Bayernwerk AG - Company Profile, Information, Business Description, History, Background Information on Bayernwerk AG

Nymphenburger Strasse 39
D-8000 Munich 2
Federal Republic of Germany

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Bayernwerk is committed on a variety of levels to keeping open every conceivable option for the energy supply of the future.

History of Bayernwerk AG

Bayernwerk AG is the largest electricity supplier in Bavaria and one of the largest in Germany. It provides about two-thirds of the electricity requirement for the Free State of Bavaria. Bayernwerk's purpose is to guarantee electricity supply through electricity generation, electricity distribution, and cooperative business ventures at home and abroad. As a national electricity supplier Bayernwerk builds and runs power stations that use nuclear and conventional sources of energy. In 1995 the company's power station capacity stood at approximately 8,570 megawatts (MW). The most important concerns serviced by the company are the regional energy supply companies within the greater Bayernwerk group, the German state-owned railway company, Deutsche Bundesbahn (DB), and large chemical companies. In 1997 the company supplied more than 50 billion kilowatt hours (kwh) of electricity. Up to 1994, some 60 percent of Bayernwerk was owned by the state of Bavaria and its governing regions, and some 40 percent by Vereinigte Industrie-Unternehmungen AG (VIAG); in that year, VIAG took over the majority of Bayernwerk stock as part of an ongoing process of privatization.

Bringing Electric Power to Bavaria

Since the beginning of the industrial age, which in Germany dated from 1795, every German state endeavoured to build up a good energy supply of its own. Bavaria was handicapped in this respect, no possessing large deposits of fossil fuels such as coal. Moreover, it did not have cheap transport facilities, and because it was not densely populated, the transport routes were long and transport costs high. Bavaria was well provided, however, with rapid mountain streams and powerful rivers. The development of energy supply in Bavaria therefore began with "white coal": hydroelectric power.

Visitors to the International Electricity Exhibition in Munich in 1882 were offered an unusual attraction--an artificial waterfall powered by electricity. The electrical current had been carried over 57 kilometers from Miesbach to Munich, the royal seat and capital. With this demonstration, the organizer of the exhibition company, the Bavarian pioneer in electrical engineering Oskar von Miller, proved that with the help of electric current, the production and application of energy could be divided from each other by large distances. Oskar von Miller had recognized the possibilities offered by the use of the great hydroelectric power on hand in Bavaria, especially the Alpine rivers. As technical director of the Frankfurt Electricity Exhibition in 1891, he succeeded in carrying an appreciably greater capacity over a distance of 175 kilometers. This achievement created the breakthrough for the first high-tension transmission lines; electric power stations could be constructed in locations where energy sources could be supplied cheaply. In 1894 Isarwerke GmbH, the first German long-distance supply station, began to operate. It ran a large hydroelectric power plant near Höllriegelskreuth, south of Munich on the Isar River. Oskar von Miller contributed to the design for the mechanical and electrical installation.

Early 20th Century: von Miller Founds Bayernwerk

Oskar von Miller, son of the brass founder Ferdinand von Miller, was a civil engineer by training. When he visited the Paris Electricity Exhibition in 1881, he was so impressed by what he saw that he began to study the relatively new subject of electrical engineering. In 1884 von Miller went to Berlin with Emil Rathenau to set up the Deutsche Edison-Gesellschaft, later to become the Allgemeine Elektrizit&aumlĂ—Gesellschaft (AEG). In 1890 he opened an office in Munich and soon made a name for himself as a power transmission expert. Together with his achievements in the field of electrical engineering, his name is inseparably associated with the Deutsches Museum in Munich. Oskar von Miller was always in search of new sources of money for this collection, which consisted of masterpieces of science and technology.

In the early 20th century, public electricity supply made huge strides forward. Power stations and overhead power works were established all over Bavaria, but there was no comprehensive, unified plan for supplying the whole state. In 1911 von Miller proposed devising a general plan for the conversion of Bavaria's hydroelectric power. A thorough estimate of requirements was projected, as was the registration of existing power stations and the building of additional installations. Furthermore, a unified electricity grid was to be created to deliver energy from large state-owned hydroelectric power stations to overhead electricity works. Oskar von Miller was also responsible for naming this project: Bayernwerk.

