Vattenfall Profile

Steve Thomas
Date published: 

Corporate changes since 2007

Vattenfall is the main Swedish energy company and is 100 per cent owned by the Swedish state. Its main activities outside Sweden are in Germany (these are larger than its Swedish operations) where it is the incumbent electricity company in Berlin, Hamburg and the former East Germany. In Denmark, a failed attempt to take over a large electricity company, Elsam, led to it acquiring generation capacity of approximately 2500MW (e) and 2100 MW heat from Elsam and E2 (both taken over by DONG (see below). It also has assets in Finland and Poland. Vattenfall followed EON’s example in offering to sell of its German grid in June 2008[1].

In November 2008, Vattenfall acquired 18.7% of the Polish energy company Enea. The company, which is one of four state-owned energy companies in Poland, has 2.3 million customers and accounts for approximately 8% of the country’s total energy generation. The acquisition makes Vattenfall the largest foreign energy company in Poland. However, Vattenfall chose not to bid in August 2009 when the Polish government offered 67.05% of the stock.[2]

In December 2008, Vattenfall announced that from January 2009, it would create a new business unit, Wind, Nuclear & Engineering, and the ‘Trading’ would get ‘a more marked placing’ in the new organisation.[3] Their main strategic move was the takeover of the Dutch energy company, Nuon in February 2009.[4] It was reportedly outbid by RWE for the comparable company, Essent, only a month earlier. It will pay a total of €8.5bn in cash for the company. It will initially take 49% of the shares and its stake will build up to 100% over the following 6 years. As with the sale of Essent to RWE, Nuon’s networks were not included in the deal. The deal will give Vattenfall a better connection between its main Swedish and German businesses. As part of the conditions imposed by the European Commission to allow the takeover of Nuon, Vattenfall sold the German subsidiary of Nuon to a regional German company, Suedwestfalen Energie und Wasser AG, for an undisclosed price.[5]

In November 2009, Vattenfall rebranded its German Transmission Operator system as 50 HertzTransmission. Vattenfall Europe Baltic Offshore Grid, the transmission grid subsidiary responsible for erecting and operating the lines connecting the offshore wind farms to the onshore power grid will be renamed 50Hertz Offshore.[6] The transmission network itself is also for sale and but by end of January 2009, no buyer had been selected. Elia, the Belgian transmission company was reported to have bid €650m, but they had been outbid by a consortium of financial investors, including Goldman Sachs, Deutsche Bank and Allianz.[7]

1.2.          Corporate Structure

Vattenfall is divided into two main divisions, the Nordic and the Central Europe Business Groups, with the Central Europe division basically comprising the German and the Polish businesses. These divisions are subdivided into generation, distribution, sales and heat businesses.

Table 1.         Vattenfall’s activities by division (SEKm)


2007 external net sales

2007 operating profit

2008 external net sales

2008 operating profit






Central Europe















Source: Vattenfall Annual Report & Accounts, 2009.

Notes: €1=SEK10.94

Table 18 shows that despite being a nationally owned Swedish company, its primary business is its foreign activities, notably its German companies, but in the future, its Dutch and Danish companies. It does not provide a breakdown by national markets of its operations so it is difficult to compare the size of, say, the Polish and the German businesses exactly. Despite this, the Nordic market operations are far more profitable than the Central Europe operations.

Table 19 shows that, like a number of the other large companies, the generation activity appears highly profitable, while the retail business’s profitability is poor. Given that much of the generation business’s sales are internal transactions, supplying the retail businesses, it is difficult to know whether this reflects the real profitability of the businesses or not.

Table 2.         Vattenfall’s activities by segment (SEKm)


2008 external net sales

2008 Operating profit



















Source: Vattenfall Annual Report & Accounts, 2009.

Notes: €1=SEK10.94

The Future

About two thirds of the capacity Vattenfall has under construction in Western Europe (see Tables 5 and 8) is coal-fired (in Germany), although it is planning off-shore wind for the UK.

