Vattenfall - Vattenfall's history - text version

The history of Vattenfall

Today, Vattenfall is a fully international company.

Deregulation has resulted in substantial changes in the constitution and operation of the energy industry, and the free market has encouraged and driven the development of new products and services. Vattenfall has come a long way since its beginnings in Sweden more than a century ago.

1899 The Waterfall Committee

The Swedish Parliament appointed the Waterfall Committee, and after extensive negotiations, the state was given majority rights to the water in the Trollhättan waterfall. Local industry used power derived from the streaming water, as well as from aged water locks and constructions that were part of canal operation. When the canal was due to be renovated, proposals regarding electricity production were presented. There were differences of opinion as to whether the state should contribute or not.

1905 Trollhättan Canal

The Trollhättan Canal and Waterworks Administration acquired the privately owned canal company's property. The parliamentary commission was to run the canal and develop Trollhättan waterfall energy generation. The managing director of the canal company, Major Vilhelm Hansen, was appointed manager and subsequently director-general.

1906 Expansion of hydro power

Parliament allocated SEK 8.5 million to continue the expansion of hydro power in Trollhättan. The Swedish state purchased the waterfall rights at Vargön, Ström, and Lilla Edet in the Göta älv River. The state also acquired waterfall rights to several other locations in Sweden.

1909 The birth of Vattenfall

Architect Erik Josephson designed the Olidan power plant in Trollhättan to look like a castle with monumental portals and walls made of Swedish west coast granite. An upper balcony was built to give Vilhelm Hansen and King Gustav V a good view of the inauguration ceremony. The canal company office in Trollhättan remained part of Vattenfall until 1992, when Vattenfall became a public limited company. Electric power technology was still in its infancy, but many people wanted to make use of Sweden's waterfalls. Parliament's decision to establish Kungliga Vattenfallstyrelsen (the Royal Waterfall Board) indicated the state's wish to engage actively in electricity production. Trollhättan Canal and Waterworks Administration became the Royal Waterfall Board, marking the birth of Vattenfall.
Vattenfall delivered electricity primarily to industry. Major clients included the rail, metal and forestry industries. Household customers were few because of the relatively high price of household electricity.

1910 Porjus hydro power plant

A technological breakthrough for Vattenfall and Sweden, the hydro power plant at Porjus on the northern Lule älv River was built in connection with investments in industry such as mining in Norrbotten and the electrification of the railway. At the time, the area was barely mapped, and materials and supplies were carried across 55 kilometres of wilderness from Gällivare. The work was hard and life in the shantytowns that sprung up was harsh. Between 1910 and 1925, as many as a thousand people worked at Porjus.

1915 Älvkarleby and Västerås power plants

The third-largest hydro power plant project was Älvkarleby, built on the estuary of the River Dalälven. The government approved further development of the Älvkarleby waterfall in 1910, and the five generators became operational between 1915 and1916. Älvkarleby power plant created a demand for electricity in central Sweden, with both industry and newly established local distribution companies using electricity. In Västerås, a coal-fired power plant was established due to insufficient water resources, and the plant became the world's leading power plant of its time.

1920s Connecting the grids

Operations required not only power plants, but also an electricity network and connection to customers. During the 1910s and 1920s networks were developed and linked together. The Älvkarleby and Trollhättan grids were connected in 1922, resulting in the so-called central grid – a unified system comprising the West Götaland and East Svealand regions. It was now possible to handle considerably larger supplies of electricity because the Västerås heat power plant guaranteed power.

1951 Harsprånget operational

Development of Harsprånget was initiated at the beginning of the 1920s but was discontinued (as were several other power plant projects) during the recession that followed World War I. Constructed resumed in 1945 and the first generator became operational in 1951. The power plant was inaugurated by King Gustav VI Adolf in front of 1,700 guests. Also inaugurated was the 400-kilovolt cable to Hallsberg – the first of its kind in the world. Harsprånget was a record-breaking project – it had the largest generator, the largest tunnel and water-reservoir structure, the largest hydro-power-based production, and, at the time, the world's highest electrical voltage for power transmission.

1952 Fully connected

The state-owned power network in central Sweden was gradually connected. Although the central region of Norrland had been connected to southern Sweden in the 1930s, it was only in 1952 that the Swedish power network as a whole was connected. This made it possible to develop co-ordinated Swedish electricity production, with the largest electricity producers working together to best utilise the nation's power supplies. From the 1960s, this collaboration expanded gradually to neighbouring countries, and towards the end of the 1980s the entire Nordic power system was co-ordinated.

1960 Access to electricity

When Vattenfall was formed, the electricity infrastructure was poorly developed. Although all towns could provide electricity, few people had access to it. Fifty years later the situation was completely different – by 1960 almost everyone had access to electricity, both in rural and urban areas, and prices had fallen considerably.

1960s Environmental protests

During the 1950s and 1960s, resistance grew to further exploitation of the rivers. At the same time, electricity demand continued to rise – and popular opinion was that Sweden should invest in nuclear power. In 1947, Parliament had already decided to form the AB Atomenergi company, which was charged with the task of developing nuclear reactors for electricity production. The first research reactor was set up in 1954 at the Royal Institute of Technology in Stockholm. In collaboration with AB Atomenergi, Vattenfall's plant at Ågesta built a heat power reactor for both heat and electricity. Ågesta was a heavy water reactor, fuelled by Swedish non-enriched uranium. During the 1960s, questions were raised about heavy water technology, and Vattenfall moved towards light water technology, which requires enriched uranium. It was also a time of growing environmental concerns, and in 1968 further development of the Vindelälven River was cancelled – partly because nuclear power was waiting around the corner.

1970s Nuclear power

In 1972, Sweden's first commercial nuclear power reactor, Oskarshamn 1, became operational. And by the middle of the 1970s, Vattenfall's first two reactors in Ringhals began operating. During the 1970s nuclear power became increasingly politically charged. Safety regulations were tightened and several energy crises broke out, partly due to years of little rainfall. The organisation of oil-producing countries, OPEC, unexpectedly increased oil prices both at the beginning and at the end of the decade. The first conservative coalition government in over 40 years (comprising the Moderate Party, the Centre Party, and the Liberal Party) took power after the 1976 election, but the coalition split in 1978 because of disagreements over nuclear power. The Centre Party was strongly opposed to nuclear power and resigned from the government. In 1979, the Three Mile Island nuclear power station in Harrisburg, USA, suffered nuclear meltdown. The surrounding area was not affected, despite parts of the core reactor being destroyed. This accident led to a nuclear power referendum in Sweden. The referendum resulted in the decision to complete those reactors that were under construction, providing Sweden with twelve reactors, seven owned by Vattenfall. The debate raged on, however. