Ladies and gentlemen, welcome here on site, and dear participants in the live stream. On behalf of BKW, I wish you a hearty welcome to the presentation of the half-year report 2024. I am Marisa Fetzer. I'm Deputy Head of the BKW Media Office. I'd like to introduce Robert Itschner, our CEO, and Martin Zwyssig, our CFO. On the slide here, you can see Alba Sanchez. She is a solar engineer at Solstis, a BKW Group company. We accompanied her from the warehouse in Lausanne to the rooftop of an industrial building. The new solar system on the rooftop is expected to produce around 311,960 kWh per year, and this is our contribution to the generation of green energy. I would like to briefly outline the program for today's conference.
First, our CEO, Robert Itschner, will give you a brief overview of the half year results, 2024, and the most important developments of the individual businesses, and with regard to sustainability, then our CFO, Martin Zwyssig, will present the 2024 half year financial year results in detail, and finally, Robert Itschner will give you an outlook for the current 2024 financial year. The presentations by Robert Itschner and Martin Zwyssig will be followed by a Q&A. We will be handing around a microphone for participants who wish to take the floor and ask questions, and if you are in the live stream, you're welcome to enter your questions online as of now. We will answer them in the Q&A, and now let's begin with the presentations on the half year results, 2024 of BKW, and I'd like to hand over to Robert Itschner.
Welcome, ladies and gentlemen, to our media conference for the first half-year 2024. We are very happy to present a very good half-year result. Here are the figures. CHF 2.3 billion revenue, a little bit lower than last year. Our CFO will give you more details. EBIT, CHF 438 million. That's an increase year-on-year. We're very proud of this result. And then the net operating profit, CHF 303 million, which is about the same as in the previous period of last year. We're proud of this result, and we think we can continue on our success trajectory and walk the talk. I'll show you some highlights in the following slides before our CEO.
We're staying with our three pillars that give us stability, and we are well positioned for the future, and we will profit from events in the market. First, the vote on the Electricity Act of the 9th of June. That's a highlight. We hope that we will have a bit more tailwind for our projects in Switzerland. We're pushing them. They are the Grimselsee project, then the solar plants, wind projects, et cetera. This is our hope based on this clear, positive result, and we will have to prove that we are serious about expanding renewables. For the Grimselsee, we applied for the concession expansion. In the next 12 months, the Canton of Bern will come up with a decision. So much on the vote on the Electricity Act. That was an important signal for us and for society at large.
Highlights in energy. I mentioned the Grimselsee project and the concession application in May of this year. We are confident that we can go ahead. We had a large majority last year already. There will always be objections. We will see that. We have an agreement with many stakeholders already and some NGOs, but there can be other organizations that come up with an objection. Turbach hydropower, that's a smaller project that we started building this summer. 7.36 kWh is the production in the Canton of Bern. We started this project then. Mont-Soleil. It's at the Mont-Soleil, where we have the installed bases already, the solar project.
We got a yes from the municipality of Saint-Imier for the Alpine project, which is a very good project with all the infrastructure, roads, et cetera, and we'll be very happy to implement that. It will produce something like 24.5 GWh of electricity. And last but not least, an important milestone for us, that's the agreement with the Sámi in Norway. We had discussions and controversies for many years, also with respect to human rights and the Fosen Wind Farm. With the help of the Norwegian government and our local partners in Norway. We went into a long and intensive mediation process, and we have come to an agreement with the Sámi, and we will continue to operate the wind farm. And this is very important with regard to our ambitions in ESG, that we could find this positive solution.
Then grids very stable. We have a growth in the number of applications in photovoltaics. Here you can see the number of connections. 2,600 new PV systems were connected to the grid. A clear growth is expected there, with all the requirements that come up with that. Time is of the essence. We have 550 MW installed photovoltaics. This will grow dramatically and quickly. Smart meters, that's another important topic that will be with us. We want to have most of the smart meters installed by 2028. 400,000 such smart meters will be installed over the next few years. Then the grid reinforcements, that is and will remain a challenge with regard to the expansion of PV. We are well positioned. We have the necessary resources, also with regard to customer interfaces.
