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Reporting on allocation and impact

Dear Investors, Dear Sir / Madam,

Topics such as climate change and a renewable energy supply have been driving our company for years. With our BKW Building Solutions, we are targeting the growing services business where a significant proportion of CO2 emissions are generated, specifically in building stock. In 2019 BKW Engineering also significantly strengthened its focus on energy and resource-efficient building planning, concentrating on the highest standards for ecological construction and sustainable architecture.

In the Energy Division, BKW has been investing exclusively in renewable energies for new power plants since 2013. In addition, our Group has committed itself to the 17 sustainability goals of UN Agenda 2030.

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As CFO, I am of course delighted that in summer 2019 BKW became the first listed company in Switzerland to issue a green bond in the amount of CHF 200 million. We wanted to explicitly target investors who are looking for purely green investment opportunities on the market. Such investments are increasingly in demand, after all. That our bond was greatly oversubscribed proves this fact.

The launch of our first green bond represents a milestone for our company. After the shutdown of our Nuclear Power Plant in Mühleberg the expansion of renewable energies in Switzerland and abroad will play an even bigger role for BKW. Thanks to this bond we will be able to refinance wind turbines in Norway (CHF 115 million) and France (CHF 60 million) and small hydroelectric power plants in the Canton of Bern (CHF 17 million) and the rest of Switzerland (CHF 8 million). With these steps we are helping to decarbonise energy supply in Europe.

We are pleased to provide you with details below about the allocation of the net proceeds and the impact we have achieved through the projects financed by the green bond since it was issued.

Best regards,

Ronald Trächsel
CFO

Solutions for a future worth living for

BKW is committed to Agenda 2030 and associated Sustainable Development Goals (SDG) and strives to make an active contribution towards achieving these goals. The 17 SDGs are closely interlinked. BKW has identified 10 of these SDGs that are especially important to us given our wide range of business activities. This is where we can create added value.

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The current green bond projects focus on SDGs 7 “Ensure access to affordable, reliable, sustainable and modern energy for all” and 13 “Take urgent action to combat climate change and its impacts”. Thanks to hydro and wind technologies, our projects are making a contribution to the desired energy transition in Switzerland and Europe. Furthermore, these projects are supporting the decarbonisation of electricity generation. In this context, we have set the goal that 75 % of our production capacity consists of renewable energy technologies by 2023.

BKW’s first green bond

In the past, BKW has played a pioneering role in renewable energies and has decided to take the lead with green bonds as well: BKW was the first listed Swiss company to launch a green bond for trading on the Swiss exchange, expanding the existing range of green bonds on the Swiss capital market. The key details of BKW’s inaugural green bond are:

Issuer

BKW AG

Status

Senior Unsecured

Issue amount

CHF 200,000,000

Interest rate

0.25 % 

Issue date

1. July 2019

Payment

29 July 2019

Maturity

29 July 2027

ISIN

CH048708729

Proceeds of issue

CHF 200,010,000

The BKW Green Bond Framework, including BKW’s sustainability approach and the (re)financed projects, were audited by ISS oekom. The Framework and the projects have been given a positive assessment. The submitted projects’ contribution to SDGs 7 and 13 were rated as significant.

The 117.3 GWh of electricity produced in 2019 and attributable to the green bond corresponds to the annual consumption of 26,000 households 1 in Switzerland. The associated CO2 emissions avoided by the green bond amounted to 1,904.9 tonnes in 2019.

Reporting on allocation and impact

To ensure the transparency and quality of the green bonds issued, BKW reports annually on the allocation of net proceeds and impact. The following reporting principles have been defined for quality assurance purposes:

Green bond reporting principles

Installed capacity (MW)

In the case of projects in operation, installed capacity in megawatts (MW) indicates the installed capacity attributable to the green bond based on the commissioning documentation. In the case of projects under construction, the capacity shows the planned capacity attributable to the green bond based on the manufacturer’s type certificate or the hydroelectric concession.

Production (GWh)

Production in gigawatt hours (GWh) indicates production based on production data (energy statistics) for 2019 attributable to the green bond. In the first report, production includes the energy generated since the payment date for the green bond on 29 July 2019.

Greenhouse gas emissions in CO2e or CO2 (t) avoided

The green bond projects generate renewable electricity in Norway, France and Switzerland. When calculating the emissions avoided, we assume that the electricity generated by the green bond projects would otherwise have been generated using the country’s typical production mix.

The emission factors for these production mixes form our baseline accordingly. For Switzerland, data from treeze2 indicates CO2 equivalents in grams per kilowatt hour. For Norway and France we use data from the International Energy Agency (IEA)3. As the IEA only considers CO2 and not CO2 equivalents as a greenhouse gas, the final calculation of the saving is conservative. The following values are used for the calculations:

1 Calculation is based on the consumption of a household with a five-room apartment of 4,500 kWh / year based on https://www.strompreis.elcom.admin.ch/BaseDataSelection.aspx

2 treeze Ltd. (Messmer, A., Frischknecht R.) (2016): Umweltbilanz Strommix Schweiz 2014 (German only)

3 IEA data 2014, CO2 emission factors from electricity and heat generation for world countries, http://wds.iea.org/

The direct emissions based on treeze are used for the projects. These are 0 g CO2e / kWh each for the small hydropower and wind onshore technologies.

The CO2 in tonnes (t) avoided is calculated by multiplying the production quantity of a project attributable to the green bond by the CO2 emission factor of the production mix of the country in which the project is located.

Allocation (CHF millions)

The allocation in millions of Swiss francs (CHF millions) corresponds to the amount of the net proceeds from the green bond allocated to the respective technology.

Allocation (%)

The allocation in % corresponds to the share of the net proceeds from the green bond allocated to the respective technology.

Reporting on allocation and impact

Attributable to the Green Bond …

Comissioning

Installed production

Production 2019

CO2 or CO2e avoided 2019

Allocation 1

Technology

Project

Country

Status

Year

MW

GWh

t

CHF millions

%

Small hydro

Ragn d’Err 2

Switzerland

Operation

2016

2.3

3.4

101.9

Schattenhalb

2017

1.4

2.1

63.0

Spiggebach

2017

0.8

0.9

26.9

Sousbach

Planning

2023

0.0

0.0

0.0

Subtotal small hydro

4.5

6.4

191.8

20.0

10.0 % 

Wind

Saint Germier

France

Operation

2017

7.0

10.1

412.8

St. Julien du Terroux

2017

6.1

4.9

199.0

RAZ Energie 3

2017

13.3

9.3

382.2

Roan

Norway

Operation

2018

23.9

32.5

269.8

Marker

2019

40.5

49.9

414.5

Hitra II

2019

7.5

4.2

34.8

Harbaksfjellet

Construction

2020

11.3

0.0

0.0

Geitfjellet

2020

16.3

0.0

0.0

Kvenndalsfjellet

2020

10.1

0.0

0.0

Subtotal wind

136.0

110.9

1,713.1

175.0

87.5 % 

Not allocated

5.0

2.5 % 

Total

140.5

117.3

1,904.9

200.0

100.0 % 

1 The allocation only includes refinancing of projects under construction or in operation.

2 Ragn d’Err: According to the Green Bond Framework, the lookback period of 36 months may be exceeded. The excess must be disclosed transparently. In the case of the Ragn d’Err project, this period was slightly exceeded at 38 months. Due to the project’s long term, the project was refinanced with the green bond, despite the short overrun.

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