Who is the owner of Vattenfall?

Vattenfall is a Swedish state-owned energy company headquartered in Solna, Sweden. It is one of the largest energy producers in the Nordic countries and has operations in Sweden, Germany, the Netherlands, Denmark, the UK and Finland. Some quick facts about Vattenfall:

• Founded in 1909 as a state-owned utility in Sweden
• Employs approximately 19,000 people
• Operates power plants, transmission networks and district heating systems
• Generates electricity from hydroelectric, nuclear, wind, thermal and solar sources
• Serves approx 5.8 million electricity customers and 2 million gas customers in Europe

As Vattenfall is a state-owned company, its owner is the Swedish state. Specifically, it is owned by the Swedish Ministry of Enterprise and Innovation. The Swedish government has 100% ownership of Vattenfall through the Ministry.

History of Vattenfall’s Ownership

Vattenfall has been owned by the Swedish state since its founding in 1909. Here is a brief history of the company’s ownership:

• 1909 – Vattenfall was established by the Swedish Parliament to utilize the country’s hydroelectric resources and electrify rural areas.
• 1992 – Vattenfall was reorganized from an authority to a state-owned public limited company.
• 1994 – The Swedish Parliament decided Vattenfall should operate on a commercial basis while remaining state-owned.
• 1995 – Vattenfall expanded outside Sweden by acquiring the Hamburg Electricity Works in Germany.
• 1999 – Vattenfall expanded further in Germany, Poland, Finland and Denmark.
• 2005 – The Swedish Parliament decided Vattenfall should focus on the Nordic market. Expansion in Germany continued.
• 2009 – The Swedish state became the sole owner of Vattenfall after acquiring a 50% stake from Sydkraft.
• Present – The Swedish state remains the sole owner of Vattenfall.

Throughout its over 100 year history, Vattenfall has remained under full ownership of the Swedish government. The commitment to state ownership has been reaffirmed by the Parliament over the decades.

Ownership Structure of Vattenfall

As a wholly state-owned enterprise, Vattenfall’s ownership structure is as follows:

• 100% owner: The Swedish state
• Represented by: Ministry of Enterprise and Innovation
• Shareholder: The Swedish Minister for Business, Industry and Innovation

The Swedish Minister for Business, Industry and Innovation represents the Swedish state as the sole shareholder and votes the state’s shares at Vattenfall’s Annual General Meeting.

Through this ownership structure, the Swedish government retains full control over the strategy and operations of Vattenfall. The company’s Articles of Association are decided on by the owner.

Rationale for State Ownership of Vattenfall

There are several reasons why the Swedish government has maintained full ownership of Vattenfall over the past century:

• Ensure national control over strategic energy resources and infrastructure.
• Enable long-term energy policy in the interests of Swedish society.
• Generate state revenue from energy sector activities.
• Support achievement of renewable energy and climate goals.
• Promote regional growth and competitiveness.
• Guarantee stable and affordable energy prices for consumers.

State ownership of Vattenfall aligns with Sweden’s traditionally active role in managing natural resources and public utilities for the benefit of its citizens. Energy policy is regarded as too important to be entirely left to free market forces.

Full ownership enables the government to integrate Vattenfall’s operations with its national policy objectives around decarbonization, electrification, renewables expansion and maintaining competitively priced energy.

Governance of State-Owned Vattenfall

As the owner of Vattenfall, the Swedish state exercises control through the following governance mechanisms:

• The Annual General Meeting – This is Vattenfall’s highest decision-making body where the state shareholder votes on matters such as board appointments, dividend policy and articles of association.
• The Board of Directors – The Board is elected by the AGM to oversee Vattenfall’s management and long-term strategy. It has 10 members including the Chairman and employee representatives.
• Owner’s Directives – These outline the state’s financial and non-financial targets for Vattenfall across areas such as sustainability, climate impact and innovation.
• The Swedish Ministry of Enterprise and Innovation – Handles the state’s administrative ownership matters related to Vattenfall on an ongoing basis.

This governance model balancing business objectives and public policy priorities is typical for Swedish state-owned enterprises. The state oversight of Vattenfall aims to ensure its strategic alignment with national energy and climate goals.

Financial Performance of State-Owned Vattenfall

Despite being fully state-owned, Vattenfall is run as an independent commercial company with the goal of generating a market return for its owner. Some key figures on Vattenfall’s recent financial performance:

• 2020 revenue – 158.8 billion SEK ($18.2 billion)
• 2020 operating profit – 26.9 billion SEK ($3.1 billion)
• 2019 revenue – 166.4 billion SEK ($19.4 billion)
• 2019 operating profit – 26.9 billion SEK ($3.1 billion)
• Credit rating (Moody’s) – A3 (Stable)
• 5 year average return on capital employed – 10.9%

Vattenfall has delivered consistently solid financial results as a state-owned utility. Its profitability and returns are in line with private European energy peers. The company pays an annual dividend to the Swedish state as its owner amounting to 50-60% of underlying profits.