Now, services. We made some great progress. Solstis was mentioned, the solar engineer who you saw at the beginning, she works for Solstis. This is a brand that we're expanding all over the country. We will want to double our installed capacity to over 75 MW in the next two years. The market is very positive. Growth is somewhat slower, but there's still a great need. Then Wunsiedel battery storage facility. This is a project that we're realizing for others. BKW Infra Services collaborates with Fluence Energy and MW Storage from Switzerland. This is the 100 MW capacity project in Wunsiedel. The transformers arrived in May and were assembled, so by spring 2025, we will be ready to go into operation.
This is an interesting project for us, and it will give us the necessary experience for our own battery storage facilities that we planned. Albula Tunnel 2, that was a very nice project, the electrification of the new tunnel between Preda and Spinas, a total length of 5,860 meters. Various of our group companies were involved, and this project was concluded successfully, and the tunnel was inaugurated festively. Then two projects from engineering, EDGE ElbSide and Roots. EDGE ElbSide is a large construction site in Hamburg HafenCity. An enormous surface, and there, a timber skyscraper with interesting technology. Assmann Beraten + Planen supported us. They were a good partner. And then Roots, also in Hamburg. As I said, the tallest timber skyscraper, 65 meters high.
On 19th floors, there are a total of 160 apartments in this timber wooden skyscraper. You can see it on the picture. It's really made of wood. Technologically, a lot has been realized that this type of building is possible, and BKW has the necessary competencies and will use them also in the future. It's a super interesting project. You can see the difference between concrete and wood. It's not... everything is prefabricated with regard to concrete, not wood. And now ESG, Environment, Social and Governance. We made some headway here. We are about to electrify our vehicle fleet. 180 out of 3,000 vehicles have been electrified so far, and by 2030, we want to have the whole fleet electrified. There are some practical questions.
Will the vehicles be charged at home, et cetera? We'll have to find solutions, but they will be found. These are the discussions we have internally now. With regard to social, we launched the onboarding of our suppliers. We will have to report in great detail across the whole supply chain, and we will request EcoVadis certificates from our suppliers in the future.
Governance.
Then governance. You saw it on the slide. In our remuneration system, we have an ESG component, and you can see this in our remuneration report. It's in the STI, and we will fine-tune this system, and gain experience on what our priorities are in this respect. So this is an important goal. An important element that is somewhat technical is the double materiality analysis that we have to produce. We did this with about 60 parties that we interviewed, and made our conclusions, identified 17 goals from a long catalog, and we'll go ahead step by step. It's an important milestone. And with this, I'd like to hand over to Martin Zwyssig.
Thank you, Robert. Good morning, ladies and gentlemen [Foreign language] . I would like to welcome you as well to today's analyst and media conference, and I'm very pleased to be able to guide you through the details of our very good first half, 2024. Now, to start with, an overview of the key figures. BKW generated a revenue of CHF 2.33 billion in the first half of the year. This corresponds to a percentage change of -2.8%. Then EBIT increased to CHF 438.3 million, a plus of 3.2%. BKW thus once again exceeds the record half-year result of the previous year. The main driver is once again the energy business, which was again able to generate an extraordinary result.
In addition to the good result of the grid business, the services business is also responsible for this result, which was able to follow up on the previous year as well. Then net profit. This is CHF 362.5 million. This includes income from STENFO, that's the decommissioning and disposal fund of the Mühleberg nuclear power plant. The STENFO performed even better than in the first half than in the previous year. In the reporting year, it was a plus of CHF 75 million versus the previous year of a plus of CHF 45 million, and that means that net profit stands at CHF 362.5 million. Then, as a key figure, the net operating profit, that's adjusted for STENFO, meaning that it reflects the operating performance of the group.
