Summary Report – EKZ (Elektrizitätswerke Des Kantons

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Summary report – EKZ (Elektrizitätswerke des Kantons Zürich) 7 2018 Reporting 2017/18 EKZ reporting 2017/18 (1 October 2017 to 30 September 2018) comprises several publications: the printed summary report, the detailed business report and the corporate responsibility report as PDFs (in German only). All reports are available in digital format on the internet at: ekz.ch/gb.

110. Geschäftsbericht – Kurzbericht – Der Corporate Responsibility-Bericht Elektrizitätswerke des Kantons Zürich Elektrizitätswerke des Kantons Zürich der Elektrizitätswerke des Kantons Zürich Anwendung der GRI-G4-Richtlinien

1908 2017 1907 8 2017 8 2018 8

Business report Summary report Corporate responsibility report 1 EKZ in figures

EKZ in figures

2017/18 2016/17 Change

Finances (CHF thousands)

Operating income (overall performance) 760.5 740.7 2.7% Earnings before income and tax (EBIT) 71.1 81.6 –12.9% Net profit 41.4 58.6 –29.4% Cash flows from operating activities 116.6 129.9 –10.2%

Distribution network

Electricity supplied from distribution network GWh 5 459 5 492 –0.6% Total supply network km 15 141 14 974 1.2% Electricity meters Number 379 941 374 079 1.6%

Customers

Directly supplied end customers Number 311 669 308 565 1.0% Energy procurement including procurement optimisation GWh 4 404 4 382 0.5%

Production

Production hydropower GWh 42.5 35.5 19.6% Production wind power GWh 422.2 358.1 17.9% Production solar power from photovoltaics GWh 11.2 8.5 31.1% Production solar power from solar thermal energy GWh 2.4 2.5 –2.7% Production biomass electricity GWh 18.8 19.1 –1.9% Production biomass heating GWh 51.8 53.0 –2.2%

Contracting

Supply energy for heating GWh 171 168 1.8% Supply energy for cooling GWh 2.9 1.5 93.4% Plants in operation Number 1 017 926 9.8%

EKZ summary report 2017/18 2 Foreword by the Chairman of the Board of Directors

New challenges, new opportunities

“EKZ is a leading co-designer of the energy future and permanently strengthens Zurich as a residential and business area.” Ueli Betschart

In the 2017/18 financial year, EKZ remained strictly on course Innovative developments such as own consumption associ- with its chosen strategy and can report good results. This is ations (EVG), “prosumer” equipment, Smart Home, Smart all the more remarkable given the challenges of the political Grid and virtual power stations are also playing an increas and regulatory environment. ingly important role. Virtual power stations combine decen- tralised power generation plants such as emergency power The Cantonal Council’s approval of the new EKZ Act was generators into a network that can be controlled in a similar of particular significance for our company, establishing the way to a conventional power station. By doing so, EKZ gains essential legal basis for the remit to generate profits. We will access to balancing energy, and small plant operators can pursue this mission under the premise that EKZ can claim generate additional income by participating. Turning risks into the necessary commercial freedom to do so. Freedom is be- opportunities creates completely new win-win constellations. coming all the more important as we head towards an open and EU-compliant electricity market. Under future competi- I would like to thank our customers for their loyalty and our tive conditions, contract-based customers will nevertheless staff for their hard work. They all contribute to ensuring that be able to change their electricity supplier. EKZ remains a leading co-designer of the energy future and permanently strengthens the attractiveness of Zurich as a The new Enersuisse AG, for example, shows how EKZ is pre- residential and business area. paring for the wide-ranging challenges. EKZ set up Romande Energie together with EBM (Genossenschaft Elektra Birseck). Enersuisse will provide various services on a shared IT plat- Ueli Betschart, Chairman of the Board of Directors form, particularly consumption measurement and invoicing. This creates centralised synergies that will enable all partners to reap benefits in a liberalised environment in particular. With around 900,000 customers, Enersuisse is the largest service company in the Swiss energy sector.

