LIGNITE CAPACITY TO BE PHASED OUT IN POWER RESERVE

GERMANY Vattenfall will take a total of 1.000MW of lignite capacity out of operation at the Jänschwalde power plant in Germany. The Group's Board of Directors on Monday decided that two blocks will be taken out of commercial operation in 2018 and 2019, to be on stand-by for four years in a temporary power reserve.

Blocks E and F each have a capacity of 500MW each. The units are not among the Jänschwalde power plant’s oldest, but well suited to be part of the German power reserve in terms of the maintenance needs they have, says Vattenfall's President and CEO Magnus Hall.
“The blocks would have been in commercial operation until the middle or second half of the 2020s, so we unfortunately loose a few years in operation,” he says.

Temporary power reserve
On Saturday (24 October) the German Federal Ministry for Economic Affairs and Energy announced a proposal to temporarily establish a power reserve of lignite power plants with a total capacity of 2.7GW.

Vattenfall, RWE and Mibrag will be compensated for putting their lignite assets into the power reserve according to the draft law which is expected to be adopted in November.

What will Vattenfall’s compensation look like?
“We expect to be paid for placing our blocks in stand-by mode and thus move relatively harmless out of this process,” says Hall.

According to the Federal Ministry for Economic Affairs and Energy, the temporary power reserve will generate costs of approximately EUR 230 million annually over seven years and consequently increased network charges by about 0.05 cents per kWh.

Socially responsible way
Approximately 200 employees at the Jänschwalde power plant will be affected by the power reserve measure.
According to the agreement, the units will be mothballed in October 2018 and 2019 respectively, before being closed permanently in 2022 and 2023.

The closure of the two units will mean a reduction of Vattenfall's total CO2 emissions by 8 million tonnes.

How will the employees be affected?
“The units will continue to run in full commercial operation until they are taken out of operation to be on stand-by mode. Once placed in the power reserve, they will require adequate staffing in order for us to be able to meet the conditions for production readiness and consequently to be paid for it. By careful planning during the four years that the units are included in the reserve, we will be able to handle the phase-out in a socially responsible manner.”

What effect does the agreement on a power reserve have on the ongoing sales process of Vattenfall's lignite assets?
“Basically positive. Interested parties now get a clearer picture of the future conditions while the production units in question are among the least efficient in our portfolio.”

What is the status of the sales process?
“It is ongoing but we do not comment on it while it lasts. We expect to be able to present a proposal to our owner during the first half of next year,” says Hall.

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