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Vattenfall completes sale of German heat business

Vattenfall completes sale of German heat business
The State of Berlin has acquired Vattenfall Wärme Berlin AG (photo courtesy Vattenfall).

Sweden-headed energy utility major Vattenfall AB has announced that has transferred all shares in Vattenfall Wärme Berlin AG, including the power plants, grids, subsidiaries, employees and shareholdings, to the State of Berlin, Germany.

According to a statement, the corresponding contracts were signed in December 2023. The Berlin Parliament approved them in March 2024. The Federal Cartel Office also granted the necessary merger control clearance in early April 2024.

With the sale, around 1,800 persons will no longer work for Vattenfall, but for an entity owned by the State of Berlin.

In the coming months, further employees from Vattenfall’s central functions, such as HR and Finance, will transfer to the heat company.

Entire heating business in Berlin

The sale relates to the entire heating business in Berlin, including the subsidiaries of Vattenfall Wärme Berlin AG.

The object of the sale is all shares (100 percent) of Vattenfall Wärme Berlin AG, which holds further interests, including in Fernheizwerk Neukölln AG, Berlin (80.80 percent) as well as in Vattenfall Energy Solutions GmbH and Energy Crops GmbH (100 percent each).

The sold heating business supplies around 1.4 million residential units with hot water and heat. The business operates 10 large heating and combined heat and power (CHP) plants, 105 smaller CHP units, and various other facilities in Berlin.

The heating network has a total length of around 2,000 kilometers.

Further investment to complete the energy transition plan

When the sales contracts were signed in December 2023, a purchase price based on an enterprise value of just under EUR 2 billion was agreed.

After preparing the 2023 annual financial statements and deducting net liabilities, among others for pension obligations, the purchase price amounts to approximately EUR 1.4 billion.

To generate 40 percent of district heating from renewable energy sources by 2030 as planned and to achieve climate neutrality from 2040, additional EUR billions will need to be invested.

The sale means the end of Vattenfall’s district heating activities in Germany.

However, Vattenfall says it remains an “important player in the German energy transition, with more than five million customers, fossil-free electricity production from hydro, continental European wholesale activities, and heavy investments in solar, onshore, and offshore wind capacities and charging points for electric vehicles.”

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