Austrian electricity generator Verbund and German power group E.ON-Energie, yesterday agreed to form a joint hydropower corporation to be based in Austria under joint ownership. The companies are the largest producers of electricity from hydropower in Austria and Germany respectively and believe the new venture will enable them to optimize the use of environmentally friendly hydropower for electricity production.

The new company, European Hydro Power GmbH (EHP) will own more than 200 hydroelectric power plants with a capacity of approximately 9600 MW and have an operational capacity of 35 000 GWh. The venture will strengthen E.ON’s position in Austria ahead of market liberalization and will involve approximately 2,500 employees across Austria and Germany.

In a statement Verbund said, “This step involving two electricity companies who look already back on a longstanding co-operation leads to the creation of Europe’s largest company that produces electricity exclusively from environment-friendly, renewable hydropower.”

E.ON-Energie and Verbund will bring into the new company their hydropower activities, which are concentrated in the E.ON Wasserkraft GmbH and Verbund-Austrian Hydro Power AG. According to a provisional evaluation Verbund will hold 60 per cent and E.ON-Energy will hold 40 per cent of European Hydro Power. The electricity generated by EHP will be sold to the parent companies in proportion to their ownership.

Verbund said that the joint venture would strengthen its competitive position and will achieve synergies across the European market.

In addition, Verbund and E.ON-Energie are planning longer-term co-operation in trade and distribution. As a first step they envisage to invest jointly in a European trading house in Berlin. Verbund also has the option to make use of E.ON’s know-how in the area of distribution.