This operating net profit is at the previous year's level of CHF 302.6 million, and is, as I said, at previous year's level. Then, operating cash flow comes to CHF 170.9 million, which means that BKW has had a temporarily lower cash conversion in the first half of the year. This is due to the investments in the net working capital, in the energy, and in the services business, and I will provide more details in my comments on the cash flow statement. Then ROCE, return on capital employed, is 7.8%, significantly above BKW's cost of capital. In the previous year, 2023, ROCE was above average because the profit from the exceptionally good second half of 2022 was included in the calculation of this key figure.
As you know, the return is always calculated for 12 months. Then equity ratio is at 47.9%. This increased, and this is thanks to profit retentions. Now, this slide shows you the three business areas that are responsible for our development, both in terms of revenue and EBIT. First of all, revenue. Energy business revenue declined by CHF 186 million. The decline in group revenue is therefore attributable to the energy business. The reason for this decline is the lower electricity price level on the energy markets, and this led to the lower revenue. Then the grid business. Revenue increased by CHF 65 million. The passing through of the tariff increases of Swissgrid and BKW, as well as the increase in the regulated WACC, increased this operating revenue.
Then, in services here, the business was able to increase its revenue by CHF 64 million . CHF 44 million is organic growth, CHF 20 million acquisition-related growth. Then, on to EBIT, energy business. Now, the decline in revenue due to the lower energy prices has had hardly any impact on the result. The, once again, very successful energy management and trading result, which nevertheless, as expected, did not quite match the previous year, is offset by increased production volumes from hydropower plants and electricity prices that were hedged at a higher level. Then, Grid. The tariff increase is the main factor contributing to the EBIT increase of CHF 14 million . Services, the result was stabilized, and the half-year result was slightly above the previous year. Then, on this slide, and on the next two slides, I shall go into more detail of the individual businesses.
First of all, this is the energy slide. First, on revenue. The total revenue of the energy business fell by 15%, or CHF 186 million , I already mentioned that, to CHF 1.05 billion . The decline was driven by the lower electricity prices on the energy market. The EBIT of the energy business in the first half of 2024 amounts to CHF 340 million , and is at the same level as in the exceptionally successful previous year. The normalization of the markets has led to a decline in the trading result, but is still at a high level, and we also had higher production volumes from hydropower plants. And as I said, the prices were hedged at higher levels, and this has had a positive impact of CHF 16 million on EBIT.
Just one brief glance at the production mix on the right-hand side. In the first half of the year, BKW produced 4.7 TW of energy, 8% more than in the previous year. The wetter weather led to an increase in production from hydropower plants of around 0.5 TWh , and then the three wind farms in Sweden were commissioned at better wind conditions, and this means that the wind production was increased by 0.1 TWh . The higher availability at the nuclear power plant of Gösgen increased nuclear power production by 0.1 TWh , and thermal power plants were used less due to price factors. Then, the Grid business. The Grid business recorded an increase in revenue of CHF 65 million, or 24%, to CHF 340 million.
The passing through of the Swissgrid tariff increase, that is a plus of CHF 37 million, and the pricing in of higher costs and depreciation totaling CHF 17 million, had a positive impact. In contrast, tariff increases of CHF 12 million to a cost-covering level have an impact on EBIT, and are only slightly reduced by lower energy transmissions due to the relatively warm winter. Then EBIT. The EBIT of the Grid business increased by 18%, from CHF 76 million -CHF 90 million. This is due to the aforementioned tariff increases to a cost-covering level, and an increase of the WACC of 3.83% for the tariff year 2023, to 4.13% for 2024. Furthermore, the equity result of our participation in Swissgrid, we hold a 37% stake, increased by CHF 2 million. Then finally, on to the Services business.
