July 21, 2020 Read More →

Sweden’s Vattenfall takes $1 billion charge to account for falling value of Moorburg coal plant in Germany


Vattenfall AB took a massive hit on the value of a new German coal plant in yet another sign of how the fossil fuel is struggling in Europe.

The Swedish utility wrote down the value of the Moorburg facility in Hamburg by 9.1 billion kronor ($1 billion), according to its first-half earnings statement on Tuesday. The plant opened in 2015 and by then Vattenfall had already taken impairment losses of 4 billion kronor for the project.

The writedown is another example of how renewable energy and the global pandemic is reshaping energy economics. Demand for power dropped more than 20% in some European countries during the lockdown, leading coal’s share in generation to plummet as green sources like solar and wind have priority on the grid.

The plant has drawn controversy since it started. Environmentalists in both Germany and Sweden slammed the state-owned utility for opening a coal-fired plant at a time when utilities, cities and governments should do all they can to reduce carbon emissions. Vattenfall said earlier this year it was considering options for Moorburg and was willing to discuss its future with the city.

“Moorburg is getting whacked by a corona-linked drop in power demand that’s also hurting exports on which coal power has relied for several years,” said Bruno Burger, a professor at the Fraunhofer ISE institute in Freiburg, Germany. “Add to that cheap gas, expensive pollution certificates and growing renewables and hard coal is getting booted out of the market.”

Moorburg generated 7.6 terawatt-hours of power in 2017. So far this year, it has generated a mere 1.1 terawatt-hours, Burger said.

[Lars Paulsson and Brian Parkin]

More: Coal demise forces $1 billion writedown for Swedish utility

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