He was unable initially to put his ideas into practice, since it was not settled as to whether and under which form the Walchensee power station should be established. The particular geographical location of the Walchensee and the Kochelsee, separated from each other by a height of 200 meters, had already been thought of in 1897 for use in producing energy. There were lengthy discussions, but it was ten years before a design could be drawn up, after it became clear that the Bavarian state railroad's electrification would depend upon the energy produced by the Walchensee power station. When it was revealed how high the costs would be for construction and electrification, the Bavarian transport ministry shied away from the project. A motion was even proposed in the Bavarian state parliament that the Bavarian state should give up completely its plans for constructing the Walchensee power station. However, Oskar von Miller's proposal to use the huge volume of energy from the Walchensee power station for his planned Bayernwerk finally won the day.

Before the planning could begin, World War I started. In September 1914 Oskar von Miller declared himself willing to take on the preparatory work for the building of the Walchensee power station and the planning for Bayernwerk at his own expense. Hindered by the war, Oskar von Miller was only able to table his plans as state government commissioner. On June 21, 1918, the founding of Bayernwerk as well as that of the Walchensee power station was voted through.

The socialist revolution of November 1918 in Bavaria and the attendant radical political changes posed new problems for Oskar von Miller. He succeeded, however, in winning the approval he needed from the socialist government for his plans by drawing attention to the jobs that would be created for the soldiers demobilized after World War I. The construction work advanced rapidly despite the difficulties caused by Germany's losing the war. However, the project's financing became increasingly difficult to guarantee due to rising inflation, and both companies had to be changed into public limited companies. On April 5, 1921, Oskar von Miller went to the offices of a Munich solicitor, accompanied by several representatives of the Finance Ministry and Ministry of the Interior, to register Bayernwerk AG. The company was capitalized at Papiermarks 100 million. Forty-nine percent of the shares were intended to be distributed among the future electricity purchasers--cities and long-distance electricity companies--but the Bavarian state took up all the shares. The board of directors of the new company was also nominated: Rudolf Decker, assistant head of the Ministry of Trade and Industry, and Ernst Obpacher, chief planning officer in the Bavarian Ministry of the Interior. The founding of Walchenseewerk AG, with capital of Papiermarks 50 million, had taken place a few months earlier on January 5, 1921. The Bavarian state had taken up eight-ninths of the shares, and the Deutsche Reichsbahn took the other ninth. Oskar von Miller acted as chairman of both companies until the end of June 1921, when he stepped down to turn to other tasks.

Alongside Walchenseewerk AG, another large hydroelectric power company, the Mittlere Isar AG, fed into Bayernwerk's network. A private consortium had created the Mittlere Isar GmbH toward the end of World War I to exploit the MunichLandshut stretch of the Isar. Dr. Theodor RĂĽmelin, a hydraulic engineer, was commissioned to draw up a design. When the Bavarian government was faced with the problem of finding jobs for soldiers returning from military service after the war, the conversion of the Isar's water power became part of its emergency program. The Bavarian parliament had approved the project on March 25, 1919, and took over the shares of the company as well as the incomplete plans. The assistant secretary to the government, Franz Krieger, was appointed state commissioner, and the senior civil servant, Dr. Siegfried Kurzmann, his deputy. The construction work close to Munich began immediately, and the founding of the Mittlere Isar AG followed on January 5, 1921, with a capital of Papiermarks 75 million. The Bavarian state took eight-ninths of the shares and the Deutsche Reichsbahn one-ninth. Like Walchenseewerk AG, Mittlere Isar AG was to contribute to the electrification of the railway lines in southern Germany.

In the statutes of the three companies, which were adapted to work in close cooperation, the responsibilities of a public utility were brought to the fore. They were to be run according to commercial principles, but the interest return to the shareholders was limited. In accordance with the general plan drawn up, Bayernwerk gave up the right to supply the end user with electricity, in contrast to other big supply companies in other German states. Its role, rather, was to supply the electricity distribution companies with energy if they could not meet their electricity needs through their own power stations. The first 25-year contracts to deliver electricity, which Bayernwerk concluded between June 23 and June 30, 1923 with nine large electricity distributors in Bavaria, were based on this principle. Contracts with firms outside Bavaria were also concluded in the same year, the first being a contract to deliver electricity to the electricity supply company of the town of Stuttgart. Despite rising inflation, the two power stations on the Walchensee and the Middle Isar were able to start providing electricity as early as 1924. The growing demand for electricity and a water level which was at the mercy of the seasons led the company to look for new sources of energy.