Revenue increased by 7% to CHF 948 million. Organic growth amounted to 5%, with an additional CHF 20 million from acquisitions. The Infra Services division made the largest contribution to organic growth revenue. It holds 25% of the services revenue. Organic growth was driven by the numerous significant orders in the German high-voltage market that we received, then on to EBIT, as announced, EBIT is back at the previous year's level and has thus stabilized. The previous year still included a positive special effect from the reversal of purchase price liabilities in the building solutions division. While the services business will face less depreciations in 2024 due to the value adjustments in the 2023 financial statements, and this means the two effects cancel each other out.
Important for you to note is the following: The services business had to bear an additional CHF 7 million in internal costs in the first half of 2024 due to the adjustment of the billing concept. These additional costs were offset through operational performance improvements. This means that operational performance improved by CHF 7 million in the first half of the year. And in addition, there is a further CHF 2 million in non-organic growth or revenue, which brings us to the reported CHF 24 million. To put this a bit into perspective, it is obvious that with these margins and an EBIT of CHF 24 million, we are still a long way from where we want to be. However, the measures to improve the structures and processes are having an effect and will continue to be implemented unabated.... Now, let's move on to the cash flow statement.
The group's cash and cash equivalents amounted to CHF 587 million, a decrease of CHF 185 million. That's the blue bars that we compare here. The operating cash flow before the use of nuclear provisions of CHF 220 million is substantially lower than in the same previous period of the previous year. This is mainly due to the increase in net working capital. In the first half of 2024, BKW invested CHF 179 million in net current assets. Therefrom, CHF 50 million are due to higher gas inventories and unbilled work. This means work that is still in progress, particularly at Infra Services, due to numerous major orders in the German high voltage market, led to a further increase of CHF 130 million.
Payments for the decommissioning and disposal fund of Mühleberg are at the previous year's level of CHF 49 million and are deducted from the nuclear provisions. I will go into more detail on the next slide when it comes to actual investments. At CHF 184 million, the investing cash flow before refunds from STENFO is at the same level as the previous year. This results in a positive free cash flow of CHF 22 million for the first half, 2024. This free cash flow, however, was not yet sufficient to finance the dividends paid out to the tune of CHF 188 million, but this has to be sufficient or level out at year-end only.
So therefore, we had to resort, in the short term, to our existing liquidity, which is the reason for the lower level of cash and cash equivalents of CHF 587 million, as I mentioned in the beginning of this slide. Now, let's have a look at the investments. In the first half of the year, investments in fixed assets and intangible assets amounted to CHF 197 million. Of this, 58% were invested in growth and CHF 84 million, or 42%, in maintenance. If we look at the energy business, CHF 68 million were invested in growth here, which means, CHF 49 million were for the wind farms in Southern Sweden and Cerignola, in Italy. In addition, investments were made in the expansion of heating networks and small hydropower plants.
In the grid business, gross investments to the tune of CHF 29 million were made in strategic expansion of the power grid. In the services business, two smaller acquisitions were made in the engineering sector. On the maintenance side, we can see that CHF 84 million , the majority of this CHF 84 million , CHF 44 million went into the grid business, with investments in wind farms in southern Sweden and Italy, in Swiss hydropower, and in the strategic expansion of the power grid. BKW invested primarily along the value chain of the energy transition. Now, here we have an overview that shows the development of the net debt on the left, and on the maturity profile on the right side of this slide. The development of the liquidity on the left of the slide, the bar above the zero, have already been explained.
In addition, short-term financial investments were also taken into account here. Financial liabilities remain stable at around CHF 1.9 billion. As a result of the decrease in cash and cash equivalents, and the stable financial liabilities, net debt temporarily increased by CHF 177 million- CHF 1.129 billion. Then, the maturity profile on the right side of the slide, you can see that it's well-balanced. BKW has an excellent diversification over time, meaning low refinancing risk, a high degree of flexibility, and corresponding scope for future growth financing. And important to note here, is the following: In May of this year, we replaced the two credit lines totaling CHF 2 billion, with a new credit line of CHF 1 billion.
