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An Analysis of the Critical Drivers of Firm Performance for Profitable Grid Owner Companies in Germany

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Peschke, Hagen (2020) An Analysis of the Critical Drivers of Firm Performance for Profitable Grid Owner Companies in Germany. DBA thesis, University of Gloucestershire. doi:10.46289/OQAM1944

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Official URL: https://doi.org/10.46289/OQAM1944

Abstract

This thesis focuses on the new networking and cooperation phenomenon known as grid owner companies in Germany, in which electricity and gas distribution are governed by rights-of-way contracts. A process began ten years ago to phase out more than 20,000 rights-of-way contracts throughout Germany. Often, a grid owner company is established whose shareholders are the current energy company and the municipality. Moreover, large numbers of rights-of-way contracts between municipalities and energy companies contain options to set up grid owner companies. The main aims of this thesis are to contribute to the understanding of the practical phenomenon of grid owner companies from a financial and legal perspective by identifying the population of German grid owner companies and by analysing the relationships between the firm size, the legal form, the ownership structure and performance of these companies, measured by the Return On Assets ratio (ROA). Based on the philosophical stance of positivism, multiple linear regression analysis using ordinary least squares is applied to sample data from 2010 to 2015 in order to analyse the relationships between the firm size, the legal form, the ownership structure and performance of German grid owner companies. According to the findings, a total of 170 German grid owner companies have been identified. The findings of the research indicate that population and area as proxies for firm size, private participation quota and the legal form of a limited partnership with a limited liability company as a general partner have a positive and significant influence on ROA. This thesis is the first comprehensive study that is solely dedicated to the new phenomenon known as grid owner companies in Germany and provides fundamental financial insights. In particular, municipalities and energy companies that are faced with the decision on the design of a grid owner company are recommended to choose large grid owner companies with the legal form of a limited partnership with a limited liability company as general partner to achieve a high level of firm performance.

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Thesis (DBA)

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