In 1928 Bayernwerk acquired the Wackersdorf mine from the Bayerische Braunkohlenindustrie AG and built its own steam power station in Schwandorf, which began operating in 1930. Although Bayernwerk had not escaped the effects of the worldwide Depression, there was a considerable upturn in business with the general armaments boom. For example, the Vereinigte Aluminiumwerke AG (VAW) agreed on a contract with Bayernwerk for the supply of steam, electricity, and briquettes to its aluminum oxide factory in Schwandorf. In view of the strong demand for electricity that came with the economic revival, Bayernwerk was once again forced to develop additional sources of potential energy. The brown coal power stations in central Germany presented an obvious choice, situated close to the coal supplies. A contract with AG Sächsische Werke and Elektrowerke AG, the latter owned by the Reich, to deliver electricity followed in 1939.

Furthermore, Bayernwerk set about extending the electricity grid to guarantee the electricity supply for the chemical works situated in Innviertel, to the southeast of Bavaria, which were important in the arms build-up before World War II. In the course of the National Socialists' implementation of a policy of forcibly placing enterprises under state control, the Reich also strove to ensure its influence over energy supplies. Bayernwerk's share capital was taken over by the Reich's Vereinigte Industrie-Unternehmungen AG (VIAG) on April 1, 1939. Since 1933, Bayernwerk had carried out the business for the Walchenseewerk AG and Mittlere Isar power stations, but in 1942 the latter companies were formally merged with Bayernwerk. The Reichsbahn, which had held one-ninth of Bayernwerk's shares up until then, relinquished its holdings. Sixty percent of the capital went to the Bavarian state, and 40 percent was taken over by VIAG. In the business year 1943-44, Bayernwerk's electricity sales peaked, only to decline considerably in fiscal year 1944 to 1945. In the air attacks by the Allied Forces, industrial works, railway installations, and towns were increasingly bombarded. When the Americans marched into Bavaria in April 1945, there was virtually no electricity supply remaining.

Postwar Rebuilding

Like many other Bavarian companies, at the end of the war, Bayernwerk found itself in extreme difficulties. Its own electricity plants had remained intact to a large degree, but division of Germany into zones, and the dismantling of both the brown coal power stations in central Germany and the electricity grids linked with power and distribution stations in Bavaria, meant that Bayernwerk lost its most important suppliers of thermal energy. As building materials were in short supply in Bavaria after the war, it was not possible to redevelop the electricity grid. In addition, the Allied Control Council had forbidden the building of new power station plants. Bayernwerk was therefore obliged to extend its already existing sources of power. Thanks to a seven-kilometer-long tunnel, the fast-flowing Rissbach river on the Tyrolean border was diverted into the Walchensee. Furthermore, Bayernwerk made efforts to link up with the West German thermal power station network, building a 220 kilovolt (kv) grid from Ludersheim near Nuremberg to its own transformer station in Aschaffenburg. In 1949 Bayernwerk concluded a contract with RheinischWestfälisches Elektrizit&auml×werk AG (RWE), Essen.

Once the Allied ban on building had been lifted in 1947, Bayernwerk embarked with increased vigor on the construction of power stations on the Alpine rivers and on the great rivers of the Danube and the Main in Bavaria. The company was aware, however, that there were natural limits to the further expansion of hydroelectric power, and that the reserves of brown coal in the Upper Palatinate would one day be exhausted. It decided to supplement the energy supply from hydroelectric power and brown coal with hard coal from the Ruhr area. In 1952 the first engines of a thermal energy power station built on the Main near Aschaffenburg went into operation. Both DB and the Prussische Elektrizit&aumlĂ—-AG had shareholdings in this power station. As Bayernwerk's oldest coal-fired power station, it has been equipped with the most up-to-date flue-gas treating installations, and is drawn on at times of peak demand.