The credit line has an increase option, which is called accordion option, for a further CHF 0.5 billion with the existing syndicate. This credit line has not been drawn and serves as a liquidity reserve. BKW's A rating allows us to adapt our financial corset to our needs at any time. Let's take a look at our balance sheet. The balance sheet has been basically stable since the easing of the energy markets, with slight shifts between current assets and non-current assets. Liabilities have decreased by CHF 0.2 billion, mainly due to a lower level of accounts payable and a lower valuation of derivatives. The nuclear provisions in the amount of CHF 48.7 million were again utilized. Equity increased by CHF 0.3 billion.
The main reasons for the strengthening of equity are, first and foremost, of course, the net profit of CHF 363 million, and there are also actuarial gains and positive currency effects, which also strengthened equity by a total of CHF 104 million. The dividends of CHF 188 million, paid out in the first half of the year, are charged to equity. The equity ratio continues to rise as a result, to a solid 48%, which supports further growth and enables us to actively shape the energy transition. Last but not least, a comment on the return on capital employed, ROCE. The return is at 7.8%, which is significantly higher than BKW's cost of capital, and has been stable with the exception of the record year, as you can see in 2023. This concludes my remarks, and I would like to hand over to Robert Itschner for the outlook.
Thank you, Martin. Let me give you a summary. We are confident that this year, too, by the end of the year, we will have a successful year, a very successful year. There's positive outlook in energy production, but also in trading. Trading is very important for us, so the results show that we can be confident. The solid contributions from the grids are obvious, and with regard to services, there, we will continue the good performance, of last year and will become more profitable. We want to live up to that expectation. We will adjust the guidance to now seven hundred to eight hundred million EBIT for the year as a whole. So this is the new expectation, the new guidance.
Let me give you a brief outlook, and we announced that at the last media conference on the 8th of November, we will have a Capital Markets Day. You're cordially invited. We will report on our strategy, present our strategy over the next years. We revised our strategy in the course of the summer. It's not a revolution. It's an evolution. We will continue our success trajectory. The thrust will be somewhat different, and I hope you will join us at the Capital Markets Day. We'll invite all the details. The venue is The Circle at Zurich Airport, where we have many customers and suppliers. I'd like to hand back to Marisa.
Thank you, Robert and Martin, for your presentations. Let's move on to our Q&A. We have a question in the live stream. Thank you very much.
You, dear participants in the room here on site, please wait for the microphone. Raise your hand, and please state your name and your affiliation, so that we can answer your question. Are there first questions here? Wait for the microphone, please.
Gianni Crippa, Zürcher Kantonalbank. I have a question. Two questions, actually. One on the energy business. EBIT was very good. You had an impairment of CHF 24 million, too. Could you mention what this means? It probably has something to do with a new construction in hydro. And then the operating cash flow, you said the decline had something to do with the increase in the net current assets and the work in Infra Services. Is this a shift in allocating costs, or is there a reason to worry, reason for concern?
Let me answer that. On the operating cash flow, increase of the net working capital, no, there's no reason for concern whatsoever. With Infra Services, the construction of systems, they generated more revenue in the first half year. We have many contracts, very good order backlog. It just had something to do with the accounting and allocating of costs, so no reason to worry, and the cycle with regard to gas storage system, it's normal.
It was just higher this year. In the winter, we outsource, and vice versa, so that's normal. We used opportunities in the market and built up our inventory, and this led to the situation in the net working capital, and the impairment, CHF 24 million, that's correct. We made an impairment on a small hydropower plant that we're about to build. We saw that the costs are not sufficient. We exceeded costs due to the geological situation. We made all the necessary tests beforehand, but once you start drilling, there are sometimes surprises, and this is the adjustment. These are the effects behind the situation. Does that answer your question?
Yes, thank you.
