Stadtwerke München

Context

Stadtwerke München (SWM) is the largest municipal utility company in Germany with revenues of over EUR$4.8bn. It aims to supply all electricity to its residential customers from renewable energy sources by 2015. A key step in achieving this was the acquisition of a 30% stake in Gwynt y Môr, one of Europe's largest offshore wind farms with a capacity of up to 576 MW.

Getting such an investment right was vital. SWM chose PwC to develop a financial model to analyse the project economics in the transaction and post-transaction phases. It enabled the company to calculate the project's return on investment and other financial indicators in order to structure the transaction and decide on a purchase price.

Deliverables

  • Analysis of the project structure and compilation of key economic assumptions.
  • Construction of a complex financial model able to calculate and analyse the following:
    • investment costs, including timing of construction phase
    • operating revenues, including wind yield and price assumptions
    • operating expenses
    • financing costs, including several financing tranches
    • taxation of the project company in the United Kingdom, including various tax credits.
  • Analysis of multiple scenarios and sensitivities to present effects of changes in investment costs, revenues and expenses.
  • Calculation of the effects of various possible tax structures, taking into consideration British and German tax regimes and their interactions.

Comment

“The purchase price has lifetime consequences. Once it is agreed, it sets the metrics for the project. There was the central objective of analysing the variables that impinge on the return on investment and purchase price. But PwC also brought together specialists from the UK and Germany to optimise the complex tax structure of the project, taking into account the British background of the project and cross-border European tax implications” (PwC).