For Bayernwerk, the 1950s brought economic and political challenges in the field of energy. Bavaria's position, both politically and geographically on the edge of the western European economic sphere, brought high energy prices and hampered its economic growth. At the same time, Bavarian industry was dependent upon a dynamically growing energy supply. The state had to find new and cheaper sources of energy. The "Bavarian economic miracle" took place with the introduction of atomic energy and the use of petroleum, and Bayernwerk bore this development in mind from an early stage. As early as 1957 an internal nuclear energy department had been created, and employees were being sent to train in England, Sweden, and the United States. Bayernwerk took part in the research into a new type of reactor using heavy water and carbon dioxide cooling via the Gesellschaft fĂĽr die Entwicklung der Atomkraft in Bayern mbH.

New Forms of Energy: 1960-90

The atomic age for Bavaria's electricity supply industry dawned on June 17, 1961, when the 15MW experimental nuclear power station of Kahl am Main fed the first nuclear-generated electricity into the grid system integrated with the Bavarian network. Bayernwerk had a 20 percent holding in the operating company, the Versuchsatomkraftwerk Kahl GmbH (VAK). In 1966 the first large German nuclear power station, in Gundremmingen on the Danube, was connected to the grid. Bayernwerk took a 25 percent share in the construction of this 250MW nuclear power station.

Bavaria owed its efficient oil industry of the 1990s to the initiative of the Bavarian economic minister Dr. Otto Schedl. His plan to lay oil lines to the Mediterranean ports of Genoa and Trieste was initially viewed with skepticism. At the end of 1963, however, work began on this project with the construction of the first two refineries located at Ingolstadt. Bayernwerk constructed a power station in the heart of the new refinery center of Ingolstadt, which came into operation in 1965 with a 150MW engine. Further down the Danube, near Pleinting, another 300MW oil-fired power station was built in 1968. By the end of the 1960s, thermal energy had overtaken hydroelectric power, the former supplying more than 60 percent of Bavaria's electricity requirement. Therefore Bayernwerk concluded a long-term contract with Tiroler Wasserkraftwerke AG and RWE for the financing of the Kaunertal power station in the Tyrol, and for the supply of electricity from the Prutz power station to the upper Inntal.

Oil became the driving force behind Bavaria's economic development in the 1960s. It was possible to reduce substantially the oil prices between the port of Hamburg and the Bavarian city of Munich. However, the massive use of oil also meant that Bavaria was particularly affected by the oil crises of 1973-74 and 1979. Bayernwerk learned its lesson from the oil shocks of the 1970s, with the enormous increases in the price of oil. A secure and inexpensive electricity supply meant that the company had to free itself from dependence on unstable imports, and Bayernwerk's decision to expand its activities in nuclear energy proved crucial for the future.

As early as 1977, the 907MW nuclear power station Isar I, close to Landshut, came into operation, and Bayernwerk had a 50 percent share in the enterprise. The first electricity generation from the nuclear power station of Grafenrheinfeld followed in 1981. With a capacity of 1,300MW, it was Bayernwerk's biggest power station to date. In 1984 Bayernwerk took a share in the addition to the network of two new blocks at the Gundremmingen nuclear power station. Each block has a capacity of 1,300MW. Growing energy demand made it necessary to build a new installation, the 1,400MW nuclear power station Isar II, 50 percent owned by the Bayernwerk group. From a technical point of view this power station counted among the most modern in the world. With an electricity production of 10.3 billion kwh each, the nuclear power stations Grafenrheinfeld and Isar II were among the leaders in the 21 nuclear power stations in operation in Germany.

The 1990s and Beyond

By the early 1990s, more than half of Bavaria's electricity needs were generated by nuclear power stations. While the price of electricity in Bavaria was clearly above the German average in the 1960s and 1970s, Bayernwerk's expansion into nuclear power contributed to the fact that Bavaria, although poor in raw materials, had cheap electricity at its disposal by the beginning of the 1990s. Furthermore, the preservation of the environment played an important part in Bayernwerk's policies: with electricity generated by nuclear and hydroelectric power, harmful substances such as carbon dioxide were not released. In 1991 almost one-quarter of the electricity Bayernwerk generated came from coal-fired power stations, while oil and gas power stations only served as reserve generators, thus conserving precious fossil fuel reserves. Moreover, as part of Bayernwerk's environment program, the removal of nitrogen and desulfurization of the coal and oil in modern flue-gas treating installations reduced to a minimum emissions of harmful substances.