Vattenfall has long stated ambitions to take a significant market position in the UK, but so far, its main business in UK is its wind power investments. It did this mainly by acquiring three companies: AMEC Wind, with projects totalling 500-750MW; Eclipse Energy, which has six projects with a capacity of 200MW; and Thanet Offshore Wind, which is building the largest off-shore wind project in the UK with a capacity of 300MW.

Vattenfall had been involved in the UK nuclear construction programme but in June 2009, Vattenfall said it was putting on hold for 12 to 18 months any decision on whether to participate in the UK's new construction program. Vattenfall cited the recession and economic uncertainty as reasons for holding off.[8]

Its annual report lists nuclear, renewables (including use of biomass in its fossil fuel stations and Carbon Capture and Storage (CCS) all as elements of its long-term strategy. Up to 2020, it sees renewable (biomass and wind) as the most important element. It also sees ‘further development of its existing nuclear power, i.e., keeping its plants in Germany and Sweden in operation despite the phase-out policies that apply in both countries. However, in the long-term, it seems to see Carbon Capture and Storage (CCS) as the most important strategy. Its 2008 annual report states:[9]

‘Most important over time will be the adoption of the emerging CCS technology, which makes it possible to capture and store carbon dioxide instead of emitting it into the atmosphere. In September 2008 Vattenfall inaugurated a pilot CCS plant at Schwarze Pumpe, Germany, and it is our ambition to participate in the EU’s programme for demonstration plants on a larger scale.’

Its existing nuclear plants have been problematic since 2007. Its two German plants, Brunsbuttel and Krummel (50% owned by Vattenfall), were shut in June 2007, after a serious electrical fires at both stations.[10] In July 2009, Brunsbuttel was not expected to be back on-line till 2010, while Krummel returned to service in June 2009 but in July 2009, went off-line and was still off-line in August 2009.[11]

At the Ringhals[12] site and Forsmark[13] sites in Sweden, Vattenfall where there are, respectively, four and three, nuclear reactors, majority owned by Vattenfall has been in conflict with the Swedish Radiation Authority. It has placed the Ringhals plants under ‘special supervision’ because it has ‘observed deficiencies that can be linked to the safety culture’ at these units. The Swedish Radiation Safety Authority said that Vattenfall had failed to correct safety shortcomings the authority had pointed out for the past years.[14] An issue that can be raised is if these accidents and a failing security culture can be linked to the company’s corporate behaviour and profit maximisation.

Swedish decommissioning funds are fully segregated but in Germany, Vattenfall has access to the funds for the reactors it owns.

  • [1] Utility Week ‘energyVattenfall Europe to divest power network’ June 13, 2008.
  • [2] Global Insight ‘RWE Pulls Out of Privatisation Deal for Poland's Enea’ October 15, 2009
  • [3] Vattenfall, 2008 ‘Vattenfall develops its organisation’ Press Release, 17 December 2008.
  • [4] Agence France Presse ‘Sweden's Vattenfall to buy Dutch Nuon for 8.5 billion euros’ February 23, 2009.
  • [5] M&A Navigator ‘Vattenfall to dispose of Nuon Deutschland’ January 25, 2010.
  • [6] European Daily Electricity Markets ‘Vattenfall TSO renamed 50Hertz Transmission’ November 23, 2009.
  • [7] TendersInfo ‘Germany : Fin consortium sweetens bid for Vattenfall s German grid’ January 15, 2010.
  • [8] Nucleonics Week ‘NDA offers Sellafield as last parcel for potential nuclear construction’ June 11, 2009, p 4.
  • [9] Vattenfall, 2009 ‘Annual report’ Vattenfall, Stockholm, p 5.
  • [10] Nucleonics Week ‘Complex repairs to push restarts of Brunsbuettel, Kruemmel into 2009’ December 11, 2008,
  • [11] European Daily Electricity Markets ‘Vattenfall's Brunsbüttel nuke off line until 2010’ July 30, 2009
  • [12] Associated Press ‘Swedish nuclear plan under special supervision’ July 8, 2009.
  • [13] Nucleonics Week ‘Regulators: Safety culture problems at Forsmark persist despite changes’ Sept 11, 2008, p 11.
  • [14] UPI Energy ‘Vattenfall's image tarnished’ July 10, 2009.