It is roughly one year since Vattenfall sold its four brown coal power plants and four open cast mines in Germany. The state power company was criticised in Germany for shrugging of its environmental and employment responsibilities and in Sweden for selling when brown coal was at its cheapest.
The company is working to abolish coal-powered energy by 2030. German Vattenfall is to invest over EUR 2 billion, around SEK 19 billion over the coming five years. “That is with growth within renewable energy and customer business, growth in distribution of power, gas and heating and redesign of our production park for heating,” says Tuomo Hatakka, head of Vattenfall GmbH, which is counting on the German government continuing to realign to greener energy. (
Yesterday’s quarterly report from energy giant Vattenfall presented a rise in operating profits and profits after tax of SKr 6 billion, thereby granting CEO Magnus Hall some breathing space.
However write-downs for German brown coal, if the government approves Vattenfall’s sale, are expected in the next report and the company must make a decision to make new investments into nuclear power or decommission.
“Without investment… we will not be allowed to run the reactors after 2020. We are not going to make investments if the government does not remove the tax on nuclear power completely. That is a definite decision from us,” says Magnus Hall.
Meanwhile DN reports Vattenfall has no plans to scrap emission rights, as MEP Jytte Guteland has demanded. Magnus Hall says the rights are part of the deal with the buyer of the lignite operations in Germany.
Czech energy company EPH’s bid to acquire state-owned Vattenfall’s German lignite coal assets will mean a loss of at least SKr 22 billion for the Swedish utility company, and the risk of the government being labelled a deserter on climate change. Magnus Hall, chief executive of Vattenfall, is nevertheless optimistic that the government will approve the sale.
Enterprise Minister Mikael Damberg said the government was receiving help from external advisors, in what is a complex financial transaction, adding, “I am very anxious that this should not become some kind of Nuon process.”
According to Vattenfall’s own calculations, its carbon emissions should fall to a level of 23 million tons per year from the current level of 83.8 million per year as a result of the lignite sale.
Pressure on Enterprise Minister Mikael Damberg is building over Vattenfall’s plans to sell off its German lignite operations. On Friday he received a petition with 65,000 signatures from environmental organisation, Greenpeace, demanding the state energy giant Vattenfall does not sell off its German lignite operations, but leaves the coal in the ground.
Damberg said, “The government only gets involved when there is a proposal. Germany decides German energy policy and the country wants to keep coal in its energy mix for a transitional period.”
The government is also under pressure from the Liberal Party, which wants to see a sale go through, but wants to have climate and environmental conditions attached.
Damberg did not wish to answer what action he will take if Vattenfall presents a sale proposition with no environmental conditions attached.
Sweden’s state-owned Vattenfall said in January this year that the utility would be run as six business areas from April 1, and that lignite power would be left outside this reorganisation (ed.).
Today Danske Bank analyst Jacob Magnussen tells business daily Dagens Industri he believes the exclusion of lignite power from the reorganisation indicates that Vattenfall has come a long way in the process to sell its lignite power plants and coal mines in Germany.
Two Czech power giants, EPH and CEZ, have expressed interest in the business on a number of occasions in the past six months, and recently Poland’s PGE has eyed Vattenfall’s German assets. A price tag of between SKr 20 and 40 billion has been mentioned.
Simultaneousy, Germany’s RWE and E.On are pressing ahead with the sale of their lignite businesses.
Just how the government will react, if an offer is made, is unclear. The Green Party has called for the closure of the lignite mines, while Prime Minister Stefan Löfven has promised that the utility will not strike any more bad deals, such as the one with Nuon.
Meanwhile, during parliamentary question time on Thursday, Enterprise Minister Mikael Damberg said he would not take any stance until a bid has been made. Talking to DI afterwards, the minister said that any deal struck would have to be commercially sound.
In the run up to last September’s general election, the Green Party said one of the first measures of a centre-left coalition government would be to stop Vattenfall from enlarging its lignite mines in Germany. Six months on, it’s business as usual at Vattenfall. Even if the Social Democrats and the Green Party have agreed that the state-owned utility must cut its carbon emissions, no new directives have been issued to halt the expansion plans.
So, what does the government intend to do? While the Green Party has called for the closure of the German coal operations, the Social Democrats have welcomed Vattenfall’s plans to divest the German coal business.
Moderate MP Lars Hjälmered is now demanding clarity from the government as to what it intends to do with the German business.