Are there any more questions here in the room? Diener. Mr. Diener? Or Mrs. Diener, rather.
Yvonne Debrunner is my name, Finanz und Wirtschaft. Did you feel the slump in the German construction industry? And your former CEO said recently that in Switzerland, new nuclear power plants will be built. Is that a topic for BKW?
Yes, we felt the slump in the construction industry in Germany. Yes, is the answer, but still, we managed to achieve good results. We are well-positioned.... we're well positioned for large-scale projects, demanding projects, and this is a trump in the market. We made a rebranding in engineering.
It's BKW Engineering now and not, not all the sub-brands, so we have more visibility. We are the biggest planner in the area of Germany, Austria, and Switzerland. Despite the slump, despite the price struggle, we were able to operate very well in this market, and I'm confident that this will continue. And then nuclear power, I saw this, too. There are different opinions in Switzerland. BKW always communicated that we are technologically open. We do not think it's a good idea to ban a technology, and we have to be open and able to react in the future. Right now, at the present moment, we do not have any plans of pushing nuclear power, but we are looking closely at the situation, also with regard to nuclear power, to then understand where we want to go.
Thank you.
Thank you. We have a question in the live stream, Steuerberatung, tax consultant Peter Gürtli. Vehicle to Grid. The question is, when will BKW offer for its customers who have a PV system and have a vehicle that has V2G technology, the possibility, when will BKW offer the possibility to feed in their electricity into the public system?
We will take this question on board and give you an answer at a later stage.
Thank you, Mr. Gürtli. And then another question here in the room.
Andreas von Arx, Baader Bank. I have four questions. On the trading business, I assume that the trading business will make up more than 10% of the overall EBIT. Wouldn't it be friendly to shareholders to show the figures separately? Because the shareholders will want to understand what the drivers are in the business.
And, furthermore, the trading profits are structurally higher than we saw a few years ago. Maybe you could mention the most important points, why the trading profits are higher structurally now, and whether this is sustainable over the next years, once the electricity prices will have reached a normalized level. A third question on the trading business again. I would be interested in hearing from you how high the invested capital is in the trading business, and what the risks involved are in the accounting. And then the service business, I would be interested in hearing whether you have done all the cleaning up work that was necessary, or whether you saw elements in the past six months that will lead to amortization and write-offs, or the other way around profits. Thank you.
Will you answer the first one and the third one? Whether it is friendly for shareholders. We report on segments in energy. I know that trading makes up a lot of this energy business. The other major part is production. What will land with trading or production, that's our internal mechanism that decides that. Not all the utilities do it in the same way. It's not really totally comparable. We do know that this is a need, but for now, we're staying with this segment reporting, because it's one area for us. Production will hand over to trade, who then works on the project maybe for three years. We also have prop trading. This is included also. We will stay with this segment reporting that we currently have.
How high is the capital?
There are major fluctuations, and it's reduced now, less than a hundred million.
Then trading, why this is structurally higher than, in 2021, 2022?
The absolute price levels are, of course, one of the major factors. And volatility in the market is, of course, a major reason. This is much higher than it was the case before the crisis. It was significantly higher, and it will probably remain on a certain level, also with a view to the expansion of renewables. That makes quite a turmoil in the system. So in trading, in the foreseeable future, we will certainly generate good results as well. There are various activities in the market, various positions. We try to optimize the hedged electricity prices on the go in three years in advance, that means, and we optimize this portfolio during these three years. Then we have some prop trading, as the statistic has just elaborated on, and sometimes we can even benefit from volatility in the short term.
What's important to note is that volatility also means that flexibility of energy production is extremely significant and valuable. That's why we try to do this during these volatile times. In the foreseeable future, we will certainly be able to generate more income here. I hope that this answers your question. On the Capital Markets Day, you will also have the opportunity to ask our head of trading, Stefan Scheffko, and it will be certainly very helpful to ask him questions because he will be able to go more into detail of the mechanics of these questions. We have gone through the worst when it comes to your last question. It's not. I cannot promise that nothing will happen.
There will be some hiccups, but certainly not to the extent as we've seen them in the past. So we will be able to cover this with normal years, and we will not have any visible adjustments. That's our goal anyway, and I'm quite optimistic that this is a new phase of stability that we have reached now. Of course, it also requires a lot of work and effort, but certainly on a different level and than in the past. This is also the reason why we want to connect to 2022 , which was very good for services, but this year is mainly under the keyword of stability, and from here, we want to see a permanent, continuing improvement.
I have a follow-up question. The 8% EBIT margin that was mentioned, when will we achieve them?
I cannot precisely answer this question, but the goal is certainly still there. We will, with the progress that we're making right now in our planning, we want to move in this direction. In the coming years, of course, we want to achieve this, but whether it's 2026, 2027, 2028, precisely, I cannot really tell you right now, because the market really plays an important role here. The direction is, of course, we are on track in terms of direction.
Rolf Keller, Connor Capital. Maybe a follow-up question. In 2022, you had a margin of 3% in the services business, and from 3% up to 8%, I would say it's a rather big step. Could you roughly elaborate how you want to improve this margin? Because it's more than double of the margin.
Maybe you can say something about the net working capital in the services business, because that's quite substantial as well. Maybe you could quantify here a little bit how you plan and how you what do you expect? Is this sustainably a higher level, or what do we have to expect in the coming years? Net working capital?
Net working capital, I'll take over here. As I've said before, I do not expect that the whole CHF 130 million will come back, but a large part of it will come back. The net working capital, if we do not have any major disruptions where we have to put in any collaterals, if we have a stable situation, then net working capital is definitely too high.
In normal times, I would expect 5% of our revenue as net working capital in our industry, so that will come back. Services, not entirely. That is definitely inflated. Then on the path from the 3%-8%, there are various measures that are necessary to reach this. There are projects that we need to improve. We sometimes have very long projects that are ongoing. We have to work them off, whether they're profitable or not, so that will, over time, be concluded one by one. Then cost structures in our portfolio, that will have to improved as well. We will work on this as well. The organizational structures need to be improved as well, so that we will reach the optimal structure. I can give you an example in engineering, for example.
A lot of white-collar work is being done there, and there, it doesn't really matter whether it's an engineer sitting in Munich working on a project in Hamburg. So the distance is not the important issue, but it's the interfaces that need to show a high quality. But in other businesses with, for example, electrical engineering, if you work decentrally, it's a completely different thing if you're 130 km away from a construction. So these structures need to be improved. These need to be optimized so that the structures, the existing structures, will really allow us to be very precise.
I have two more questions. You said the smart meters will be introduced. What do you do with them? What is the benefit for BKW in order to strengthen profitability, for example?
To improve profitability? We will see what the impact will be on profitability. However, what we expect is that the availability of data will be improved. We have a better customer service. We can automate various processes that are now done manually. To read all these meters takes a lot of time, because you'll go to the places, you write the data down, and then you have to put it into a system, and that is very time-consuming, energy-consuming, of course. So this will now be automated with the smart meters and will also help to reduce costs. But also the loads in the grids can be optimized, and therefore, the entire grid expansion will become much more intelligent, and that is something where I really hope for great potential in the future.
But I cannot tell you precisely and in detail what it means in terms of profitability. BKW already has smart meters in operation. Several thousands of them are already introduced, so we do know that the technology is there, and it is very beneficial. But however, we can still do a lot in this respect. But you will also have to have more flexible pricing models, I assume.
Yes, but we have to know that the law stipulates that we are able to read in an interval of 15 minutes, and not more, due to data protection issues. So we have price models that we can offer. However, very quick differences or changes in the grid cannot be read.
And the last question: How does BKW expect the volatility or the changes of electricity prices? Do you have any scenarios here?
