Berlin Secures District Heating Network from Vattenfall: A New Era Begins
In an unprecedented move, the state of Berlin has snatched its district heating network from Swedish energy giant Vattenfall. The announcement, made by Berlin's Governing Mayor, Kai Wegner (CDU), and Vattenfall, indicated that the Berlin Senate had agreed to purchase the network for a hefty 1.6 billion euros. Finance Senator Stefan Evers (CDU) confirmed this price, with the Senate set to present its financing plan to the House of Representatives in the first quarter of the year. Slated for completion in the spring of 2024, the transaction promises to mark a significant turning point in Berlin's energy landscape.
Wegner described the day as historic for Berlin, while Senator Franziska Giffey (SPD) - responsible for Economic Affairs in the city - said, "We're bringing the heat back home, we're bringing the heat back into Berlin's state hands." However, the deal is yet to secure approval from the Berlin House of Representatives. Moreover, the agreement comes with an optional contract for Vattenfall to sell its shares in gas network operator Gasag, adding another layer to the proceedings.
Vattenfall's intentions to move away from fossil fuels made this decision a crucial one for the energy supplier. In 2022, the company announced an evaluation of its district heating business for 1.4 million apartments in Berlin, following which the Berlin Senate expressed its interest in purchasing the company. Vattenfall then initiated a bidding process in December 2022 and entered exclusive negotiations with the Senate by the end of October.
For years, the Berlin state government has focused on maintaining public ownership of all energy and supply infrastructure. The city already boasts public ownership of its electricity and water networks, and the acquisition of the district heating network now extends this practice. On the flip side, the gas network will remain private for an extended period.
Despite its intentions to phase out fossil fuels, Vattenfall deemed it necessary to test its district heating business in Berlin. It planned a sale, but a final decision was yet to be made. However, Vattenfall recently announced investments of 200 million euros aimed at enhancing the network's capabilities, with an industrial heat pump and a new steam turbine to be installed at the Reuter West site.
Though we can't disclose the exact amount paid by Berlin for the district heating network, the acquisition represents a significant step towards lower carbon emissions in the city's heat provision. Meanwhile, Vattenfall is actively developing its heat network in Diemen, the Netherlands, with a focus on reducing CO2 emissions, while acquiring the heating installation company Geosolar Group aligns with Germany's broader strategy for more sustainable heat solutions.
Additional Insights
- The acquisition of Vattenfall's heating business in Berlin was completed in 2024, with Berlin making a substantial financial commitment to secure the network. The specifics of this investment aren't publicly disclosed.
- The network focus on low-emission heat sources will help Berlin's quest for a greener energy supply. Vattenfall, on its part, is also dedicated to reducing emissions in its heat network in Diemen, the Netherlands.
- With its acquisition of Geosolar Group, Vattenfall expands its portfolio to contribute to more sustainable heating solutions in Germany, maintaining its commitment to a greener future in the energy sector.
Source:
