" alt="Alpiq Banner Interim Report" />Alpiq Anlagentechnik Group
Following a sharp economic downturn in the first half of the year, the German economy stabilised in the third quarter. While the economy appears to have bottomed out, spending remained extremely lacklustre up to the year end. Conditions in the markets served by the two business fields of the Alpiq Anlagentechnik Group (AAT Group) – Industrial and Power Plant Engineering (IPPE) and Energy Supply Technology (EST) – differed widely last year.
Whereas spending in the IPPE area was high, especially on new power plant construction, EST's energy supply business declined. Overall, however, demand in the power generation sector remained stable. During the year, the Heidelberg-based AAT Group was negatively impacted not only by the financial and economic crisis, but also by the large number of political/regulatory interventions.
Political regulation in Germany
The central issue in Germany was the Federal Grid Agency's regulation of transmission charges. Moreover, the incentive regulations for the German electricity and gas sectors came into force on 1 January 2009, stipulating a reduction in electricity and gas transmission charges. At the same time, the EU Commission required power generation and power distribution activities to be economically separated – so-called unbundling. These official regulations had a noticeably negative impact on capital spending by energy suppliers.
Conversely, legal incentive measures to promote local and district heating networks drove demand up slightly in 2009. Nevertheless, the Energy Line Expansion Act and economic stimulus packages involving investments in transport infrastructure and modernisation of IT systems did not have the expected positive impact on incoming orders. Offshore wind farm projects were postponed, although follow-up orders are expected in 2010.
Industrial and Power Plant Engineering (IPPE)
While benefiting from sustained stable demand for conventional new power plants in 2009, the IPPE business field came under increasing competitive and price pressure during the year. Licensing and environmental problems also fuelled greater investment uncertainty.
At present, gas-fired combined cycle power stations, combined heat and power stations, waste incineration plants, biomass projects and nuclear technology offer attractive niche markets, while demand for industrial pipeline construction, industrial plant engineering and power supply technology remains low.
Energy Supply Technology (EST)
A general reluctance to invest led to a decline in the energy supply (energy distribution) business in 2009. One of the main reasons for this development was the Federal Grid Agency's regulations governing charges for electricity and gas grids, which dampened investments in the electricity distribution grid and increased pressure on prices. One important development was EST's entry into electrical installations for new power plants.
District and local heating projects offer the main market opportunities for EST, since demand for high-voltage overhead lines, cable systems and transformer stations has been severely inhibited due to licensing, financing and unbundling problems. Following a slow first half of the year, demand for cabling systems and railway technology showed a slight increase in the second half. During 2009, Energy Supply Technology activities were combined, and the company structure was streamlined by merging various limited liability companies.
Highlight: solar thermal plant in Jülich
One of the highlights of AAT's year in 2009 was the commissioning of the experimental solar thermal power station in Jülich in western Germany. Kraftanlagen München, a subsidiary of the AAT Group, acted as general contractor responsible for planning and building the facility. In future, the new technology installed in Jülich will be marketed worldwide by building 10–50 MW facilities in sun-rich countries.
Electricity distribution grid in need of upgrading
AAT's business performance is largely dependent on economic recovery in the wake of the financial and economic crisis and on capital spending by energy utilities in Germany. Following massive cutbacks in 2009, investments in the electricity distribution grid are expected to pick up again over the year ahead. With the improved and expanded European energy infrastructure, experts expect to see increased demand for high-voltage overhead lines, cable systems and transformer stations. Investment in new generation capacities in Europe is likely to remain stable.
Strategic development
The priority for 2010 is on further long-term strategic development of AAT's two business fields, including research and development activities. With this in mind, collaboration with partners is to be stepped up, for example by setting up working groups and cooperating with research centres and universities.
Energy Supply Technology aims to strengthen its focus on implementing a qualitative growth strategy and becoming an engineering-oriented full-service provider with the capability to act as general contractor or operator. In particular, this will require further development of transmission system activities, which is to be achieved by building a European platform for high-voltage line installation, creating the organisational framework for organic growth in the construction of high-voltage transformer stations and, where appropriate, by acquiring market players. Plans are also in place to step up high-voltage activities in neighbouring Central European countries.
The main objective for Industrial and Power Plant Engineering in 2010 is to stabilise its results and profit at the current high level, with emphasis on acquiring additional projects in order to further expand its share of key account customers in the home markets. Selective growth through cooperative ventures in new markets is also planned, as well as further expansion of activities in new target countries, for example in Central Europe.