Berlin considers purchase of Vattenfall's district heating business

View of the natural gas-based cogeneration plant in Lichterfelde in the early morning.

With a deal worth billions, the state of Berlin wants to gain more influence over the gas and district heating supply in the city.

The Senate is considering taking over both Vattenfall's Berlin district heating business (Vattenfall Wärme Berlin) and the Swedish group's shares in the Berlin utility company Gasag, the state's press and information office announced on Wednesday evening. Berlin had expressed its interest in a bundled acquisition in a conversation between Vattenfall CEO Anna Borg, Berlin's Governing Mayor Franziska Giffey (SPD) and other members of the Senate.

Accelerating the energy and heat revolution

"In cooperation with experienced industrial partners, the course for accelerating the energy and heat system transformation is to be set in a timely manner and the strategic further development is to be advanced," the statement continued. To this end, the state is in intensive talks with the other Gasag shareholders Eon and Engie and has already defined the cornerstones of a joint cooperation. Berlin is aiming for a majority shareholding in Gasag.

More influence on supply security through purchase

Commenting on the project, Giffey said that the state wanted to "exert more influence on the security of supply and the future of energy and heat supply in Berlin". Berlin will only become climate-neutral if the heat supply is also modernized, she said. "With its 1.3 million district heating households, this lever is very important for the energy transition in Berlin." Finance Senator Daniel Wesener (Greens) said, "A rapid and successful heating system transformation is necessary for Berlin to get through this energy crisis well and achieve its climate protection targets. To do this, we need to tie the existing infrastructures, energy sources and players together much more tightly."

No information on possible costs yet

No information was available on the possible costs of the intended deal. The Left Party leadership pointed out that the switch of the heating networks to renewable energy would involve considerable investments. "These must be taken into account in the purchase price," it said in a statement issued by state chairwoman Katina Schubert, the two parliamentary group leaders Anne Helm and Carsten Schatz, and deputy head of government and culture senator Klaus Lederer.

Senate has long been committed to remunicipalization of infrastructure

The Berlin Senate has long been committed to reversing the privatizations of the infrastructure sector of the past decades. In 2021, Berlin took over the power grid from Vattenfall. The water utilities have been fully in state hands again since 2013. Vattenfall, in turn, has declared its intention to play an important role in Germany's energy transition and to say goodbye to fossil fuels. In May, the company announced that its heating business in Berlin was under scrutiny in this context. One option is a sale.

Berlin district heating system one of the largest in Western Europe

Several large power plants are connected to the Vattenfall heating network in Berlin, which primarily burn gas and hard coal, but also use biomass in some cases. Vattenfall supplies hot water and heat to 1.3 million homes in Berlin. The district heating system in the capital is one of the largest in Western Europe. Hot water is transported to households via more than 1700 kilometers of pipelines for heating. A few years ago, the state of Berlin tried to take over the network from Vattenfall. The attempt failed in court.