Ladies and gentlemen here in the room, ladies and gentlemen in the live stream, I wish a hearty welcome to the Analyst and Media Conference on the half-year results 2021 of BKW. I'm René Lenzin. I'm in charge of Media and Public Affairs. This is a special day today. When we planned this conference, we did not know what would happen in our industry. In the course of this conference, we will touch on this topic, also on the news of this morning. First, we would like to present our half-year results, which is very gratifying for us. Roger Baillod, our Chair of the Board and interim CEO, will give you a brief strategy update, and then our CFO, Ronald Trächsel, will comment the half-year figures. Then it's over to you here in the room or in the live stream.
A pointer to the people in the live stream, you can enter your questions already now or later. I do not want to take more of your time. I'd like to hand over to you, Roger. Thank you, ladies and gentlemen. From my side, too, a very hearty welcome to our this year's Financial Analyst and Media Conference. Let me get started right away. BKW generated a good result in extraordinary times. I think we can really say this. We have a war in Ukraine. We have a crisis in the energy market. The energy business was very gratifying. CHF 330 million EBIT was generated, and this has something to do with the management of the energy position. Our CFO, Ronald Trächsel, will tell you more about this.
The higher electricity prices helped us generate a better revenue, but also in services, we grew by 20%. The operating net profit that can be influenced by us before the valuation fluctuation of the commissioning and disposal fund grew by 35% to CHF 191 million. Particularly in these turbulent times, our business model has well proven with the three pillars, energy, services, and grids. Energy and services, BKW has a lot of growth potential. At the Capital Markets Day in October 2021, we presented our ambitions, and since then, in the energy and services business, we have taken major steps. In France, we bought wind parks with an installed capacity of more than 100 MW, and also in services, we made forward-looking acquisitions.
The expansion of renewable energies is taking a central position in the growth strategy of BKW. In Switzerland, too, there are promising projects, especially in wind and hydropower. The projects Trift and the raising of the dam, the Grimsel dam, are part of the roundtable that Federal Councilor Sommaruga convened. BKW would be prepared to realize these projects as soon as the economic and legal preconditions are met. There's a lot of movement in these topics. With Jeanbrenin and Tramelan, BKW has two wind projects that are ready to be built, but they're currently blocked because of objections. Photovoltaics plays an essential role in the supply of Switzerland with renewables. BKW operates a number of PV plants, but the lion's share is contributed by private suppliers. BKW offers services around photovoltaics, and with Home Energy, we have a product that enables the optimal use of photovoltaics.
We have partners in our network that help install PV systems on roofs. We made a major step by buying Solstis. We have 4,000 projects realized by Solstis in the French-speaking part of Switzerland. The grid will play a key role, and is sometimes forgotten. Without the further development of the grid, energy transition will not be possible. We will have to make massive investments into the grid. To contain the cost increases and to manage future investments as efficiently as possible, BKW decided to merge all grid companies in one network. With this, we increase our grid stability and we can realize efficiency gains in the further development of the power grids. This reduces the costs for grid expansion and in the last analysis, the customers will benefit from this.
BKW is well-positioned and can make a contribution towards a future worth living with its ecological and economic business model. We confirm the updated growth strategy presented at the Capital Markets Day. We're growing both in the energy and services businesses. Due to the higher energy prices, we will raise our EBIT ambition 2026 to over CHF 800 million. In energy, we can achieve this mainly by expanding our renewables business from 800 to 1,000 MW capacity. In services, we can do this by strengthening our existing network. What I would also like to mention is the maintenance and modernization of our grids. In the past crisis, they were stable anchors and generated stable revenues. We will focus on improving our profitability. A continuous and sustainable operating optimization will help us become an industry leader in these sectors too.
With this, I'd like to hand over to my colleague.
Thank you very much. Distinguished guests, I'm very happy to present to you the half-year results of BKW. We had a very successful first half year, 2022. Our operating revenue was a plus of 37%, EBIT + 46%, and operating net profit, that is before the costs of the STENFO, plus 35%. Everywhere we can see a clear increase of our figures. The reported net profit, that is the performance with or including the dismantling and decommissioning of Mühleberg costs. For the operating net profit, we took this out. We had CHF 1.3 billion in this STENFO. However, we want to invest that further. Here we can see the effect from CHF 209 million down to CHF 71 million, a - 66%.
If we look at the performance of the STENFO, then in the past half year, meaning 2023, we had a positive performance of about CHF 80 million in the balance sheet. In 2022, now we have a negative performance of -CHF 150 million. The net effect year-over-year is 230 or 130 million. If we look at the operating performance, we have to take the operating net profit, which means a plus of 35%. If we look at where we got these figures, here we have an overview. We will also come into detail to the individual business areas. Here in this overview, we can see that the energy pillar is a very important contribution to these figures with a + 70%, CHF 483 million+ .
Also in services, we have mentioned it before, it is a + 20%. That's not only acquisitions, but it's also organic growth that is included here. A bit less strong is the EBIT. I'll come back to that later on, why this happened. However, we can still feel the supply chain challenges that we have to face right now. Then we have grid, which is quite stable with a slight decrease, also a slight EBIT decrease. All of this, however, was announced due to the tariff reductions that we did last year. We have a WACC of 3.7% that we had to adapt to. I will come back to that later on. Here we go. Now, what about our investments in order to achieve these results?
