BKW AG: The Future of the Power Sector - Interview with Dr. S. Thoma

From "Berner Energieversorge" (power supply of the Canton of Berne) to an internationally operating corporation within a mere seven years. Dr. Suzanne Thoma talks about strategic developments, new technologies and the topic of supply dependability.

Dr. Thoma, you are considered a calm and strategical thinker. The decommissioning of the Nuclear Power Plant Mühleberg, the ongoing fundamental transformation of BKW into an internationally operating corporation, focused on sustainable energy systems as well as smart services and infrastructures... the originally somewhat "ponderous Bernese energy supplier" lies clearly in the past... And you continue to lead the way with new ideas. What will be the next milestone for the BKW Group?

A record result in 2019 confirms that BKW's strategy works. Thanks to its sustainable and robust business model, BKW is securely positioned. This is also reflected in the fact that we have managed to get through the Corona pandemic relatively unharmed. Now, we must make sure, that our strategy is fit for the future, offering comprehensive solutions in the areas of energy, building systems and infrastructures for our customers. I cannot name a specific milestone, such as the Mühleberg shutdown, but it is our expressed ambition to contribute towards a livable future with our solutions.

In 2017 you were quoted saying "the production of electricity is not profitable". However, a separation from this sector is currently not an option and there are various strategic approaches in the industry dealing with this problem. Adding to that are external factors, such as the impending surge to liberalize energy markets as a result of the Federal “Energy Strategy 2050”. What is BKW's long-term approach to solving these issues?

In the past year, despite significant negative price effects in the power sector, we generated an EBIT of CHF 227 million in the energy business but it comprises more than just the production and sale of electricity. Good results were achieved due to excellent cooperation between production, trading and sales. The trading business in particular, performed outstandingly in 2019. We intend to continue along this path and are seizing new business opportunities created by the transformation of the production landscape from large power plants towards smaller, more flexible, decentralized production units. We are no longer focused solely on electricity, but also on other commodities such as gas, coal, oil and CO2. Furthermore, making good use of the latest technologies enables us to anticipate market developments more successfully.

You are incorporating new developments such as urbanization and digitization into BKW's strategy. Can you give us an example, perhaps in the area of electricity trading or distribution grids?

BKW invests approximately CHF 100 million in its distribution network per year. To ensure an intelligent and efficient management of the restructuring of networks, in order to best benefit this new decentralized energy world, our company relies primarily on digitization. A digital approach also plays a key role in the service sector: Our companies are increasingly using 3D "Building Information Modelling" (BIM) technology when planning new buildings and infrastructures. We also invest heavily in technology revolving around building automation.

When you took over as CEO in 2013, you were quick to announce that Mühleberg would be shut down. At the same time, BKW expanded its expertise in the field of radiation protection and had started to monetize this in 2017 with the acquisition of a company called "Dienstleistungen für Nukleartechnik GmbH". So, could the decommissioning of nuclear power plants in Europe become a lucrative business in the decades ahead?

For us, decommissioning our own nuclear power plant is a key priority. By adding the company "Dienstleistungen für Nukleartechnik" to our network, we wanted to secure the necessary personnel for radiation protection. So it is primarily our employees, who will benefit from the project: They will be the first people in Switzerland experienced in both, the operation as well as the decommissioning of a nuclear power plant and these specialists will certainly be in high demand on the market beyond the decommissioning of Mühleberg.

There is of course the question of security of energy supply after a nuclear power plant shutdown - particularly in the winter months of February/March, when storage lakes are empty. At the same time, the demand for electricity is on the rise due to increased electric mobility. Backup powerplants could be a solution but the Federal Government wants to rely entirely on renewable energies. This is a dilemma – is there a way out?

Finding a way out is the responsibility of politicians as policy makers and related discussions are in progress. A shortage of supply could indeed occur, particularly at the end of winter, when nuclear power plants no longer operate and if Switzerland would be unable to import electricity. Such a situation would require the use of reserve capacities that could produce electricity quickly and flexibly. As back-up, gas-fired power plants could make economic sense due to their relatively low investment costs. And since such facilities would only be used in exceptional situations, their CO2 emissions would be minimal.

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