business with construction and operation of wind farms will certainly be one of the most important growth fields for "Axpo Solutions". We are currently determining how to strategically set up the wind business optimally in relation to "Axpo Solutions".
Thank you for the interview Christoph Sutter, and good luck at the New Energy Investor Summit.