We invested quite a great deal, CHF 462 million in the first half year. In brackets, you can see what we invested last year, CHF 178 million. That was the first half year, 2021, CHF 170 million. However, you can also see that the major part, the lion's share of investments was done into growth. That's 85%. About 15%-18% goes into maintenance and repair. When it comes to maintenance and replacements, most of it is invested into grid replacements or grid maintenance, about CHF 120 million. That's for grid. It's not expansion, but truly maintenance and replacement and upgrades. Then we have services, energy, and other, which are almost the same for these three ones. You can see the investment growth, mainly the energy and services business.
A major part goes into the services business, which means, for example, the UMB part, which, of course, makes up a large part of this light blue part. The energy part is, for example, energy, wind farms that we acquired, the six wind farms in France with 106 MW installed capacity that we acquired. If we look at the operating cash flow, we can see the following. The first half year, we are now at CHF 205. That is slightly above average of the half years 2014 to 2021. When it comes to investments, we are clearly above average with CHF 460 to CHF 186, was the average over the past six years in the first half. What are the effects for our liquidity situation? We started the year with CHF 1.046 billion.
CHF 47 million. We are now ending the first semester with 952. That's quite nice. What happened? We have the services that came with a + 150, then investing activities with about half a billion CHF. Then what do we get back from the funds, for example, from the STENFO? Because we are receiving money, we do not have to pay money there. We are now receiving it back in order to pay for the cost of the decommissioning and dismantling. CHF 150 million we have received there. That's the dividends, - 151. Then the additional finances, almost 400 billion. Maybe you remember that in January, we issued a straight bond of 200.
In April, we made a refinancing in the framework of also 200. That was a refinancing action. We also issued a green bond with CHF 100 million. This makes up the CHF 300 million, and the rest, the remainder that's in here, are short-term financing that we took up in order to provide the security deposits at the exchanges. These are the short-term elements that you can get some flexibility. We have a good liquidity development despite the prices are increasing and despite the fact that we are investing a great deal. The security deposits have not been reduced at the exchange, but they have not increased either compared to the end of last year. Why is that, despite these increasing prices? It's because our positions have now been delivered.
We are not dependent on the exchange rate, so we have cash that we have deposited there. We get that back. Now, the second thing that we did is that we have a position that we had in the Q4 of last year, it was adapted, so it is now turned into a long position. What is a long position in terms of security deposits? We have two margins. First of all, we have an initial margin. There, it does not depend whether you sell or you buy. Then there is the variation margin. There, you have to adapt in terms of how the prices are developing. If they are long, then you will receive money back when prices are increasing. Otherwise, it's the other way around.
If this initial margin is going into delivery, and then we have, at the end of the day, the variation margin, this led to the fact that we are not so much burdened by the security deposits, and we also had to react with these deposits with these positions. That's not something we just sit there and watch. We do have taken out a lot of risk when it comes to exchanges, so we have almost no new positions, which is actually quite sad today because there are so many opportunities out there with PPAs and so on. However, this requires money, risk capital, venture capital, and we also need to provide security deposits that we need to provide. Therefore, in this situation, we are a little bit reserved, and we adapt to the risk positions.
Today, we can truly say we have a clean result with almost CHF 1 billion. We also have to consider the fact that the credit line of half a billion CHF is not drawn yet. That will be added on top of this. We are in a very gratifying position for the future when it comes to liquidity requirements. Our financial situation, as you can see on this slide, we took up further capital. Our net financial debt situation has been better. We are now at CHF 1.7 billion. Here, we have a lot of security deposits in there that can be corrected very quickly once the money is coming back. Why can we correct this quickly? You can see it here.
If you look at the maturity profile of the bonds, we have a very balanced maturity profile, so that at any point in time, we are in a situation where we can also with our long-term financing, we can adapt that. We are flexible, we can react quickly whenever something happens where we need to react. That is extremely important in situation like current situation. You need to have the flexibility or the opportunity to change your approach for the next year and react accordingly. Let's talk about our balance sheet. You can see here the striking figures, 35%. That was our equity ratio last year, and it came down to 28%. Of course, this is due to higher balance sheet total of CHF 1.4 billion. Why is that the case? This is the valuation of derivatives.
It's not more derivatives, however, they have a higher price, and they drove, of course, the valuation, and also due to the price increases that we have in the market. With 28%, we are slightly below the margin that we set ourselves of 30%, but due to the current situation, this is still not something that we need to be concerned about. Now, the individual business areas, let's have a look at them and how did they perform. Now, first of all, energy. One of the major contributors of our success of the first half year, we can see that revenue increased by 70% to almost CHF 1.2 billion. First of all, due to higher prices, of course, but also because we were able to have more thermal production. The thermal power plants, coal-fired and gas power plants were working harder and get.
Got us more revenue. We also had a higher sales volume, especially in Switzerland, with independent customers who bought greater volumes. We are able to sell more on the independent market. That is a very gratifying development. If we look at it from in terms of EBIT, we can say the following. 129, that's the plus, to CHF 235 million. Now, what are the reasons for it? The major reason is that we have a very good energy management that we generated or had in the first half year. This goes back to the fact that at the end of last year, in terms of valuation in trading, we had a relatively great loss that we had to accept. That was a position at the end of year 2021.
We had a loss of CHF 150 million at the end of last year. These positions that were valuated at the end of last year were delivered at the beginning of this year, and they now did a good job or came up with good. The loss that we actually generated at the end of last year has now been turned back into a positive result for our EBIT with a +CHF 150 million. The second issue or the second point that I'd like to mention is that we have so-called ancillary services. Services that Swissgrid is calling upon in order to keep volatility flat. We did have more volatility in the first half year, and the energy that was required from us was sold by us at spot prices.
Therefore, we were able to incur +CHF 60 million via these ancillary services. Otherwise, we cannot really benefit from higher prices as it is currently the case. As I said, everything has to be hedged, so we only have profits in terms of SDL where we have non-sold services that we can then sell on the independent market. You can also see the production mix in terms of how it developed. Hydropower, for example, it decreased a little bit. That's the dark blue part. You can see that there was a shortage of water in Switzerland. That's why this production decreased. In particular, in Switzerland or, for example, in Italy, in particular, there was almost zero production when it comes to hydro from Italy, so therefore we had to accept a decrease. That will probably continue over the coming six months.
We cannot expect any improvements there. This always has consequences, of course, because the energy that is not delivered to us is, of course, a volume that we need to buy in order to deliver to our customer. This needs to be bought in the market. Therefore, minor losses can have great consequences on our results, on our profit. In the first half year, due to a shortage of water, we had less capacity in the hydropower plants and had a loss of about CHF 25 million. If we look at thermal power plants, they almost remained the same compared to last year. Wind power plants. Wind energy also remains the same. The French wind farms are not yet included here. Nuclear has picked up a little bit. Of course, France is not delivering more.
Still, this was a number that increased due to the Leibstadt nuclear power plant because they are working now at full load and also provide and can offset actually the capacity that is lost in France. We can offset that with Leibstadt. Let's go on to the services business here. We had an increase in revenue of a + 20%. About 3%-4% is organic growth, and the remainder is acquisitions. When it comes to acquisitions, we have mainly the UMB and also Solstis that we've already mentioned. That's already included in these figures. Otherwise, we were not very active when it comes to services in terms of acquisitions. These are the two acquisitions that are reflected here. EBIT decreased slightly by 7%. Two reasons for this decrease, I've already mentioned them briefly before.
On the one hand, we have COVID repercussions back from 2021, which is quite surprising because it already went down with the volatility and everything. However, if you look at it in detail, due to sickness days of the pandemic, we had major consequences, and the greatest effects were actually done in Q2 2022, surprisingly. I know that the pandemic was not that dangerous anymore. However, people stayed at home. If you do not have people on construction site because they cannot work from home, of course, you will be less efficient on construction site, and that is something we can truly feel this year. Now it is again back to normal. The second issue were the supply chain challenges that we had to deal with. Material supply chains were tight.
There were long delivery times, and that is reflected in the high prices. In the first half year, we were not in a position to offset these high prices or to pass them on to our customers. However, we still assess that the situation is gratifying. We have quite a good pricing power in the market. The order backlog is fantastic at the moment. We have more than one year order backlog that we have already in our books. The customers currently, when it comes to the supply chain, do not have the opportunity to find any other provider. Therefore, our power, our pricing power is quite big. However, we also need to leverage on that and capitalize on it. If you have to adapt 50x , then you will have to react 50x in order to adapt to the new prices.
In the past 20 years, this never happened, and now we have to accept that we need to do this. We are very confident that also in the second half of this year, we will be able to pass these price increases on. On to the business area of grid. We did have a slight decrease in revenue and in EBIT. There are two reasons for the revenue decrease. First of all, the decrease happened due to the tariff corrections that we announced already last year. I would like to explain it again so that everyone can understand it. In 2017, the Federal Council, the Swiss government, reduced the WACC from 4.7 to 3.8. BKW did not react in terms of grid tariffs, but left them high. Why were we able to do this?
Because we said that our distribution grid must have, or we didn't want it to have a higher valuation than. Because of this higher valuation, we were able to build up some positive elements. Instead of reducing the prices on tariffs, we left the prices high and then had this difference was re-decreased. By the end of 2021, these differences were sort of used up. We have no coverage there anymore and therefore we had to announce a tariff decrease for 2022 and implemented the tariff decrease. The second point is that we have less feed-through volumes. We had quite a warm winter and a very warm spring, so that the feed-through volumes in our grid were lost, so we did not get as much energy. The third point is very interesting. Sometimes we have some physical grid losses.
There is energy that is just physically lost, and this energy needs to be bought back. If there are major grid losses, you have not yet hedged everything, so therefore you need to procure that on the market, of course, at higher prices. Of course, the consequences reflect in these figures. However, it is not of major concern when it comes to feed-through volumes. It's something that we will get back next year. We can offset that again. The tariff reduction is also something that will be reduced. Maybe you remember that we were at about CHF 180 million per year in terms of grid when it comes to EBIT, and we always said it is sustainable if we are at the normal price level.
We are at about CHF 160 million , and this is exactly the situation in which we are right now. The share price performance. We are still happy. What you can see here, this is now reflected till end of August 2022. In August, we all recovered again. We are now at CHF 120 , more or less, and this is also reflected when it comes to market capitalization. We are still at CHF 6.3 billion. I don't think this is a bad performance considering all the situation and circumstances reigning in the market. Maybe just a few words about our guidance. We want to confirm our guidance of CHF 460 million-CHF 500 million, despite major insecurities in the market. Insecurities when it comes to trading, for example, because we do have increasing energy prices, volatility is increasing.
