Vattenfall weighs up selling stakes in 5GW offshore wind portfolio

CEO Anna Borg says the Swedish developer is looking at reducing its holdings in the 1.5GW Hollandse Kust Zuid development off the Netherlands and the UK's 3.6GW Norfolk sites

CEO Anna Borg gave an update on Vattenfall's financial results and offshore wind strategy

Vattenfall is considering selling stakes in two large, under-development offshore wind clusters to reduce its net investments over the next two years.

The Swedish energy giant had previously confirmed its intention to reduce its stake in the 1.5GW Hollandse Kust Zuid projects, but now has updated its plans to also sell part of the 3.6GW Norfolk complex off the UK.

It plans SEK 57 billion (€5.6 billion) of net investments in 2021 and 2022, though gross investments for this period currently amount to SEK 78 billion. Most of this difference is attributable to the 1520MW Hollandse Kust Zuid , 1396MW Norfolk Boreas and 1380MW Norfolk Vanguard West projects.

In a conference call with reporters as the comapny announced its full-year financial results, CEO Anna Borg would not confirm what size stake Vattenfall might consider selling or when sales might be agreed.

However, she added: “We will do it when the time is right for us. I wouldn’t be surprised if we partner for Hollandse Kust Zuid in 2021, but the Norfolk projects are further out in time, so we are less certain on that.”

Wind accounts for most (SEK 23 billion) of Vattenfall’s planned SEK 32 billion capital expenditure on growth in this period. It also plans to spend SEK 14 billion on maintenance of existing assets and SEK 10 billion on replacements.

Financial results

Meanwhile, lower electricity prices and more maintenance work squeezed wind power’s contribution to Vattenfall’s financial results for last year.

However, the company’s diversified business portfolio largely helped stabilise its finances in 2020 as the phase-out of a large German coal plant squeezed its net profit for the year.

The Swedish utility’s net profit for 2020 was down 48% to SEK 7.7 billion (€760 million), while its underlying operating profit – with unusual, non-recurring costs stripped out – rose 2.7% to SEK 25.7 billion.

The company said that — in addition to low electricity prices and lower sales during the coronavirus pandemic — it had faced a hit from the phase-out of its Moorburg coal plant near Hamburg, Germany.

However, CEO Borg explained the firm’s diversified business portfolio – which also features renewable energy and energy trading – helped stabilise business last year.

Vattenfall boosted its wind portfolio in 2020, with the commissioning of large wind farms such as the 407MW Horns Rev 3 and 301MW Princess Ariane (formerly Wieringermeer) projects.

This – along with higher wind speeds – helped its wind fleet generate more than its wider asset base in 2020. Wind generation rose by 1.1TWh, while total electricity generation decreased by 17.4TWh to 112.8TWh in 2020.

The increase came despite more maintenance work on its wind farms taking place, and therefore being less available, Borg said. “This is something we will see more of with a growing wind fleet,” she added.

However, lower electricity prices and higher maintenance costs squeezed wind’s contribution to the company’s underlying profit by 4% to SEK 3.9 billion.