Local and environmentally-friendly electricity supply thanks to long-term contracts by Alpiq

Swiss people are increasingly concerned by the issue of climate change. Electricity distributors are trying to respond to this by guaranteeing their customers a long-term supply of locally generated, environmentally-friendly energy. Thanks to its extensive portfolio of Swiss carbon-free electricity production, Alpiq supports this approach by designing tailor-made products that respond to the needs of consumers who are increasingly conscious of where their electricity comes from.

For example, a distributor in the canton of Valais recently concluded a long-term agreement with Alpiq for a total of 196.7 GWh of certified Swiss electricity from the Salanfe hydropower plant in the canton of Valais. The delivery period runs from 2021 to 2029. This new supply contract enables Alpiq’s partner to cover the annual electricity consumption of about 5,000 households with local and renewable energy. With electricity prices rising on European markets, long-term supply contracts also allow energy suppliers to hedge part of their portfolio. They can thereby reduce the risks associated with price volatility on the electricity markets.

In Switzerland, Alpiq is one of the leading providers of long-term contracts for electricity supply and guarantees of origin for electricity from Swiss hydropower. In January, the Group had already concluded long-term contracts for a total of 3.4 TWh with several energy suppliers in Switzerland and Germany. Alpiq intends to continue developing this type of partnership with business customers based in Switzerland and neighbouring countries.

Three questions for

Capucine Chagneau

Senior originator

Why commit to long-term contracts today?

For a modern portfolio management, today’s market operators need diversified types of supply in order to reduce their risks. This requires a range of innovative products that are well-balanced in terms of structure and duration. Long-term contracts are an excellent complement to more volatile short-term products: they often form a small part of the overall portfolio, to benefit from all the advantages, in particular the guarantee of the current price level, without the necessity of making a commitment to a fixed volume that is too large.

Aren’t there too many uncertainties around the market price or the regulatory context in Switzerland?

Of course, no one can be sure of what direction market prices are going to take! But for two years, we’ve been seeing a clear upward trend and several indicators both in Switzerland and Europe show that this trend is likely to continue.
It’s clear, too, that regulatory changes must be taken into account, particularly the opening up of the market planned for 2023. But the advantage of our long-term offer is that it can be adapted, in terms of both duration and quantity. Furthermore, most of our counterparties think that many customers will stay with their supplier, as is the case elsewhere in Europe. So there’s little risk in hedging a limited part of the portfolio in the long term.

Why choose Alpiq as service provider for long-term contracts?

With our Swiss carbon-free production portfolio, we can offer our customers personalised products developed specifically for their needs. Our offer is very flexible, particularly with regard to guarantees of origin, where we can provide variable volumes throughout the entire duration of the contract.
Today, our long-term transactions portfolio is broad enough to give us reliable indications of long-term price levels; this allows us to be particularly competitive on the market.