Vattenfall said it would sell its German lignite, or brown coal, business – open cast coal mines and two power plants close to the German-Polish border – to Czech operator EPH.
The coal operation represent about one-tenth of Vattenfall's power production in Germany, where it is the third-largest energy supplier.
“This divestment of our lignite assets is good strategicallly but also financially given current and expected market conditions,” said Vattenfall chief executive Magnus Hall.
“We are now accelerating our shift towards a more sustainable production. The sale means more than 75 percent of our production will be climate neutral compared to about 50 percent today,” Hall said.
Vattenfall said the sale of the coal business would have a negative impact of 22-27 billion kronor ($2.7-3.3 billion) on its second-quarter results, but the hit would have been larger if it had waited longer.
The sale of the coal assets drew few bidders. Another Czech company, CEZ, withdrew after expressing initial interest.
Greenpeace, too, had tried to bid for the coal operations with the intention of closing them down. But the environmental group said in November it had been barred from bidding because Citigroup, in charge of the sale, judged that it had no intention of making a financial bid.
There is growing resistance to fossil fuels in Germany. Meanwhile, public subsidies of renewable sources of energy are making coal-fired energy less profitable.
One of Vattenfall's old plants in Germany. Photo: Patrick Pleul/picture-alliance/dpa/AP Images
The closure of the brown coal plants in Germany ignited hot political debates in both Sweden and the northern European nation amid shift towards more non-renewable energy sources in both countries.
Sweden's Green Party called on the previous centre-right Swedish government to avoid allowing Vattenfall to sell on the sites, arguing that the move amounted to encouraging other firms to continue producing emissions that harm the environment.