Along with good-value electricity and care for the environment, the reliability of supply was one of Bayernwerk's stated aims. As a national electricity supply company, Bayernwerk was running a network of high voltage and maximum voltage lines totaling 5,500 kilometers in length, and is linked to the Western European grid system. Bayernwerk regulated the provision to this grid, as well as the use of the power stations, from its distribution center in Karlsfeld near Munich, whose high-technology computer installations ensured that the balance between electricity demand and electricity production was maintained.

The constantly growing demand for energy and the limited quantity of natural resources made the development of new technologies and research into possible energy sources for the future indispensable. In the early 1990s, Bayernwerk had a 60 percent share in the Solar-Wasserkraft-Bayern GmbH in Neunburg vorm Wald in the Upper Palatinate. Hydrogen--perhaps the energy source of the future--was derived from the fission of water in electrolysis plants in this research center, and the electricity for this process came from solar cells. The hydrogen produced in this manner could be stored and employed according to requirements. Furthermore, Bayernwerk put into operation a trial model for providing solar energy in FlanitzhĂĽtte, a remote area in the natural park of the Bayerischer Wald. The aim was to supply five estates there, totally independently from the public network, with electricity derived from solar power from a photovoltaic plant.

The reunification of Germany in the early 1990s provided Bayernwerk with another task for the future, and it undertook the construction of a highly efficient and environmentally friendly energy supply in the former German Democratic Republic. Three new subsidiary companies--Energieversorgung NordthĂĽringen AG, OstthĂĽringer Energieversorgung AG, and SĂĽdthĂĽringer Engergieversorgung AG--were founded at the beginning of 1991, Bayernwerk holding a 51 percent majority share in them. These subsidiaries, provided with a great deal of investment and specialist technical support, would bring about the reorganization of the supply of electricity and long-distance heating in the eastern German state of Thuringia. In 1991 Bayernwerk had already built a 380-kilovolt grid from Redwitz in Bavaria to Remptendorf in Thuringia.

The opening of the Iron Curtain also enabled closer cooperation with the states of eastern Europe. Thanks to the direct current network coupling in the border region near Etzenricht in the Upper Palatinate, the company planned to make possible exchange of current between the two maximum voltage networks in Bavaria and the Czech Republic. This would make mutual help possible in the case of power station breakdowns, or if power stations had to be closed down temporarily owing to a danger of smog.

In the mid- to late 1990s, Bayernwerk placed an emphasis on many of the issues on which it had focused in the earlier part of the decade: continued reunification of Germany, and exploration of joint-venture opportunities with businesses in other parts of the newly unified European continent; and development of alternative energy sources and other methods for preserving the environment. Added to these concerns were new ones, in the form of expanded business ventures, particularly in the realm of telecommunications; privatization of utilities; and the concomitant downsizing and streamlining of the vast enterprise that is Bayernwerk and the Bayernwerk Group.

A principal area of activity for the company in eastern Germany was in the state of Thuringia, where it operated through a number of subsidiaries including Vereinigte Energiewerke AG (VEAG). Outside of Germany, Bayernwerk explored joint ventures both to the west--with EdF, a French utility--and to the east. Together with EdF and Germany's own RWE, Bayernwerk belonged to a consortium devoted to increasing the interface between eastern and western Europe. It built a gas line connecting Bavaria and Austria, completed at the end of 1996, and became heavily involved in supplying energy to the Czech Republic, Slovakia and most notably Hungary. In the latter country it acquired interests in an electrical utility, DÉDÀSZ Rt., and a gas company, KÖGÀZ.

Of the electric power Bayernwerk produced in 1996, more than 70 percent came from power stations under its ownership. Power was generated by hydroelectric and nuclear plants, but the company also looked to new sources of energy. It continued to operate its acclaimed Solar-Wassertstoff-Bayern GmbH (SWB) in Neunburg vorm Wald for the production and application of hydrogen. It also held slightly less than half of Siemens Solar GmbH (SSG), the world's largest producer of photovoltaic modules for solar power. Also, the company backed public relations campaigns such as "Citizens for Solar Energy" and "Sun in Schools," which assisted classrooms throughout Bavaria in developing their own photovoltaic construction kits. (The Germany Ministry of Economics took over the latter program at the end of 1996.) In addition, the company devoted considerable resources toward Energy Future in Bavaria, a program designed to promote conservation of resources. It also held a heavy interest in waste management activities through several subsidiaries.

