| ZURICH, Sept 19
ZURICH, Sept 19 Government-owned Axpo,
Switzerland's biggest utility, forecast another full-year net
loss after taking 1.4 billion Swiss francs ($1.43 billion) of
writedowns on its pumped storage dams and other facilities.
Axpo booked a 540 million franc impairment on its new 1,520
megawatt Linth-Limmern pumped storage plant, launched this
month. Built in the Swiss Alps, the plant acts as a power
storage system by pumping up water at night and releasing it by
Its profitability strongly depends on the difference in
prices for base load electricity and prices during peak
consumption times, but abundant daytime solar power has reduced
that spread to below the level to operate the plant profitably.
"Even though this power plant is immensely important for the
security of supply in Switzerland, it cannot be operated
profitably in the coming years," Axpo said in a statement.
Axpo also wrote down the the value of its production plants
and made provisions for energy supply contracts as European
wholesale power prices sank to 13-year lows in the first quarter
and have since recovered only to levels of a decade ago.
Consequently, Swiss utilities - whose power costs more to
produce than they can sell it for on the European market - have
written off billions of dollars worth of facilities, with no
relief in sight.
"The year-on-year contraction of around 30 percent in
European wholesale prices for electricity is a clear sign that
the price slump will last longer than expected a year ago," Axpo
Axpo, whose loss last year hit nearly 1 billion francs,
began construction on the 2.1 billion franc Linth-Limmern
project five years ago.
It had hoped to sell power from it across Europe at times of
high demand and high prices. Instead, a flood of new renewable
energy sources in particular in Germany, coupled with laggard
demand, have conspired to drive the price of electricity to
levels where Linth-Limmern will be a money-loser for years to
Fellow Swiss utility Alpiq huge Nant de Drance pumped
storage dam faces similar challenges.
To raise cash, Axpo has joined other Swiss utilities
including Alpiq in seeking to unload assets and
diversify their businesses away from electricity sales.
($1 = 0.9810 Swiss francs)
(Reporting by John Miller; Editing by Geert De Clercq)