Vattenfall’s International Expansion

Although fully Swedish state-owned, Vattenfall has significant energy operations outside of Sweden which contribute a majority of its profits:

• Germany – Vattenfall is the 3rd largest power generator in Germany with 7.2 million customers. It owns generation assets like the Moorburg coal power plant and distributes electricity and gas in Berlin and Hamburg. Germany accounted for nearly 50% of Vattenfall’s underlying operating profit in 2020.
• Netherlands – Vattenfall is the 3rd largest electricity provider in the Netherlands serving 2.2 million customers. It owns various natural gas, wind and biomass power plants. The Netherlands made up 25% of Vattenfall’s 2020 operating profits.
• UK – Vattenfall owns and operates 7 onshore and offshore wind farms in the UK, including Aberdeen Bay and Ray Wind Farm. The UK contributed 9% of profits in 2020.
• Nordics – Vattenfall has hydroelectric, nuclear, wind, heat and biomass facilities across Sweden, Finland and Denmark. The Nordic region provided 16% of total profits.

Vattenfall’s growth outside Sweden was driven by deregulation of European energy markets enabling acquisitions. Its foreign expansion has been self-financed from retained profits without direct state funding. Returns from foreign assets help strengthen Vattenfall’s overall profitability for the benefit of its Swedish owner.

Vattenfall’s Strategy and Priorities

Vattenfall’s corporate strategy is focused on accelerating the transition to fossil free energy production and sustainable operations. This aligns with policy priorities of the Swedish owner. Key strategic objectives include:

• Phasing out coal and other fossil fuels from the generation portfolio by 2030.
• Investing heavily in new renewable energy assets, especially wind power.
• Expanding its district heating operations to supply fossil free heat.
• Electrifying industrial processes, transportation and heating.
• Developing and offering energy services that enable fossil free living for customers.
• Cutting CO2 emissions across the entire value chain in line with 1.5°C climate goals.
• Offsetting residual emissions through negative emissions technology.

Delivering on Sweden’s ambitious climate agenda is the overriding purpose assigned to Vattenfall by its state owner. The company’s sustainability targets exceed those mandated even under EU regulations.

Recent Developments

Some recent notable developments at Vattenfall under continued state ownership:

• In June 2022, Vattenfall announced plans to invest SEK 55 billion ($5.5 billion) over 2022-2027 in renewable energy projects like new offshore wind farms.
• Vattenfall is phasing out coal power and will shutter its last coal plants in Berlin by 2030. It is transitioning these sites to use renewable energy for heat generation.
• In September 2022, Vattenfall began construction on the Kriegers Flak offshore wind farm in the Baltic Sea which will have capacity to power 600,000 homes at completion.
• Vattenfall is piloting new energy solutions like power-to-heat, electric vehicle charging infrastructure and mini solar power grids.
• The company recently installed North Europe’s largest power-to-heat facility at a steel plant in the Netherlands, helping cut 12,000 tonnes of CO2 annually.

Vattenfall continues to execute major investments in renewable energy enabled by its state backing and alignment with Swedish climate change policies.

Comparison to Privatized Energy Firms

It is instructive to compare Vattenfall’s status as a state-owned utility to large European energy companies that have been fully or partially privatized:

While there is variability, Vattenfall’s state owner has enabled it to commit to one of the most ambitious coal exit timelines in the industry. Its renewable energy growth also keeps pace with privatized peers, benefitting from backing for major investments.

Public Opinion on Vattenfall’s Ownership

Vattenfall’s ownership has been the subject of recurring debate in Swedish politics. However, public opinion has consistently favored the status quo of state ownership:

• A 2022 opinion poll found 64% of Swedes support continued state ownership of Vattenfall, while only 17% favored full or partial privatization.
• Arguments for retaining state ownership include ensuring democratic control of critical infrastructure, faster climate action and protecting jobs.
• Critics of privatization point to the poor track record of privatized electricity markets in Europe on prices and decarbonization.
• Some experts propose improved regulation rather than privatization can address concerns about market dominance and transparency in state-owned utilities.
• Many Swedes consider Vattenfall a matter of national pride and tradition going back over a century, similar to public health and welfare.

While the politics are complex, the Swedish public remains steadfastly behind the state retaining ownership of Vattenfall as a strategic national asset.

Conclusion

Vattenfall stands out as one of the largest 100% state-owned utilities in Europe. For over 100 years, it has remained under the ownership of the Swedish state via the Ministry of Enterprise and Innovation. Although operating internationally, governance mechanisms enable the state to align Vattenfall’s strategy and investments with national policy priorities, especially on climate change. Public opinion strongly favors continued state ownership which is seen as advancing Sweden’s economic and sustainability goals. The history of Vattenfall demonstrates how state ownership of strategically vital infrastructure continues to enjoy democratic support in Sweden’s mixed economy model.