Vattenfall to divest Berlin heating business to Berlin State in €1.6bn deal

Vattenfall, a key player in the energy sector, has finalized its strategic review and decided to sell its entire district heating business in Berlin to the State of Berlin. The deal, marking a significant shift in the energy landscape, involves a purchase price based on an equity value of approximately EUR 1.6 billion, derived from an enterprise value of just below EUR 2 billion.

Transitioning to Renewable Energy

This sale is pivotal for Vattenfall and the State of Berlin, aligning with Vattenfall’s decarbonization ambitions and commitment to the Berlin energy transition. Anna Borg, President and CEO of Vattenfall, emphasized the importance of finding a buyer who would continue these efforts and be a reliable and fair employer, criteria the State of Berlin fulfills.

The State of Berlin’s acquisition includes plans for substantial future investments, aiming to generate 40% of district heating from renewable energy sources by 2030 and achieve climate neutrality by 2045. Approximately 1,700 employees from Vattenfall Wärme Berlin AG will transition to the new owner.

Vattenfall to Divest Berlin Heat Business to State of Berlin in Strategic Move

Vattenfall’s Strategic Focus

With this sale, Vattenfall ends its district heating activities in Germany but continues its significant role in the German energy transition. Christian Barthélémy, Country Manager Vattenfall Germany, highlighted the company’s focus on supporting suppliers, partners, and customers in living fossil-free lives.

Vattenfall’s leadership in the generation of fossil-free electricity from hydropower in Germany and its investments in solar, onshore, and offshore wind projects, including the Nordlicht cluster wind farm, are testament to its ongoing commitment to renewable energy.

Background of Vattenfall’s Heat Business

Vattenfall’s heat business in Berlin, established in 1999, includes the operation of 10 large-scale combined heat and power plants and various other facilities, supplying hot water and heating to about 1.4 million residential units. The sale encompasses all shares in Vattenfall Wärme Berlin AG, including its subsidiaries.

Strategic Sale and Future Outlook

The transaction, expected to close in the second quarter of 2024, is subject to the approval of the Berlin parliament and merger control clearance by the Federal Cartel Office. The sale reflects Vattenfall’s strategic shift to focus more on renewable energy and maintain its position as a key player in Germany’s energy sector.