Volatility is, of course, cool for the market, but it can have major effects. There are some insecurities. We also face some insecurities when it comes to the volumes of our hydropower plants. What about the production in the coming six months? CHF 35 million of losses that we had because we had to procure a replacement. The same with Cattenom, with the nuclear power plant in France. At about 50% load they're achieving right now. We will have in the second half year, maybe a repetition of the first half year at CHF 25-30 million. Of course, now you could say CHF 330 million, that's what you did this half year. Now your guidance is CHF 460-500 million. That's sandbagging, that's very cautious, but I would not call it like that.
Because if you look at the normalized first half year, then you also have to take the CHF 150 million moves that we had on the market. We have to add that on top, and then you'll come to a performance of about 180+. If you take the negative effects that we are expecting, that maybe are also at about CHF 60 million in the second half of the year, you may add maybe some higher valued services. However, at the end of the day, you will come to around 480, if you calculate all these factors I have just mentioned. It is a realistic guidance. We stand by it. When it comes to volatility, this might be valued at a higher level. However, we will see what's gonna happen there.
We are quite confident that we will achieve this guidance. On this note, this concludes my statement. Thank you very much for your kind attention.
Thank you, Roger Baillod. Thank you, Ronald Trächsel, for your comments. Now it's over to you in the room or in the live stream. Please mention your name and tell us who the question goes to. Just wait for the microphone, please, here at the very front. From AWP. I have two questions. Can you say something on the rescue package that was activated today by the Federal Council? Whether you welcome this, whether you want to use it. Second question, mid-term goals. You mentioned EBIT CHF 800 million up until 2026. Is then the revenue goal the same by 2026?
On the first question, rescue package. Our position is still the same, the same as we have always had. We do not want to use the rescue package. We don't think it's the right tool. If somebody needs support, fair enough, but it can be done with other tools without really including all the electricity companies. Will we use the rescue package? No, we will not use it. We're still in the comfortable position that makes us say that we do not have any liquidity problems. We have the necessary risk capital to overcome this crisis, and I don't think we need to use the rescue package. Maybe some people will say, "You could do that to improve your liquidity situation." No, we're not going to do that. We will stay with our liquidity policy.
Costs of the whole exercise, hard to say. Something between CHF 15 million and CHF 20 million per year, I would say. That was the first question. Second, 800. You mentioned the 800, up until 2026. We take the last, safeguarded prices, hedged prices. At the Capital Markets Day, we presented 700, and we thought we had 75 that we could hedge by 2024. We hedged the year 2025 too. This is around CHF 100. If we have this as the last price, for 2021, then we arrive at 800. It's not speculation. We have a solid basis that makes us come up with this figure, the figure of 800.
Still, it's not a budget, it's not a plan, it's not a guidance, it's a strategic figure. This is our ambition. That's what we want to arrive. It's not the guidance, same as we have a guidance for the CHF 450-500 million, but it is adjusted in this way for realistic reasons. Thank you. Any more questions? At the back, please. Andreas Schneller, Zürcher Kantonalbank . I have a question to Mr. Trächsel. If I understood you correctly, your hedging policy was adjusted. The short positions for the years 2023, 2024, 2025 will be hedged less. If prices go up, you have less cash outflow. Did I interpret this correctly? You were hedged more twelve months ago than today. You have to differentiate there. Our hedging policy has not changed. We are still a company that hedges.
If we are long or short, we're not directionally long or short, but we hedge these positions. There are always differences because you cannot hedge them in Switzerland. They are maybe hedged in Germany, in France, then you have country spreads, then you have time spreads, because maybe you did not hedge in the exact same month where you need it. With the spreads that you have, there you can be in a long position or in a short position. What we changed as against the end of the year, we are more in long positions when looking at the spreads. In principle, we still hedge in the same way. It has to do with how you manage risk, and with electricity, you always have a risk.
Either you have a long risk, and then you have a market price risk, and you can hedge this, and then you turn it into a liquidity risk. You can say, "I'm not hedging this at the exchange. I'm selling it to a counterparty." You have a credit risk. You always have a risk. You have to choose one of the three, and you have to choose the one that best fits your balance sheet. Because of the upheavals we currently have, we made this adjustment. What you see today, this is not a change in the principle of our hedging policy. Thank you. Let's go to the live stream now. There are a few questions on the EBIT. I think they were answered.
Andreas Brun, Vontobel asks, "In the business unit energy, CHF 634 million revenue came from other countries outside of Switzerland, 55%. In percentages, what's the share of the contribution from other countries outside of Switzerland? So, does this share have to be paid as excess profit?" Well, if you want to speak of excess profit, I don't think we should do that. The profits would really be seen in 2026. Currently, we do not have any excess profits due to the high electricity prices because everything is hedged. We have problems with the situation of high energy prices if we look at our balance sheets. If excess profit, we would see it maybe by 2025 or 2026, probably more realistically 2026.
Can you say something on the EBIT, and countries outside of Switzerland and their contribution EBIT? So 55%, yes, is generated by countries outside of Switzerland, EBIT 20%. The thermal power plants are mainly outside of Switzerland, and if the price goes up, fuel prices go up too, gas or coal. So nothing much changes in the spread that we have. So a smaller part of the EBIT is generated outside of Switzerland. Are there questions? Wait for the microphone, please. Thank you. Thank you. Ingo Becker . I have a question on the CHF 150 million that need to be adjusted in the energy segment. Where do they come from? Is that a trading result, good or bad? No, it was a bad trading result in 2021.
