Utility becomes major wind player -- Vattenfall makes big splash

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In a significant round of utility jostling in Scandinavia, Swedish utility Vattenfall has emerged as a major player in the European wind power business. If the game plan gains authority approval, Vattenfall will own 458 MW of Danish wind plant, including 60% of the Horns Reef 160 MW offshore wind farm, plus offshore developments in the UK and Germany. All were previously owned by Danish utilities Elsam or Energi E2.

The acquisitions, which will make Vattenfall the next largest owner of wind generation in Denmark, are part of an assets for shares swap in which Vattenfall relinquishes its 35% stake in Elsam to clear the way for the birth of a major Danish energy company. Elsam's wind assets, together with four fossil fuel plants in Denmark, were payment to Vattenfall for its share of the Danish utility, which will go to Danish Oil and Natural Gas (DONG).

The agreement allows DONG to gain a decisive majority share in Elsam. If competition authorities approve the deal, by January 2006 DONG will control 76% of Danish electricity production, including 580 MW of wind. Vattenfall will own the remaining 24%, including its 60% share of Horns Reef, which it will become the operator of.

Offshore acquisition

Vattenfall will also own all of Elsam's foreign wind generation, including the 90 MW Kentish Flats offshore development under construction in the UK and Elsam's wind turbines in Poland, but not projects under development overseas. The deal includes Energi E2's third share of Germany's 100 MW offshore Borkum Riffgrund project.

Vattenfall's wind acquisitions do not stop there. It has bought Sweden Offshore Wind for SEK 95 million (EUR 10.3 million) from Germany's Wind-Projekt Development AG (WPD), giving Vattenfall control of the 640 MW Krieger's Flak project. A further SEK 8 billion is needed get the 148-turbine site up and running. Vattenfall also paid SEK 5 million to take over the offshore wind development division of Norway's Fred Olsen A/S, Östersjöns Vindkrafts AB.

The deals indicate a new urgency at Vattenfall to get seriously to grips with wind power development. "The acquisitions are part of an overall strategy both in terms of renewable energy and to integrate our Swedish and Danish operations," says Vattenfall's Erik Von Hofsten. "Wind power is central to our business strategy and we would not rule out further purchases, but it is unlikely it would be in the near future."

The company's Lars G Josefsson adds, "This structure ensures that we get new competence and increased resources in the Nordic operation to continue to develop long lasting environmentally friendly energy solutions like wind power and bio energy."

Krieger's Flak is a two-tier project in German and Swedish waters. WPD received a permit for the German 328.6 MW phase in the spring. Sweden Offshore Wind had lodged an application for the Swedish phase, Krieger's Flak 2, in December, along with an application for a grid connection. The project may be running into difficulties, however. Questions have been raised about whether there is grid capacity enough to connect it to the Swedish grid at Trelleborg.

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