Vattenfall has reported a substantial second quarter loss with impairment losses due to low electricity prices continuing to have a negative effect.

The Swedish utility’s impairment losses amount to approximately $3.2bn.

“Very low electricity prices have put pressure on margins for conventional generation. As a result of this, Vattenfall’s board of directors have decided to recognise impairment losses,” said the company.
Magnus Hall
The impairment losses include the planned closure of the Ringhals nuclear plants and a downturn in the utility’s lignite coal-fired power operations, including the Moorburg plant.

“Naturally, this is a very negative development and unfortunately reflects the world we live in,” comments Magnus Hall. “Vattenfall’s strategic transformation, with greater customer focus and more renewable power generation, continues. Activities to identify additional cost reductions are in progress in the entire organisation.”

Wind generation was up in the quarter on the back of operations at the 288MW DanTysk offshore wind farm in Germany and the 37MW Clashindarroch wind farm in Scotland.

The company takes some solace in the decision of the German government to present a proposal to transfer lignite-fired power plants to a capacity reserve in return for financial compensation to the owners for keeping the plants in standby mode.

“We believe that this proposal creates conditions for lower CO2 emissions as well as security of supply in addition to providing greater clarity about the conditions for our work on finding a new owner for our lignite operations.”