There are some positions in trade that you have to value on the reporting date. These positions at the end of the year have a negative valuation effect, had a negative valuation effect on our result. CHF 150 million was the figure. These positions went into the supply mode not at the value that we had on December 31, but at the value with which we sold it and hedged it. This had a negative effect at the end of the year in our reporting but will have a positive effect. This does not need to be adjusted, but it cannot be translated to the next half year. This cannot be repeated. You have to adjust the expectation, not the first half year. Thank you. Any more questions? Yes, please. Once again, Rechenberg, ZKB.
About the adjustment, the net effect was CHF 300 million, wasn't it? Because you could then deliver this and had a positive effect, but you can dissolve the loss. No, it wasn't more. Then the other question on Cattenom. You have a stake in Cattenom, and it says 25%, there are four blocks. Was this downtime planned? When will it go online? Cattenom is not an individual power plant. The share, the stakes that we have there, Axpo is in it, Alpiq too, concerns a whole nuclear power plant park. About 40% of all the nuclear power plants in France, about 20 nuclear power plants in total are in this package. Currently, these nuclear power plants in France run at about 50% due to overhauls. Planned overhauls, these will take their time.
They also have a specific problem in one power plant, the cooling circuit. All the power plants of the same type have this specific problem. These overhauls will take up until 2024. 30% of the whole nuclear power plant park is not online. What is the forecast, you're asking? When are they going online? Well, probably not over the next, one or two years. 2022, we have some problems with that. We did not hedge that because it was bought already. For 2024, we could adjust the position so that it doesn't hurt us too much. We could purchase at reasonable prices. With winter coming, when the situation is critical, maybe, some of these power plants will wait, with their overhauls. We'll see if this is done in the way we think.
A question from the live stream now. On the question of the rescue package, CH Media, Pascal Michel asks, with regard to the securities that forced Axpo under the rescue package, is it as hard-hit? We said no, we answered that. In what way is the situation different from Axpo? Answer. First, we are smaller. BKW is smaller than Axpo. Secondly, we are not in the same way positioned with regard to risk. Then we hedged well. These are the explanations. We are not as hard-hit, no, not the same as Axpo. We will not have to make security payments that would bring us into difficulties. Peter Gürtli is asking, how high were the extraordinary write-offs over the past five to six years?
We did not have any extraordinary write-offs than the last one we had in 2012. Another question, Christian Affolter, La Liberté, he asks, the own production of BKW, does this cover, the need of your own customers? That was quite complex. It's the question at the very bottom. I want to read it myself. Christian Affolter. So, the own production, isn't this the best hedge against fluctuations for the end consumers? Yes, yes, of course. All the agreements we had, the contracts we had, these are covered. Will this be supplied in this way? Is the next question. We have to differentiate there. Are we speaking about our own production or not our own production? What we can say is, what is domestic supply is what we can cover with our own production. So, you do not need to worry there.
Our free customers too. We can supply. If we did not get this electricity, we could not supply, but this would be very drastic. Another question here. Microphone. Wait for the microphone. I have a question. Switzerland is short in the winter and long in the summer. Is this true for BKW too? A question on Leibstadt, the financial markets raised the procurement costs. How was the effect on half year one? The last question, renewable IRR. At the Capital Markets Day, you were not really satisfied because the unlevered return was not as good as you had expected. At the Capital Markets Day, you mentioned something like that. Has this situation improved, this return that you can now generate? Is it satisfactory or maybe even very good? What is the situation like? First question, short, long.
Winter short, summer long. It's the same. For BKW, no, it's not different. Maybe it's not as much as with other companies, but it's basically very similar. They have the same performance, but you can see this in a different place. With our own power plants, you see this in the financial positions. At nuclear power plants, you see this in the procurement, on the procurement side. Good performance has positive effect, et cetera. The effect is around CHF 140 million in the first half year. So the real effect is, I have to correct, is CHF 40 from half year 2021 to half year 2022. Third, the problem of the low profitability with regard to renewables. That's still a topic. That's still low. We have made progress with our capital-light approach.
We try to take investors on board, include them in these projects. They are willing to do that, so we are making progress, and we think by the end of the year, we will be able to present first successes. This helps because the financing can be done at better conditions. We are. We have larger tickets on the market, not 30 MW or 50 MW, so we're speaking of larger parks, more than 100 MW, and there you have a different investors' client group. For the smaller ones, 30, 50, you have many financial investors. They can easily handle that. If you go above 100, you have more strategic investors. A strategic investor has similar requirements on profitability as us.
If you have a financial investor, you're happy with three. This somewhat distorts the picture. We have a move towards larger transactions, and there too, the profitability expectations are a bit more realistic. At the back. Thank you, Andreas von Arx, Baader Helvea . I have three financial questions and a question to the chair of the board. First, three financial questions. Efficiency gains in the merger of grids, can you give an EBIT figure? And second question, with the growing, increasing electricity prices, what is your expectation with regard to the negative capital effect? Is it similar to the effect that we saw in the previous half year, or will there not be a significant increase? And then the third question, back to the EBIT in energy.