EKZ summary report 2017/18 3 The CEO on the 2017/18 financial year

Successful and renewable

“Our customers benefited once more from the fact that EKZ is one of the cheapest electricity suppliers in Switzerland.” Urs Rengel

EKZ ended the 2017/18 financial year with an operating profit tion having to be halted. The work on the power stations is of CHF 71.1 million. This was marginally above expectations expected to be completed in October 2019. and 13 per cent below the previous year which was dom inated by special effects. Regulatory changes in the network The Repower Group, which is 30 per cent owned by EKZ, also and energy area resulted in lower margins in the core business. focuses on hydropower. Repower achieved a turnaround in Our other business divisions and our equity investments 2017, generating sales of CHF 1.8 billion. And not least, EKZ performed well overall. owns 18.4 per cent of Axpo Holding AG, which is the largest Swiss producer of hydroelectricity. Our customers benefited once more from the fact that EKZ is one of the cheapest electricity suppliers in Switzerland. This In the year under review, EKZ invested around CHF 60 million is because EKZ purchases electricity on the market and only in the maintenance and modernisation of the network infra- produces a very small portion of the electricity it sells. structure, thereby contributing to the above-average supply availability (99.998 per cent in 2017/18). As in previous years, a stand-out feature of EKZ electricity for customers with basic supply was that it came solely from The electrical installations division (EKZ Eltop) posted good renewable energy in 2017/18. Among other sources, we used performance in the past financial year. After its conversion into wind, water and the sun. For instance, EKZ currently operates a limited company as of 1 October 2018, EKZ Eltop now has 69 of its own solar installations with a nominal power of around a modern business framework. 11 MWp. Wind energy is generated, for example, by 14 wind farms in which EKZ has a direct investment. EKZ also has On behalf of the Executive Board, I would like to thank all our holdings in another 14 operational wind farms through three employees for their tremendous and successful hard work associated companies. All in all, 422.2 GWh of electricity were for EKZ. produced by wind power in the year under review.

The backbone of Switzerland’s power supply is and remains Urs Rengel, CEO hydropower. Our belief in hydropower is evidenced by the CHF 37 million we are investing in upgrading the Dietikon power station. Furthermore, EKZ is building a new discharge power station below the Dietikon weir which will channel more water to the Limmat section below the weir without produc-

EKZ summary report 2017/18 4 Customer relationships

Customer focus pays off In 2017/18, EKZ’s traditional customer focus again proved to be a source of expert technical and advisory services as well as numerous innovations. A clear trend towards customer-specific and comprehensive solutions is beginning to emerge here.

Private and commercial customers tomer care, the procurement services that relieve the cus- EKZ offers customers a modern and affordable portfolio of tomers’ workload and EKZ’s attractive prices. electricity products. In the 2017/18 financial year, the approxi EKZ energy contracting continues to grow and now sup- mately 310,500 households and commercial businesses ports 1,017 facilities. EKZ sees particular growth potential in were mostly supplied with EKZ’s standard “Mixstrom” prod- the property sector where the emphasis is on the integrated uct which comes solely from renewable energy. The demand energy system. This combines electricity generation and for complete solutions for solar power generation from storage, heat generation and refrigeration and electric mobil- people’s own roofs and “home batteries” increased signifi- ity in an integrated system, and can achieve the targets of cantly. In the 2017/18 financial year, no fewer than 145 photo the Energy Strategy 2050 both ecologically and financially. voltaic systems were installed. Under the Ordinance on Energy Strategy that came into In view of the deregulation of the market environment, force in November 2017, EKZ developed several products for EKZ together with EBM (Genossenschaft Elektra Birseck) own consumption associations (EVG) and combined own and Romande Energie founded the service company Ener- consumption groups (ZEV) in the year under review. The EVG suisse AG in the year under review. Enersuisse operates offering enables investors, owners, tenants and management on a shared IT platform in consumption measurement and bodies to be active co-designers of the energy future. invoicing in particular, and is the largest service company in the Swiss energy sector. EKZ Eltop EKZ Eltop remains on a growth trajectory and increased Business customers operating profit by 30 per cent. The tough competitive pressures in the business customer Since its conversion into a limited company on 1 October market (annual consumption of more than 100,000 kWh) in- 2018, EKZ Eltop has been operating as a legally independent creased under the influence of rising prices. Nevertheless, company and has the commercial freedom to continue devel- all major utility companies stayed loyal to EKZ in the year oping successfully under increasingly tougher competitive under review. This continuity is attributed to attentive cus- conditions.

solar installations that feed electricity into 40 the EKZ grid were in operation at the end 00 of December 2017.

