Munich is the third largest city in Germany with a population of over 1.5 million people. It is one of the richest cities, with a GDP per capita of over €80,000 and a total GDP of €130 billion – higher than the entire country and particularly higher than the poorest 150 countries in the world.
Munich is one of over a thousand cities and towns that have municipal utilities. SWM, or Stadtwerke München, is a municipal utility company responsible for providing various services to the city and its inhabitants. Founded in 1866 as Municipal Gasworks to supply gas for street lighting in Munich, it grew over the years to include various utilities, such as electricity, water and public transportation. It also serves telecommunications, District Heating, some District Cooling, waste management and public pools.
SWM employs more than 11,000 people and has a consolidated income from complex shared taxes, including federal government and local taxes, as well as from wholly owned subsidiaries. SWM’s revenues rose to 10.6 billion in 2022 and are expected to exceed 12 billion in 2023, due to the spike in gas and energy prices that occurred during 2022 and 2023. Here’s a snapshot of electricity, Natural Gas, and District Heating, which represent over 87% of SWM’s revenues:
In 2023, the price of electricity more than doubled due to the Russia-Ukraine war, as shown in the latest residential and commercial rate of SWM.
It is to be noted that the average price of electricity rose from €12.5 cents in 2022 to over €30 cents in 2023. Similarly, Natural Gas rose from €5 cents in 2022 to around €10 cents in 2023.
SWM has generated enough renewables from local hydropower and solar PV, remote wind turbines in Norway, and solar PV in Spain, equivalent to what it has consumed; and hence, it has decarbonised the electricity sector. SWM is investing heavily in deep geothermal District Energy to decarbonise the heating sector, adding hundreds of car-charging stations and investing in an electric bus fleet, hoping to fully decarbonise the city by 2035. (A full 2022 SWM sustainability report can be found by clicking on the link: https://www.swm.de/dam/doc/english/swm-sustainability-report.pdf.)
An analysis of numbers
The drastic increase in tariff in 2023 is expected to double SWM’s revenues in 2023 and lower the consumption trend owing to the increase in tariff that occurred in 2022, when compared to 2021, which was due to a milder winter, as per SWM.
The consumption per capita in the city is one of the highest in the world for total electricity, Natural Gas and District Heating – it stood at 131,385 and 86,571 kWh/capita in 2021 and 2022, respectively, out of which electricity contributed 24,315 and 20,680 kWh/capita, respectively. That is compared to 15,194 kWh/capita for electricity in Dubai, which is used for 100% electric cooling as well as other power consumption. Hence, Munich has a much higher net footprint per capita for power and heating than Dubai.
SWM, to remain competitive and to comply with federal control on tariffs, had a net profit of €500 million in 2022, which was barely five per cent of the revenues. Still, the company is planning to invest over €6 billion over the period 2023-2027 in the following sectors:
· €2.35 billion in public transport
· €0.85 billion in expansion and modernisation of infrastructure networks (electricity, gas, District Heating and water)
· €1.155 billion in expansion of renewable energy
· €0.1 billion in expansion and maintenance of conventional generation plants
· €0.35 billion in expansion of deep geothermal District Heating
· €0.35 billion in company-flat expansion campaign
· €0.1 billion in expansion of fibre optic future-proof networks
· €0.05 billion in maintenance of public pools
What Munich is doing right
Munich is doing everything right in terms of municipalisation and of a roadmap towards carbon neutrality. The major deviation is to link consumption to efficiency – that is, kWh/m2 – and to penalise inefficient homes and commercial spaces, and use the money generated to invest in building conversion, which can improve the building sector’s general power efficiency.
Also, the city needs to generate higher profits to accelerate investment in District Heating, reduce municipality public debt and focus on decarbonisation of all sectors.
The writer is CEO, DC PRO Engineering and Author, The Energy Budget. He may be reached at firstname.lastname@example.org