Alpiq’s focus on flexible assets pays off

Dear readers,

For the third year in a row, Alpiq can report a very good result for 2024. The market environment was characterised by a further decline in prices, accompanied by significantly lower (price) volatility compared to the previous year. Against this backdrop, our good result underlines our strong operational performance and shows that our strategic focus on flexible assets in Switzerland and the European markets is paying off, even in a less volatile market environment. In addition to this successful strategic focus, this good result is also down to the strong collaboration shown by all areas of the company along the entire value chain.

As the geopolitical instability around the globe continues, uncertainties prevail. The weak economic growth rate throughout Europe dampened demand and resulted in a lower price level. In the summer months in particular, we saw very low electricity prices due to the high availability of hydropower and the rapid expansion of solar capacities, which regularly led to an oversupply. It is becoming more evident that flexible capacities and efficient energy storage solutions will be vital in integrating the intermittent production of wind and solar into the system. Elsewhere, in the gas markets, the mood of uncertainty increased towards the end of the year due to the expiry of supply contracts.

Turning to our own operations, we can say with conviction that we once again contributed significantly to security of supply in Switzerland and large parts of Europe. The reliability, availability and security of our production and our services were again very high. Our production was higher overall than in the previous year, driven above all by much higher inflows for our hydro assets in Switzerland and the increased dispatch of our flexible thermal assets in Italy. At every level of our company – from our employees to our managers and Board of directors – we are fully committed to fulfilling our purpose by contributing to security of supply and a better climate.

Our journey of sustainable business transformation

For the first time this year, our Sustainability Report was prepared in accordance with the European Sustainability Reporting Standards (ESRS). By including it directly in our Annual Report, we want to underline the fact that sustainability is an integral part of our business and that sustainable business transformation is a matter of course for us. By providing the comprehensive data in the Sustainability Report, we want to give a transparent picture of what we have already achieved, where we stand today, and what journey still lies ahead of us.

Our actions are reflected in our company’s purpose: ‘together for a better climate and an improved security of supply’, which clearly indicates our journey towards ensuring sustainable business activity. A secure, stable and affordable electricity supply forms the backbone of a prospering economy. By ensuring the optimum use of our flexible and powerful assets, we wish to play an important role in strengthening security of supply for the economy and for society, while also caring for the climate.

Our power plants are exposed to the effects of climate change, especially those in the Swiss Alps, which are fed by glaciers. Switzerland’s eternal ice is melting, mountains are starting to crumble, weather patterns are changing, and precipitation levels are varying. Our dams not only provide security of supply, but help to protect against potentially devastating floods. We store water for irrigation during dry periods and secure the population’s future drinking water. We also care for the multi-use of our water resources, which increasingly need careful management to meet the best interests of the economy, society and nature. At Alpiq, our people strongly engage in evaluating the best models and solutions. We have confirmed our net zero ambition for Scope 1 and Scope 2 emissions by 2040 and we will define additional intermediary targets on the path to achieving these ambitions. Going forward, we will report on the Scope 1, 2, and 3 emissions generated by all our activities.

By adding winter production and flexible assets to the energy system, Alpiq enables the integration of additional intermittent wind and solar production into the system. The impressive and welcome growth of solar since 2019 has caused imbalances in the grid, and we are working on solutions to counteract this. In Hungary, for example, we are currently working on a solution to combine small gas-engines with a 5 MW battery to provide the flexibility needed. Our investments to master these imbalances could conceivably also include existing gas-fired assets, if these contribute to reducing our emissions or enhancing flexibility. For instance, Alpiq can envisage supporting investments that temporarily increase its own CO₂ emissions if these investments could be expected to reduce CO₂ emissions for the overall energy system by allowing the integration of more renewable production.

Our responsibility towards the environment goes beyond emissions. Another important aspect to be considered is biodiversity. Alpiq will identify and assess material impacts, risks, dependencies and opportunities for its operations, taking into account the major pressures on biodiversity. We will adhere to the ‘Do no significant harm’ principle in line with EU taxonomy requirements. We will improve our understanding of the biodiversity impacts of our existing operations and consider biodiversity through Environmental Impact Assessments (EIA) at the onset of each new asset development, such as the upcoming hydropower and Alpine PV projects in Switzerland. Ultimately, Alpiq aims to go beyond compliance with environmental regulations wherever possible, by committing to contribute to a long-term net positive impact on nature.

Strengthening security of supply in Switzerland…

On 9 June 2024, Swiss voters clearly approved the new Electricity Act, thereby enabling the implementation of the planned expansion projects to increase storage capacities and electricity production during the winter months. At Alpiq, we are focusing on the storage projects set out by the Hydropower Round Table as well as various alpine PV systems. In 2024, we paid particular attention to Gornerli, our project to construct a multi-purpose storage reservoir near Zermatt. The Gornerli dam could have significantly reduced the extent of the flooding in Zermatt and further downstream in the Rhone Valley during the severe storms in June 2024. In autumn, a support group backed prominently by Federal Councillor Albert Rösti was set up to facilitate the swift advancement of the project.