EKZ summary report 2017/18 5 Production

Renewables on the rise Wind power and hydropower were at the forefront of the expansion of renewable energy production capacities. In the year under review, EKZ produced 422.2 GWh of electricity with directly or indirectly owned wind farms.

For its own power generation, EKZ resorts to renewable en- In the 2016/17 financial year, EKZ acquired 6 per cent of ergies from wind, water, the sun and biomass. Wind power Repartner Produktions AG and in the year under review is becoming increasingly important, and in the year under obtained around 16.6 GWh from the company’s Swiss hydro- review, EKZ expanded its wind farm capacities. power plants. Together with the income from the Pfungen, Over the last few years, EKZ has built up substantial Waldhalde and Dietikon power stations, this brings the out- know-how through acquisitions and in the operational man- put of hydroelectricity to 42.5 GWh, a 20 per cent year-on- agement of wind farm facilities, which is hugely beneficial year increase. in an increasingly challenging competitive environment. EKZ EKZ received planning permission from the canton to carries out in-depth checks of investment assets and com- upgrade the Dietikon power station in October 2017. Initial prehensively analyses all risks. It only invests in economically work began in December 2017. A key aspect of the permit is sound facilities. ecological improvement. The protected nature area will be Overall, the 14 operating wind farms owned directly by given a secondary tributary and better shielded to protect EKZ and the 14 operating wind farms in the three associated rare birds. The main power station also features Switzerland’s companies generated 422.2 GWh of electricity (EKZ’s share) largest horizontal rake to protect fish as well as a new fish in the year under review. ladder and bypass. Work on the discharge power station is due to be completed in summer 2019. The main power station is scheduled to recommence operation in autumn 2019. The company’s successful commitment to building up Production volume wind energy by country photovoltaics (PV) continued in 2017/18. EKZ has been ad- in GWh 2017/18 2016/17 Change vancing this technology for more than ten years and today operates 69 of its own PV facilities throughout Switzerland, Germany 192.1 145.8 31.7% with a nominal power of around 11 MWp. In the year under France 132.3 116.4 13.6% review, EKZ acquired three photovoltaic facilities in French- Italy 17.5 18.0 –2.7% speaking Switzerland with a production capacity of 2 MWp. Portugal 80.3 77.9 3.1% In 2017/18, EKZ’s PV installations generated 11.2 GWh of solar

Total 422.2 358.1 17.9% power, a year on year rise of 31.1 per cent.

For hydropower, EKZ uses its own three run-of-the-river power stations at Pfungen, Waldhalde and Dietikon. In the year under review, they produced 25.9 GWh of electricity, which was 12 per cent less year on year.

EKZ summary report 2017/18 6 Networks

Investing in the future In 2017/18, EKZ invested around CHF 60 million in maintaining and modernising the networks. The weekly investment of more than CHF 1 million ensures that the supply availability and EKZ’s grid efficiency will remain above average in the future.