This is, of course, secret, what we expect. However, our expectations are always a little bit interfered with the current times and actual changes. What we expect is a stable price situation, much more stable than in 2022, 2023. However, at a higher level than in the years before. But I do not want to go into more detail and give you any precise figures here in terms of electricity prices.
Thank you very much. I have one more question from the live stream. Carlos [Zenhäusern] from Tamedia has asked the following question: What's the impact, if the Biodiversity Initiative were adopted, on building projects of BKW?
I cannot tell you conclusively. We will only see that if the Biodiversity Initiative is adopted, and then will influence many building projects, of course.
We are now of the opinion, or we assume, that we can build in certain areas, but that, of course, also will have an impact on the entire industry. We do not think that this is the right path to achieve the promotion of biodiversity. We also have to say that we invest a great deal in biodiversity already now. We have many projects that show this. For example, at the Bielersee, we have a project where the entire riverbank has been newly designed, and we have really a lot of investments there for to promote biodiversity.
And we also have balancing measures that we want to introduce, be that for dry meadows or any other investments. Of course, this also makes or leads to higher costs. However, we certainly have to say that we do a lot in terms of biodiversity, and I think we are well on track here.
Another question, maybe, from the room. Anything else? Any burning questions? Yeah. Yes, please.
Klaus Bonanomi from Radio Swiss SRF. The tariffs that you have mentioned for the feed-in of solar power, that has been discussed lately at BKW. It's the volatility of these feed-in tariffs that I think. Is this a difficult thing to calculate? Why do you uphold this model or this program, and how does it has an impact?
Well, the model, as I said before, works quite well. It's been working for many years. The average spot price is paid out retroactively. BKW does not make any profits because we sell this power at spot prices as well.
We compensate the consumers feeding it in at the same price as we sell. I think, also in the long term, it is a good model, and it's a good incentive to feed in power that you do not use yourself for self-consumption. We will especially see that during summer months, where a lot of power is not used for self-consumption. Now, if we look at the sell-back tariffs of the last years of BKW, if we look at five years ago, if you had a PV installation, CHF 0.15 was paid back, and I think that was above average, even in Switzerland. However, if you installed PV panels only last year, then, of course, the margins or the prices have come down massively.
So this is, of course, an issue, and therefore, retroactively, on the first June, we increased it by CHF 0.03 for the guarantees of origin. For our and this is also financed from our EBIT. So whether the model can be explained, I mean, the questions that you've asked, we can only explain it to some extent. It's something that we are working on. With the new Electricity Act, we can see the following: the producers and the grid operators, if they do not agree, there are minimum remunerations that come into play. So the model, in terms of political terms, is also discussed in political realms. What we've also seen is that many, maybe sometimes also optimistic assumptions, were taken, because PV installations are amortized within 25-30 years.
If you installed that 15 years ago, it was certainly better than doing it last year. So depending on the installation, it depends a little bit of what you can expect. But it is true that we need a proactive approach with regard to these questions.
So for house owners, you would also recommend to install a battery storage facility, for example?
Yes. I mean, battery storage is, of course, a good solution to transfer electricity or consumption of electricity to whenever you use it or need it, but these batteries are still rather expensive. So for those households using a lot of their own energy, this might be a very good idea, because the sellback tariff, if that is, compared to the tariff that what we sell you electricity, I mean, this difference is something or these costs can be saved, of course, and this can add up.
Thank you very much. Are there any further questions here in this room or in the live stream? This is not the case. So on this note, let us conclude this conference. On behalf of BKW, I would like to thank you for your interest and participation in this media conference on the half-year results of the first half year, 2024.
We would like to invite you to snacks and drinks here in this room, and we would like to wish you a very nice end of summer, and of course, hope to see you again at the Capital Markets Day on the 8th of November of this year at The Circle in Zurich. Thank you very much, and goodbye.