Besides its gas and electric businesses, Bayernwerk in the mid- to late 1990s expanded into the area of telecommunications. On February 15, 1996, it established Bayernwerk Netkom GmbH out of the merger of its communications engineering departments in Bavaria and Thuringia. Though the venture into telecommunications may seem an unusual one, in fact energy companies had been allowed to operate their own telecommunications networks since 1922, the year after Bayernwerk was founded. Bayernwerk Netkom had two aims: first, to provide member companies of the Bayernwerk Group with efficient telecommunications services; and second, to develop a communications network that would serve consumers around the country. In so doing, it would enter into joint ventures, through VIAG, with companies including British Telecom and MCI.

On the first day of 1996, Germany ceased subsidization of coal, another move in a nationwide trend to take the government out of the realm of business enterprises. Bayernwerk continued to change with the successive movements toward privatization. In 1996, the company reduced its numbers of employees, chiefly by the concentration of hydropower and telecommunications activities. But for the slimmed-down work force, new opportunities presented themselves. For instance, the company implemented flexible work hours to increase efficiency and give workers a greater sense of personal freedom. It also increased its vocational training programs, in part as a response to high unemployment in reunified Germany. As its contribution to the "Employment in Bavaria Pact," a statewide jobs program, the Bayernwerk Group in 1996 undertook the vocational training of almost 650 young people. As Bayernwerk enters the 21st century, privatization would likely continue to have far-reaching effects on the company, the group, and all subsidiaries.

Principal Subsidiaries: Energieversorgung Oberfranken AG (26.3%); CONTIGAS Deutsche Energie AG (Contigas) (88.8%); Energieversorgung Ostbayern AG (95.7%); Uberlandwerk Unterfranken AG (55.4%); Grosskraftwerk Franken AG (98.3%); Fränkische Gas-Lieferungs-Gesellschaft mbH (65%); Untere Iller AG (60%); Solar-Wasserstoff-Bayern GmbH (70%); WBG--Wohnen, Bauen, Grund, Gesellschaft für Wohn--u. Gewerbeimmobilien GmbH (99.9%); Thüringer Energie AG (53%); Isar-Amperwerke AG (80.8%); ILSE-Bayernwerk Energieanlagen GmbH; Gasversorgung Thüringen GmbH (89.8%); Thyssengas GmbH (50%); Gerresheimer Glas AG (51%); Klöckner & Co. AG; VIAG-Bayernwerk Beteiligungsges. mbH (50%); Gesellschaft der Energiewirtschaft für Daten- and Organisationsservice mbH (51%); Telekommunikation Gesellschaft für Betrieb und Dienstleistungen mbH (50%); Bayernwerk Netkom; Bayerische Wasserkraftwerke AG; Rhein-Main-Donau AG (77.5%); Bayernwerk Wasserkraft AG (69%); ReCon Projektentwicklungs- und Beteiligungsges. mbH (90%).

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Further Reference

25 Jahre Bayernwerk, Munich: Bayernwerk AG, 1946.30 Jahre Bayernwerk AG Bayerische Landeselektrizit&aumlĂ—versorgung, 1921-1951, Munich: Bayernwerk AG, 1952."FĂĽnfzig Jahre Bayernwerk 1921-1971," in Bayerischer Braunkohlen Bergbau, No. 81, June 1971.Kristl, Wilhelm Lukas, Der weiblaue Despot. Oskar von Miller in seiner Zeit, Munich: Richard Pflaum Verlag, 1965.Responsibility and Vision. Munich: Bayernwerk AG, 1996.von Miller, Walther, Oskar von Miller, Munich: Bruckmann Verlag, 1932, 2nd edition, Munich, 1955.Zorn, Wolfgang, "Bayerns Gewerbe, Handel und Verkehr (1806-1970)", in Max Spindler, Handbuch der bayerischen Geschichte, vol. IV, Das neue Bayern 1800-1970, verbesserter Nachdruck, Munich, 1979.

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