Swiss activate safety net for power groups as Axpo seeks help

A general view shows the nuclear power plant KKW Beznau of Swiss energy company Axpo and the Aare river near the village of Beznau, Switzerland July 8, 2020. REUTERS/Arnd Wiegmann/File Photo

ZURICH, Sept 6 (Reuters) – Switzerland rushed out its financial safety net for the power sector after Axpo Holding [RIC:RIC:AXPOH.UL] sought and got an emergency 4 billion Swiss franc ($4.08 billion) credit line to secure its liquidity requirements amid surging energy prices.

It joins Finland, Germany, Austria and Sweden in offering liquidity guarantees to their utilities to withstand the ructions on markets as Russia cuts gas flows to Europe in an economic battle with the West over the war in Ukraine. read more

Swiss Energy Minister Simonetta Sommaruga told a news conference the government could not let a “wildfire” engulf crucial power groups exposed to wild swings in prices that are forcing them to cough up huge collateral for energy deals.

Axpo, Switzerland’s largest producer of renewable energy that generates more than half of the country’s renewable electricity from hydropower, said in a statement on Tuesday it has not used any of the funds yet.

“This credit line ensures that, should the situation intensify further, Axpo is in a position to cover the collateral requirements of long-term power supply contracts concluded with its customers, and continue contributing to Switzerland’s security of energy supply,” it said.

The government had already lined up a safety net worth 10 billion Swiss francs for the electricity sector, including Alpiq , BKW (BKWB.S) and Axpo. read more

But with the draft law stuck in parliament, the government resorted to an emergency decree to grant Axpo the credit line under punitive conditions.

Axpo has more than 5,000 MW of renewable energy capacity across Europe and markets a customer portfolio totalling 19,700 MW of energy from renewable sources. Its activities include wind energy, photovoltaics, biomass and hydropower.

Peer Alpiq, which last year sounded out the government for support only to withdraw the request, and BKW said they were fine for now.

“Alpiq is not currently drawing on any federal assistance and remains confident that it will not have to do so even if market conditions remain challenging,” it said.

BKW, which posted strong first-half results, said it did not need a state credit line.

($1 = 0.9792 Swiss francs)

Reporting by Michael Shields, Editing by Miranda Murray, Uttaresh.V and Emelia Sithole-Matarise

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