EKZ has a supply availability of 99.998 per cent and network EKZ took over the distribution network of Elektrizitätsgenos- efficiency of 98.4 per cent. These figures are the result of senschaft Lufingen (EGL) at the end of 2017, gaining 720 cus- a corporate strategy based on security and reliability and tomers in the process. EGL’s network was already largely strengthen EKZ’s attractiveness as an energy supplier, service technically integrated into that of EKZ before the takeover. provider, advisor and cooperation partner. In November 2018, the people of Einsiedeln voted in EKZ is heavily involved in the construction of the Limmat- favour of the new concession agreement between EKZ tal light rail line. The project is highly demanding both in its Einsiedeln AG and the district of Einsiedeln. This was signed planning and execution and requires a great deal of coord in the year under review. With this yes vote, EKZ Einsiedeln AG ination. Furthermore, the Limmattal will be getting a new will ensure the energy supply for the district of Einsiedeln for substation in Oberengstringen which will ease the load on another 25 years from 1 January 2019. the existing substation at Schlieren and create the necessary The EKZ specialists, who provide many and comprehen- capacities for the strong growth of the Limmattal area. It is sive network services, were kept very busy again in 2017/18. due to be commissioned in spring 2020. The completely With its technical expertise and experience working with revamped substation at Kloten began operating in December highly complex projects, EKZ is the preferred partner for 2017 and now houses all electrical equipment in a single build- numerous industrial companies and utilities throughout ing. In Freienbach SZ, EKZ and EW Höfe AG jointly replaced Switzerland. EKZ is able to carry out most projects without the substation which was more than 40 years old; the new voltage interruptions – this prevents unwelcome production one is due to be commissioned in late summer 2019. outages, which is much appreciated by corporate customers in particular.

minutes is the average time per year that EKZ customers have to go without

their energy supply. This is far below the Swiss average 12 of 20 minutes.

EKZ summary report 2017/18 7 Environment

Judged by actions Increasing awareness, advising and promoting – private households, business customers and municipalities benefit from the long experience of EKZ energy advisory services. The aim is to support customers individually and over several years. Sustainability is therefore a constant thread. In the year under review, measures to boost energy efficiency helped save 6.1 GWh of electricity.

“The Energy Strategy 2050 calls for a reduction in final energy The newly introduced efficiency gap analysis for the evalua- and electricity consumption, the increased use of renewable tion of properties was very popular. The analysis shows the energies and a reduction in energy-related CO² emissions. reasons for high energy consumption in buildings and sug- These moves are to take place without endangering Switzer- gests consumption-reducing measures. land’s currently high level of supply security and its affordable EKZ also demonstrated awareness in the animal world. energy supply.” This was the background as described in the It had taken part in a study by the Swiss Federal Institute for Federal Council’s dispatch of 4 September 2013 on the first Forest, Snow and Landscape Research (WSL) which was com- action package in the Energy Strategy 2050. With a wide pleted in summer 2018. WSL biologists concluded in the study range of initiatives and successfully implemented projects, that dimmed lighting and shorter street lighting times sub- EKZ also followed these superordinate guidelines in the stantially reduced the negative impact on nocturnal animals. 2017/18 financial year. Demand-oriented management by EKZ is therefore sustain- The EKZ electricity detectives have been making a real able on two counts. contribution since 2012, completing their 3,000th assignment in the year under review. They look for electricity guzzlers in the home, give tips such as how to cook, wash or refrigerate more energy-efficiently without sacrificing comfort, and help bring about consumption savings of 10 to 20 per cent in most cases. The “own consumption check” also proved very popular in the financial year, showing around 1,000 owners of photovoltaic installations in the supply area how to increase the pro- home visits in portion of their own consumption and their self-sufficiency levels. In terms of business customers, EKZ provided advice six years: the to 112 companies on how to reduce their energy costs on electricity detect a sustainable basis. On request, EKZ actively monitors meas- ive has been ures to improve energy efficiency. out and about in the canton of 30 Zurich since 2012 and gives tips on how to prevent unnecessary electricity con- 00 sumption.

EKZ summary report 2017/18 8 Innovations

At the forefront With rising ecological challenges and accelerating technological change, the expectations placed on energy suppliers and infrastructure service providers such as EKZ are increasing. The company is meeting these challenges through dedicated innovation management.

