Credit line

Renewable energy producer Axpo receives a 4.16 billion euro line of credit from the Swiss government to prepare for the European energy crisis

The Swiss company Axpo, the country’s largest renewable energy producer, announced on Tuesday (September 6th) that it had received a credit line of up to 4 billion Swiss francs (4.16 billion euros) from the Swiss government.

Axpo’s board and senior management applied for a credit line on September 2. The company now indicates that the Federal Council and the Financial Delegation of the Swiss government have approved the proposal. The company also clarifies that the line of credit is subordinated to existing financing and that there are no collateral obligations.

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Turmoil in the energy market

The company mentions in a press release that European energy markets have experienced unprecedented volatility since the fourth quarter of 2021, and had deteriorated sharply in recent weeks. Compared to September 2021, wholesale power costs have increased tenfold as recent price volatility continues to set new records.

The situation is so bad that many European countries have passed laws or are doing other things to help energy companies get money.

Axpo’s new credit line ensures that the company can continue to meet its customers’ long-term electricity supply contract guarantee needs and support Switzerland’s energy security even if the situation deteriorates.

Christoph Brand, CEO of Axpo, said: “Paradoxically, while in the short term we are facing the challenges of a historic energy crisis, the long-term outlook for Axpo remains positive. We have therefore made the responsible and proactive decision to request this additional funding. By taking this step, we want to ensure that the company can continue to make its vital contribution to Switzerland’s security of energy supply, even if the highly uncertain market situation intensifies further as the half-year approaches. ‘winter.

Axpo has access to liquidity worth more than CHF 2 billion.

Hedging strategy for power companies

Axpo and other European energy companies hedge their production years in advance. This is a globally recognized process where energy companies sell the electricity produced in advance.

Axpo says its hedging practices are conservative and benefit both the company and its customers. Swiss transmission system operators with multiple end customers, large industrial operations or SMEs can secure a guaranteed energy supply at a predictable price through long-term PPAs.

The company therefore minimizes future price risks. Axpo customers who have entered into such agreements will continue to benefit from relatively low and stable prices and will not have to purchase electricity at the high prices that energy prices are currently facing.

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