If the various Alpiq projects can be implemented, the investment volume in Switzerland will be over a billion francs. All these investments will help to strengthen security of supply and provide Switzerland with greater capacity for the critical winter months.

… and in our European markets

We are also continuously investing in strengthening the security of supply at our international plants. Our flexible assets in Italy, Spain and Hungary ensure that the rapidly increasing production from intermittent solar and wind power plants can be better integrated into the electricity grid. Ensuring grid stability is a crucial factor in this respect. In an international context, gas-fired power plants also play an important role. In 2024, we implemented a comprehensive upgrade to our Vercelli power plant in Italy that will allow it to be used more efficiently and flexibly. The effect is already noticeable. The power plant was dispatched more than twice as often in 2024 as in the previous year. At the same time, CO₂ intensity – the amount of CO₂ emitted per kWh produced – has fallen by over 10 per cent. The number of starts requested by grid operators is continuously growing – not just for the Vercelli plant – which demonstrates the need for this kind of flexible generation. We are also working hard to make our gas-fired power plants more efficient and flexible. And as shown above, we are pushing hybrid solutions that combine gas turbines with heat and battery storage.

Taking the next steps in developing new storage technologies

For Alpiq, flexible assets and energy storage capacities are crucial to transforming the energy system. They ensure grid stability, store energy and quickly compensate imbalances. We are also expanding into new technologies in this area, for example, by taking on Battery Energy Storage Systems (BESS) projects in Finland and France in 2024. The 30 MW project in Finland is scheduled to go into operation this year, while the 100 MW project in France will follow in 2026. In Switzerland, we are already managing 40 MW flexible BESS assets as a means of ensuring additional grid stability.

In spring 2024, Alpiq acquired a majority stake in Finnish hydrogen pioneer P2X Solutions, a Power-to-X developer with a focus on the production and distribution of green hydrogen and synthetic fuels in order to facilitate specific industrial processes becoming carbon-neutral. The first facility started commercial operation in February 2025. It has an installed electrolysis capacity of 20 MW, making it one of the largest of its kind in Europe.

Organisational development

Alpiq’s operational performance is good. We are in a very strong financial position and the implementation of our strategy is in full swing. At the same time, we are working hard to become more efficient and to achieve more as a team.

In 2024, we also conducted a complete brand refresh, including a new corporate website, to better communicate our purpose, our values and our promise of ‘a different kind of energy’. Moreover, we continued our visionary leadership programme, rooted in the ‘Caring, Daring and Sharing’ philosophy of Secure Base Leadership. As part of this effort, we have launched an internal coaching network to further embed our coaching-focused leadership approach across the company. This initiative strengthens our emphasis on ‘Daring’ by fostering constructive solutions that empower our people to realise their potential, perform and drive the company’s growth. By the end of 2024, and at the first attempt, all Alpiq locations had been certified as a ‘Great Place To Work’. We are also proud to have been selected by the IMD as an example of visionary leadership in sustainable business transformations.

New long-term financing structure

During 2024, Alpiq set up a new committed credit structure to replace its existing facilities and lines. Together with 15 Swiss and 17 international banks, we concluded two new unsecured, committed Revolving Credit Facilities with a total volume of CHF 3.6 billion. Thanks to our strong financial position and high liquidity, we were able to repay bonds totalling CHF 910 million including CHF 650 million for the complete pay back of the hybrid bond. Despite this outlay, we continue to enjoy a high equity ratio of 58 per cent and we are net cash by CHF –428.4 million. This puts us in a strong position to take the next steps in implementing our strategy and actively drive the transformation of the energy landscape.

Thanks to our strong financial position, we expect to maintain our good position and we are confident of achieving another good result in 2025. Nevertheless, we remain conscious of the fact that geopolitical developments are unpredictable and cause uncertainty on the energy markets. We therefore recognise the need to keep investing in our leadership development and our committed employees in order to set a clear direction and show the path forward. As our certification as a ‘Great Place To Work’ shows, we are ‘one Alpiq’ and we remain convinced that it is our people and our culture that make the difference.

The Board of Directors of Alpiq will propose to the Annual General Meeting on 15 May 2025 that a dividend of CHF 4.90 per share, totalling CHF 162 million, be distributed for the financial year 2024.

Finally, we want to express our appreciation and thanks to our customers, our partners and our employees at all our locations. You truly make Alpiq a great place to work! We look forward to enjoying another inspirational and successful year with you in 2025.

26 February 2025

Johannes Teyssen

Chairman of the Board of Directors

Antje Kanngiesser

CEO Alpiq Group