The energy future is multifaceted. The increase in renewable The PV test installation and measurement container that energies is gathering pace, the electricity network is becom- operated until spring 2017 on the Walensee were moved to ing more intelligent, mobility is electric and digitalisation is Totalp above Davos in September 2017. There, the test instal- opening up new opportunities for the energy sector. EKZ lation produced as much electricity in the winter six months technology management is shaping the electricity supply of as the annual production of an average PV installation in the future and designing the intelligent electricity network central Switzerland. This is because of the more intensive that will continue to supply the canton of Zurich with electri irradiation due to the altitude and more hours of sun thanks city securely, economically and on an environmentally friendly to less mist and fog and to the reflection from the snow. basis. The test installation was developed by EKZ in conjunction Key points for EKZ technology management are energy with the Zurich University of Applied Sciences in Wädenswil storage and photovoltaics. Other focal areas are electric and the WSL Institute for Snow and Avalanche Research (SLF) mobility and big data, where EKZ is involved in various re- Davos. search partnerships. EKZ continued rolling out the introduction of smart In the year under review, EKZ commissioned Switzer- meters, taking the number installed to 142,000 at the end land’s largest battery, in Volketswil. The nationally and inter- of September 2018. Thanks to their digital communication nationally acclaimed battery storage project with 18 MW of capacity, on-site meter reading is now redundant. output and 7.5 MWh of storage capacity supplies Swissgrid, the national grid company, with balancing energy and helps stabilise the continental European grid. At the beginning of January 2018, the pilot project for Urdorf’s traffic-monitoring light was awarded the Watt d’Or entries were 2018 in the “Energy technologies” category by the Swiss Federal Office of Energy. EKZ has since expanded the sys- submitted tem in Urdorf by adding a second section featuring dynamic for the Swiss light management. Overall, the light is now controlled over energy prize a stretch of two kilometres based on traffic volume. Watt d’Or 2018. EKZ’s pilot project for the traffic- monitoring light won the Watt d’Or 71 in the “Energy technologies” category.

EKZ summary report 2017/18 9 Social responsibility

With care and vision As an employer of 1,438 staff and a service provider for almost one million customers, EKZ makes a crucial contribution to the strength of the Zurich economic region. At the same time, EKZ is involved in numerous initiatives on social and ecological matters.

EKZ as an employer EKZ offers attractive jobs with a future that feature a strong In the year under review, EKZ employed a total of 1,438 staff. corporate culture, contemporary employment conditions 138 of them are apprentices who are undergoing vocational and a fair salary policy. This was also recognised by employ- training in nine different areas. Young talents are profession- ees, as in 2018, EKZ was in a very creditable 6th place in the ally trained, supported and individually developed at EKZ. employer ranking Swiss Employers Award in the category 38 young people successfully completed their studies in of companies with more than 1,000 employees. summer 2018 in five different vocations, ten of the candidates with above-average marks. 55 new apprentices also started Commitment to society and environment their basic training at EKZ in summer 2018. EKZ takes social responsibility seriously. Accordingly, it In the year under review, EKZ again lived up to its repu- ensures that municipalities and the local population regularly tation as an employer that actively promotes the personal share in operating success. In 2017/18, EKZ paid the muni training and development of staff. The new internal series cipalities voluntary catch-up allowances of CHF 11.6 million of presentations, “Digitalisation@EKZ”, was one focal point. and credited customers with a bonus of CHF 27.1 million. These presentations look at the functionalities, applications This means that EKZ has been one of the cheapest energy and effects of new technologies. They also showed how the suppliers in Switzerland for many years. EKZ world of work is likely to change and what opportunities As part of its social commitment, EKZ supports people and risks are associated with change processes. with disabilities, promotes cyclo-cross and supports student focus projects at ETH Zurich. The high priority that EKZ gives to sustainability is also employees help underscored by the corporate responsibility report (CR report) to shape EKZ which has been published since 2008 and is based on the guidelines of the Global Reporting Initiative (GRI Sustainabil- with their input ity Reporting Standards). The 2017/18 CR report can be down- and ideas. This loaded via the following link: ekz.ch/cr. includes 138 apprentices who are undergoing 14 vocational training at EKZ. They account for almost 10 per cent of the entire 38 workforce.

EKZ summary report 2017/18 EKZ (Elektrizitätswerke des Kantons Zürich) Dreikönigstrasse 18, 8002 Zurich Telephone +41(0) 58 359 51 11 www.ekz.ch, [email protected]