German utility RWE and Swiss power company Energie Ouest Suisse have signed a 10-year agreement to exchange hydroelectric and coal-fired power that will come into effect on January 1, 2009. RWE will supply around one billion kWh per year of electricity from hard coal-fired power plants.

In a press release, RWE said that the companies expect the exchange to further optimize their economic positions with respect to base and peak load generation. There will be advantages for both parties, as a result of the avoidance of bottlenecks and the efficient use of generation capacities.

The power trading arm of RWE and Energie Ouest Suisse (EOS) have agreed that both partners will be able to exchange coal-fired base load generated by RWE’s power generation unit for hydroelectric peak load generation by EOS. The exchange will be for the next day, will take place on a virtual basis and will be based on long-term parameters.

As a result, RWE will have short-term, flexible access to peak loads that it would otherwise have had to buy on the market. Meanwhile, Lausanne-based EOS will have short-term, economical access to next-day coal-generated base loads and then, in return, will be able to supply peak loads to RWE. The costs for the coal-fired power procured by EOS will be calculated at the corresponding coal and carbon dioxide allowance costs as determined by current market prices, RWE said.

Johannes Lambertz, the member of RWE Power’s board responsible for fossil fuel-fired power plants, said: The logistic advantages of the coal-fired base load power production at RWE locations and the high degree of flexibility offered by hydroelectric power generation in the Alpine countries complement each other really well.