Vattenfall wipes £3bn off power plant values

The write-downs came primarily at its coal, gas and combined heat and power (CHP) plants, where Vattenfall blamed lower than predicted future revenues on cheap emission allowances under the EU emissions trading scheme (ETS).

The low price of carbon has seen predicted future electricity prices plummet by as much as 28%

Due to lower levels of industrial activity there is currently a surplus of trading allowances in the ETS, which has pushed carbon prices down to around Euro 5 per tonne – about a sixth of the peak reached since the ETS was launched back in 2005.

Earlier this month European politicians resumed negotiations over withdrawing 900 million allowances to shore up the carbon price, having failed in a previous attempt to do so back in April.

The low price of carbon, combined with lower coal prices, has seen predicted future electricity prices plummet by as much as 28% over the past year in Vattenfall’s key markets of the Nordic countries, the Netherlands and Germany.

These predicted lower prices mean lower revenues in future and as a result Vattenfall has written-down the value of its gas and hard coal-fired power plants in the Netherlands by SEK 14.5 billion (£1.46bn), its coal-fired power plants in Germany by SEK 4.1 billion (£411 million), and its CHP plants in the Nordic region by SEK 2.5 billion (£251m).

A Vattenfall spokesman told Process Engineering that the write-down of the CHP plants was largely due to the sale earlier this month of the company’s Amager coal and biomass CHP plant, valued at SEK 2 billion (£200 million), but was also affected by the low coal prices.

In addition to writing down the value of power plants, Vattenfall also revelead it would be cutting back its investments over the next five years by SEK 18 billion (£1.8bn) to SEK 105 billion (£10.55bn).

The spokesman declined to comment on where these cuts would be made, saying only that the remaining investment would be focused on core areas such as UK offshore wind.