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Vattenfall writedown wakens Nuon spectre

The leader of the Swedish opposition wants the government to appoint a crisis commission to probe energy giant Vattenfall's purchase of Nuon, which after Tuesday's writedown is worth 42 percent of its original price.

Vattenfall writedown wakens Nuon spectre

The government, meanwhile, said it was too early to assess the Dutch outfit’s true value and whether it was a sound investment on the part of Vattenfall to buy it in 2009.

“With the information that we have today, it is clear that it was a very high price. Whether it was a good or a bad deal, however, that we’ll have to evaluate in the long term,” Sweden’s Financial Markets Minister Peter Norman told the media on Tuesday.

“The price was, however, at that point, in line with other business deals, and was backed up by external reviewers.”

The 2009 purchase made Vattenfall one of the three biggest electricity generators in the Netherlands. But three years on, most of Tuesday’s writedown arose from the company’s Nuon operations, where many observers have said it overpaid for its Dutch subsidiary.

Norman underlined that the government had nothing to do with the board of the state-owned company’s decision to buy the Dutch power company, although credit raters Moody’s noted in 2011 that “The Swedish state exercises long-term active ownership over the company and views value creation as a paramount goal for Vattenfall”.

While then Enterprise Minister Maud Olofsson decided not to order a review into the board’s decision, she also did not discuss the issue with other cabinet ministers, nor with the other leaders of the four-party ruling coalition, Norman said.

Social Democrat leader Stefan Löfven said Tuesday’s writedown made the need to properly investigate the decision-making process more pressing than ever.

“They are incredibly big writedowns, so of course it’s serious, and the question of Nuon becomes relevant again,” Löfven told the TT news agency.

“It’s obvious to me that the government is trying to skirt responsibility, they’re trying to dodge the question and have tried to put the lid on the whole thing. But it is the government, and by extension the head of the government, which is responsible for this deal.”

Löfven said Norman’s claim that the rest of the government had not been consulted appeared to contradict a previous statement to the parliamentary committee on constitutional affairs, in which the government stated it had approved the purchase.

“It’s incredibly odd,” Löfven said. “And this is a deal in the 100 billion kronor scale… if it’s that easy for one single minister to make that decision… frankly, I don’t know which is worse.”

He further claimed that it was inconceivable that a board or a minister would be allowed to sign off on such a large deal without the knowledge of the prime and finance ministers.

“The head of the government has to speak out and explain what they were thinking,” Löfven said.

Vattenfall also on Tuesday announced that it was separating its traditional Nordic markets from its European business, saying that continued uncertainties about a single European energy market was partly to blame for the decision to write down its assets.

Financial Markets Minister Peter Norman did not rule out that the company would seek to sell its continental assets, stating that the question would be properly reviewed and potentially discussed in parliament.

“That question demands thorough analysis.”

TT/The Local/at

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ELECTRICITY

Sweden to double wind energy production in next four years

Wind energy is set to double its share of Sweden's power supply over the next four years as a string of giant projects come online.

Sweden to double wind energy production in next four years
The Gabrielsberget wind project in Västerbotten. Photo: Swewind
The contribution of wind energy is scheduled to grow from 17TWh in 2018 to 35 TWh in 2022, taking wind's share from 12 percent to 25 percent of total power produced. 
 
Charlotte Unger, chief executive of the Swedish Wind Energy Association trade body said the pro-renewable policy decisions had been driving growth. 
 
“Sweden has the best regulatory regime for wind power projects from a European perspective, and therefore production costs the least here,” she told Swedish state broadcaster SVT.  “Investors have confidence in wind power in Sweden, and that's because of the policies that exist.” 
 
The largest new wind farm is the giant Markbyygden project outside Piteå, which is expected to supply 10TWh per year as it comes online in stages from this year, making it one of Europe's largest wind farms.  
 
Other major projects are the Överturingen wind farm in Västernorrland, Åskälen in Jämtland, and Valhalla in Gävleborg. 
 
The new farms will make up for the shutdown of two reactors at the Ringhals nuclear power station in 2019 and 2020. 
 
 
Because the majority of the new wind power projects are in the northern counties of Norrland, Västerbotten and Jämtland, the shift will require Sweden's state-owned grid operator Svenska Kraftnät to rapidly improve capacity, especially in central Sweden. 
 
But Niclas Damsgaard, the grid company's senior market strategist, said he believed the company would be able to keep pace with the growth. 
 
“It's going to work, but all this will mean an increase in risk. In an extreme case, some major industrial consumers may not be able to buy as much power as they want, but it's not going to mean difficulties across the country.”  
 
Unger said that if the new production exceeded Sweden's own needs, then the excess could be exported into Europe, reducing the continent's coal use. 
 
Between 2022 and 2040, the Swedish Wind Energy Association hopes to double the amount of wind power produced in  once again, taking it to half of Sweden's total power use.
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