CHF 150 million, if that's a comparison to the second half year of last year. If I want to look at the first half year, 103 to 235, I would not have an effect of CHF 150 million, but less. I'm trying to understand. 103 + 60 for the system services - 25 for hydro. How do I arrive at this 235? What's the rest of this difference? Is it the valuation or what are some other factors that I would have to look at? First, on the grid merger, this does not really have a major effect on the EBIT. This has, as what Roger mentioned, an effect on the tariffs. They are passed on to the customers.
The less we have to invest, and we have to invest less if we merge the grids. Why? We do not have to invest into copper. The investments go into control software, cybersecurity software. There, it doesn't matter whether you have a grid or with 10,000 or 500,000 connections. Doesn't matter. It's the same investments that you have to make. If you merge the grids, so we merged three grids. You really have a lot of cost savings. Your costs increase less. Because we had clear cost increases last year. Because we had to invest into controls, into security massively too. This is something that you contain by merging the grids. The tariffs will go down, but you will not have a direct repercussion on the EBIT.
That's the difference in the regulated business. There, the efficiency gain is in our pockets, not in the regulated business. This is really passed on to the customer. We are not doing this to grow the EBIT, but to reduce the cost. NWC, I don't think there will be a substantial increase. I think we will be in a reasonable framework. The last question was about the guidance, and I'll try to look at this in context. It's assumptions that we're making today. It's a forecast telling us where we want to go. That's important. Let me start by looking at the CHF 330 million that we had in the first half year, and let's correct them by CHF 150 that we have in the move.
There we are around CHF 180 million then. In the following year, let's say we have across everything CHF 100 million, because we have to make replacement procurements, hydro, nuclear power and what have you. Then you arrive at something like CHF 80 million. I do hope we will have a better services result. In the past years, we had one- third, two- thirds. I think we can improve this result by, let's say, CHF 30 million. Then you have the CHF 40 million from nuclear power plants. I don't think we will have such a bad performance in the decommissioning and disposal fund. Right now, we are more or less on track. If we look at the performance in July.
You arrive at CHF 140, 60 + 80 + 330, and then you arrive at the 460-500 that we indicated in our forecast. That's our idea as to where we want to be. We do not really want to exceed this. We would not be able to do that.
The question to the chairman of the board of directors when it comes to remuneration policy. The net operating profit is one of the elements, so profitability is a KPI for the bonus. I would like to know how you ensure or make sure that when it comes to acquisitions, how you generate shareholder value, because the profit contribution always comes with the net operating profit. However, if you pay too much for an acquisition, then this does not have a negative effect on the targets, let's say, of the management team. How can we make sure, or how can you make sure that the best possible acquisitions are done?
The second part, which goes in the same direction, if we now have higher energy prices and a significant increase of the EBIT, and as a consequence, also a significant increase of net operating profit because the energy price based on the war, for example, in Ukraine, has increased a great deal. Is this factored in when it comes to short-term bonus calculations, or is this just depending on energy prices, electricity prices, and then it might go up massively in one year, and when the situation goes back to normal, it might also go back again? Thank you. Thank you for this question. When it comes to benchmarks, we have the net profit before STENFO, that's a decommissioning fund. That's one part of how we calculate it, and the other part is the benchmark with the SMI.
We're looking at how the share price of BKW performs in relation to the benchmark that I've just mentioned. There we have a certain weighting. That is one part of the answer. Net operating profit, of course, is before the decommissioning fund, net operating profit at the end of the year. Now, when it comes to acquisitions are always taken out of the calculations. It depends on the budget, what is included in the budget, and then we take certain positions out. The acquisition effects are not included when it comes to the bonus calculation. We make sure it, in a way, that we of course, try to set up the right and appropriate criteria. For example, conformity with strategy, profitability, the factors, are we able to manage the company in an efficient way?
These are the main issues when it comes to acquisitions. They are not included in the valuation. Of course, after a year, they will come into play, and then, because then they are back in the budget. This is the mechanism where we try to be clean and as transparent as possible. When it comes to electricity prices, it's always like that. You can handle it well or not so well. With increasing electricity prices, if you can handle it well, it, I still think it is a management performance, because you can also have a wrong positioning and so on. This is not taken out. It would also be very difficult to do that. If the corrections go up, other management executives are benefiting as well. If it's going down, everyone is suffering. That's why it is included.
Of course, it is possible that there are swings. I think Ronald has mentioned it several times. Just the mere fact that electricity prices are increasing, this is not a guarantee. Since we have hedged prices, we also have a realistic view on the entire year. Ronald has already explained it in great detail. That is the benchmark then for the calculation of the salary or the short-term incentive plan that we have. I do hope that I have answered your question. Thank you. We have another question back here. Erhard Weh, uncertain . I have three questions. You announced that the price for end consumers in 2023 will remain more or less the same.
I severely doubt that this makes sense, because that would lead to the fact that everyone is going to buy a little oven to heat instead of using the heating system they have in their household. This is not what we wanna go to when it comes to saving energy. Second question. Now, within our reservoirs, the water reservoirs, what about the water levels there? How much can you produce? How is the loss there or the lower capacity? Shall we maybe just answer the first question first? Roger Baillod, maybe up to you. Well, the tariff is regulated for the most part. Let's put it that way. Our basic supply customers, we can supply to them with our own production. We have the requirement that these are production costs, that this is done at production costs.
Of course, we have the possibility of adaptation. This is also done via ElCom, and is also approved by the Electricity Commission. We also have to say that this is also kind of a balancing fairness because then we have the same situation for customers and for us. If this leads—whether this leads to higher consumption, well, let's say if the gas supplies are truly turned off completely, then this might come or lead to a higher consumption, but we do not have any estimates on that, really. That is the mechanism that we are working with, our own production and not very much flexibility when it comes to tariff pricing. Second question was the reserves in our water reservoirs. The Swiss government still has to adopt the latest decree, so it is still under negotiations, really.
Yes, we are not forced to do it, but you are welcome to participate in it. You will get the possibility of putting in offers. However, the conditions need to be very clear. How can you calculate a premium? What is a premium? This is all not negotiated. It has not been clarified yet. Of course, we are having a close look at it. However, we have to consider it very carefully because sometimes people are not aware that it's not just water that is up there, and we're just waiting until prices go up, and then we sell the stuff. It is already sold. If we have to leave water in the water reservoirs, then we need to procure replacements, and that has to be done at market prices as they currently are.
You can not only make money with this, if you only make the transactions, and if we do not want to generate losses for us, it will cost money. However, we will have a look at the mechanism in detail of how it's going to work and with the compensation. What does it mean for BKW? If we look at the guidance, for example, how does it reflect in the guidance? These of course could lead to some positions that have to be deferred because the EBIT effect might only kick in 2023. However, we will have the negative effect of these additional procurements that need to be invoiced this year. Just in order to explain the mechanism a little bit. A third question. Yes, the dismantling of NPP Mühleberg. The costs are increasing strongly.
Do we have to expect higher costs when it comes to the dismantling? I'd love to answer this question. It is true that the costs, dismantling costs are increasing due to inflation. However, we are still in a position, and we have seen that when it comes to audits, that we are becoming more and more efficient. With security deposits that are lowered, this can be offset. When it comes to securities or hedging, this is still lower than what we planned. This is still more than sufficient to offset increasing costs. I think we have another question over there. Yes, please. Alexandra Bosshard, UBS. One part of the regulation of the water power reserves has already been mentioned, but there are also other regulations that might come up. I'm talking of OSTRAL, for example. What about an electricity gap?
A possible electricity gap? If we do not have any electricity, how does BKW prepare for such a situation? Second question, do we need to expand? You mentioned investments that have been blocked by certain appeals. How far can you expand? Can you give us a CapEx expectation here? Now hydropower reserves, we've already mentioned that. We of course will have a close look at this. We will do our utmost in order to offer or to make our offer here as well. However, the conditions and the whole setup with the setting up commission and so on, this really needs to be discussed in detail, and we cannot go into detail here because we don't know yet. Now, when it comes to the electricity gap, again, here we are doing our utmost, what we have to do and what we can do.
Of course, we are trying to use and leverage our hydropower plants and to optimize the capacity there. In this respect, there are various regulatory interventions. For us, it is mainly the water power reserves. We are affected by production, but we're also affected by the grids that we can't control ourselves. These discussions are ongoing now. Fact is, like, if there is the case of emergency, then we don't have any say in this because production will be controlled by OSTRAL. They will have their contingency plan where energy is supplied to which grids and so on. Of course, we will try to have a say in how we can generate this and how we can adapt to this situation.
However, we cannot just rely on individual enterprises, and that is not something that will happen. This is just not feasible. I clearly start from the fact that we are still on track of what's going to happen in the near future. Of course, we will announce and inform about it. Then from there we can be clear on what we can base the future. The competence at the end of the day is with OSTRAL. Of course, we are trying to interfere or intervene and have a say in it, and therefore it is very difficult to give a clear expectation. What about expansion because of the appeals that were launched against expansion projects? Well, again, we are ready. We would love to go on with the expansion.
It was a great disappointment that Tramelan and uncertain were again blocked by an appeal that was lodged by a house owner, an individual house owner. The canton, the communities, everyone adopted the bill, and now we are faced with a new appeal. In Switzerland, that's the way to go. We have to go the appropriate way. We have to discuss this in court. We have to convince the court that we are right and that this is appropriate. We do hope, of course, that we will be able to build these plants. Of course, we would be much faster if we could do it. I mean, you have to see, they have been blocked now for 10 years. Our application for approval started or was lodged 10 years ago, just three wind turbines in the Swiss Jura.
Of course, this would certainly help the supply situation. It's not huge. I have to look to Ronald. I think it's 330,000 households that we could supply electricity to, but the grid stability would certainly increase. It is really a pity. If this happens time and again, we will not be able to push forward renewable energy. CapEx. Then CapEx question. Oh, please, could you repeat the question? I forgot. It's the CapEx, yeah. Could you elaborate on CapEx second half 2022? It will be about the same level as now. If we look at CapEx when it comes to maintenance and replacements, it will be about the same level as in the first half year. I do not think that this will be increased between CHF 70 million and CHF 80 million. That's what we will spend here. We would like.
I'd like to mention that we made great progress here, especially when it comes to energy. Here we are on an annual basis at CHF 15 million that we invest in terms of maintenance, and they are very well-maintained. They work very smoothly. Looking back five to six years, we were at maybe CHF 50-60 million per year that we had to invest in maintenance of plants. We made great progress here. Also, when it comes to the technology, of course, digital controlling, monitoring systems of the power plants is something. We do not have to make these outages or as long outages that used to be in the past. You can do those in a digital way, and you can calculate as how long they will still be running.
