Industries – Energy New


The energy industry is undergoing a change. The traditional business model of most energy suppliers has been severely affected by the tightened market conditions, changes in the regulatory framework and the technological progress. The transformation of the sector is observable in various financial aspects and in particular in the increased transaction activities.


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Regulation Radar

The revised Energy Act and the associated amended ordinance came into force on 1 January 2018. As a first step of implementing the Energy Strategy 2050 the intention is to reduce energy consumption, increase energy efficiency and exploit the potential of (new) renewable energies. The newly introduced or amended funding instruments will be financed by the increased grid surcharge.

Lack of investment opportunities

The investment focus of Swiss energy suppliers is mainly in the areas of renewable energy, grids as well as innovative products and services. Concentrated demand in these investments areas, combined with the presence of financial investors, tend to lead to high transaction prices. Due to lack of investment opportunities in Switzerland, investment budgets often cannot be used.

Electricity market design, quo vadis?

The state subsidies for renewable energy such as wind and photovoltaics and the withdrawal of coal-fired and nuclear power plants mean that power generation is increasingly fluctuating and weather-dependent. Accordingly, question arises regarding security of supply and due to the low electricity prices established pricing mechanisms are questioned as well. A study on behalf of the Swiss Federal Office of Energy (SFOE) concludes that the current market model ensures the supply in Switzerland in the medium and long term.

Innovation as an important driver of the energy sector

The range of innovative and digital products on the electricity market is constantly increasing. Since 2018, for example, IWB has offered its customers the possibility of virtually storing their surplus electricity from their photovoltaic systems. With “ewz-neo”, ewz initiated an interdisciplinary ideas laboratory for developing innovative products and services with customers and internal and external experts. Repower developed an innovative digital tool for utilities that increases efficiency in asset management and reduces administration.

Decarbonisation of the economy with impact on electricity demand

The targeted decarbonisation of the economy is intensifying the demand for renewable energy. However, the demand for renewable energy cannot be satisfied with Swiss production only. The path abroad is in fact a must for many Swiss energy suppliers. Due to the limited number of interesting projects in nearby countries, alternative countries should also be considered for possible investments.

Virtual power plants gain ground

Because of the subsidy of renewable energy to achieve the targets set in the Energy Strategy 2050 and the associated expansion of uncontrollable generation types, the Swiss electricity grid will be more heavily affected by volatile electricity production in the future. By pooling many small, decentralized power generation units to virtual power plants with intelligent control systems, grid stability can be supported and additional revenues can be generated to increase return on investment.


BKW remains an active M&A player in 2017

BKW further expanded its service business in 2017 with more than 10 acquisitions. The acquired firms are both Swiss companies and companies from nearby Europe.

Sale of Switzerland’s largest photovoltaic system

The photovoltaic system developed and built by Soleol SA at Lake Neuchâtel with an installed capacity of 8.3 megawatts was successfully sold. The buyers are aventron, UBS Clean Energy Infrastructure Switzerland and Swiss Solar City.

ewz relies on wind energy from France

ewz acquires shares of the project companies for the two wind farms Autremencourt and Vihiersois in France with a total capacity of 36 megawatts. This will increase ewz’s annual production from wind energy by 22%.


EB/EBITDA multiples of European energy suppliers


  • The valuation level of European energy suppliers in 2017 is stable compared to the previous year and is at the peak of the period under review.
  • The valuation differences between the individual energy suppliers observed since 2015 remained unchanged in 2017.

EB/EBITDA multiples of renewable energy suppliers in Europe


  • The average EV/EBITDA multiple of European suppliers of renewable energy has been declining since 2014.
  • The valuation level of suppliers of renewable energy is with 8.4x still higher than the one of conventional energy suppliers (see graph above).

EB/EBITDA Multiples and Market to Book Ratio of Swiss energy suppliers

Market to Book

  • At the end of 2017, the four listed Swiss energy suppliers had an average EV/EBITDA multiple of 7.6x and therefore a valuation level similar to that of the European energy utilities.
  • The average market-to-book ratio has been rising steadily since 2014. However, the market values of equity are still below the book values (ratio of 0.81x in 2017).

Source: Bloomberg.