State of Berlin takes over heating network from Vattenfall

Early morning view of the natural gas-fired combined heat and power plant in Lichterfelde. The power plant supplies around 100,000 households with electricity and district heating. The energy company Vattenfall operates the power plant.

After electricity and water, Berlin's next important supply network is now moving into public hands: the Senate is taking over the district heating sector from Swedish energy group Vattenfall, as both sides announced on Tuesday. According to Finance Senator Michael Evers (CDU), the purchase will cost the state around 1.6 billion euros. The purchase price is based on a company value of just under two billion euros.

The purchase is to be handled by a state-owned financing company. According to the finance senator, it will receive equity from the state budget and loans from Investitionsbank Berlin (IBB), which the Senate intends to back with a state guarantee. "The Senate will present a financing concept with all the details to the House of Representatives for approval in the form of a supplementary budget in the first quarter of 2024," announced Evers.

Senate with purchase option for Gasag shares

With the purchase, the Senate is also putting out feelers for the Berlin gas network, which is currently operated by the private company Gasag. Vattenfall has granted the Senate a purchase option for its own Gasag shares. The Swedes own around 31.6 percent of the group. According to the Senate, it will examine whether Berlin will take up this option in the coming year.

Giffey: «Bringing the heat back into Berlin state hands»

Governing Mayor Kai Wegner spoke of a historic day for Berlin. Senator for Economic Affairs Franziska Giffey (SPD) said: "We are bringing the heat back home, we are bringing the heat back into Berlin state hands." Giffey continued: "We are taking this path because, despite the necessary investments, we are confident that this company will be a profitable one". The investments are also unavoidable if Berlin takes the goal of climate neutrality seriously. Getting the energy and supply grids into state ownership is an important component of this.

Goals of the acquisition: security of supply and climate neutrality

As the Senate announced on Tuesday, this requires integrated network development, particularly for district heating and gas. The state is counting on the future support of Gasag and its other shareholders Eon and Engie. But what do Berliners gain from the purchase of the district heating network? The most important promise is security of supply, said Finance Senator Evers. Added to this is the contribution to achieving the climate targets - Black-Red is aiming for climate neutrality before 2045.

Finance Senator: State ownership protects against price increases

Another aspect is fair pricing, which is not based on the returns of a private applicant. "The state of Berlin as the owner is the surest guarantee that there will be no price gouging here." Christian Barthélémy, Chairman of the Management Board of Vattenfall GmbH in Germany, said that Vattenfall was placing district heating in good hands.

Electricity grid and water supply already in public hands

In mid-2021, the then red-red-green state government had already taken over the electricity grid from Vattenfall for around 2.14 billion euros. The capital's water supply has been in public hands for some time.