This has reduced the costs greatly, of course, without that the capacity would have been lowered of these plants. As I said, about the same level as it was in the first half year. We have Arne Olsen. What about the hedging strategy for the coming years? Are you going to hedge further on? Yes, we will continue as we did that. We have of course the risk of market prices, liquidity risks, and also a credit risk that we need to face that's all out there in the market. Our hedging strategy will be set up in a way so that we can take these risks, but that we can handle in our balance sheet. The hedging is not something where you try to, you know, make profit or you're not in a poker game here, right?
We really try to make the best in order to handle the risk. We have a follow-up question on this. Mehran Aghadavoudi from Credit Suisse. The last question, that is Ronald, the strategic decision taken by BKW is that you rather go with a market price risk instead of a liquidity risk because you're in the long spreads now. Are you passing on the market prices to your customers? Not exactly, but let me elaborate. It's not quite true that we are running a greater liquidity risk or a market price risk. If we look at it in detail, we still have the major part when it comes to the hedging, and we usually do this at the exchange. We still have these hedgings. It's still done in the market price and liquidity risk.
This is, of course, made a little bit more severe when it comes to the credit, credibility of my counterpart, the credit worthiness I'm talking of here, so that they are not below a certain credit line. Sometimes credit lines are massively exceeded. If you want to hedge, then you have to trade on the exchange, and you are more or less pushed in terms of risk. It's not true that we have a much higher market price risk instead of liquidity risk. Now, the spreads I've already talked about that these are the positions that we have out there in the market. If we are in a long version, then of course we will not pass it on to the customer because these are energy, management questions that arise here. A further question. Finanz und Wirtschaft, Stefan Gnegi . A question to Mr.
Mr. Baillod and to Mr. Itschner. Mr. Baillod, if I remember well, you said that BKW only trades with companies that have at least an A-minus rating. Now, with this rescue package, the rescue fund, does this change in any way the situation? No, nothing changes. I think Ronald has already explained it. What we will do is the following. There is a risk about the creditworthiness of our counterparty, and that's why we are pushed towards the exchange. We will do more transactions on the exchange. Or what we require from our counterparty, appropriate, security deposits, of course. We do not differ from our principle here. The rescue fund, the rescue package does not change anything when it comes to quality strategy that we clearly want to achieve.
We need to have access to the market when the conditions are right, and we also need to have access to the capital markets. Well, then you could say, "Well, you have a guarantee now. You don't need that anymore." However, we will not change this in any way. We really continue on our track. It's not just access to the market that we're talking about here. These are various other things that are included. For example, liquidity, then debt situation. It's a whole set of factors that's included here. I think it is very important for a healthy company that we have these standards and that we uphold these standards. Second question. You have explained that you have long positions and that this helps you to reduce the liquidity requirements. Now these long positions, do you have more end consumers with those? Yes, you do.
That is true because you are at the exchange. You do have more flexibility. It doesn't mean that you have less costs, but you are more flexible to do. You can get out of these positions. If you are in a pure hedging position where you, for example, you hedge your own production. If you want to hedge that, then you are pushed or forced into a short position. You do that via a short hedging. You are pushed in this position. If you have to work with the spreads, as I explained before, then this is not linked or does not refer to production. There we have more flexibility and can react more flexibly. That's why it was possible at the end of the day. I mean, these are not very high positions, high amounts.
You can adapt to the market of what's happening. Of course, it might cost something. It is possible, though. That's what I want to say. Thank you very much. Any further questions? Yep, we have one in the front. Patricna Jaeger . Now, when it comes to Grimsel Trift, you've already mentioned it. It seems to be a no-brainer, especially at the high prices right now. What about the Grimsel heightening of the two dams? I think it sounded a bit more positive. Now with the high prices, what can you say about it? I mean, you have to calculate in the long term, that's for sure. However, you maybe have to calculate in a different way right now. Well, actually, we need to calculate both things. Of course, we're always in favor of expansion, but it has to be offset somehow.
Is it feasible? Does it pay off? If you look at the subsidies, the support that you get, Trift is still something that will pay off. With the heightening of the second dam, this is something that does not pay off right now. We do have positive reactions in terms of support. However, the heightening of the dam is not yet paying or will not pay off if we did it right now. You have to bear in mind, if the construction will be launched, it takes five to six years, and then it will pay off maybe in 30-32. What you need in order to make such an investment, you need electricity prices between EUR 150-EUR 200 in the long term.
You also can do it without subsidies, just to give you a range. The electricity price, as such, does not influence the fact whether we will go ahead or not. However, what influences the decision is that maybe barriers will be dismantled. You know, that you can start, for example, the construction site earlier or that the subsidies might be increased. With the demand that we have in Switzerland for such energy, so that we can get it in a volume so that it pays off. It is not the case right now. It does not yet pay off. This dam especially brings more flexibility for the winter months, and that will also show in the future. I mean, we will have to see how this will develop in the future.
It's not more volume as such, but it really gives us more flexibility. It's quite interesting to see if we look at prices. What we can see currently is more and more pressure to, you know, give a price ticket to energy supply. It's not just the kilowatt-hour or the megawatt-hour, but more and more you can see that security of supply is getting a price. But this is something that leads me to the thinking that we will have to realize that this security has to be given a certain price because this might help us to enable such investments. Thank you very much. Let me ask the participants here in the room whether there's a last question. I think we answered all the questions from the live stream. I can not see anybody raising a hand.
Thank you very much for your interest in BKW, for coming here. As usual, you're kindly invited for drinks and some food at the back. Thank you.