Germany’s RWE and Swiss power company Energie Ouest Suisse (EOS) have reached an agreement to exchange hydroelectric and coal-fired power. The partners signed a contract that will come into effect on 1 January 2009 and has a lifetim of 10 years. Through this exchange both companies expect to further optimise their economic positions with respect to base and peak load generation. RWE Trading and EOS have agreed that they have the potential to exchange coal-fired base load power generated by RWE Power for hydroelectric peak load generation by EOS. The exchange will be next day trading, will take place on a virtual basis and will be based on long-term parameters.

RWE will supply electricity from hard coal fired power plants in the range of around 1 TWh per year. The deal gives it a short-term, flexible response to peak loads which the company would otherwise have to buy on the market, while EOS will have access to next-day coal-generated base loads.

Peter Kreuzberg, chief commercial officer and managing director of RWE Trading commented: “It is an exemplary agreement of great value to both sides, and it means that the various power generation structures of neighbouring countries will grow together.” Dr. Johannes Lambertz, member of the board of RWE Power responsible for fossil fuel-fired power plants added: “The logistic advantages of the coal-fired base load power production at RWE locations and the high degree of flexibility offered by hydroelectric power generation in the Alpine countries complement each other really well.”

The costs for the coal-fired power procured by EOS will be calculated at the corresponding coal and CO2 allowance costs as determined by contemporary market prices.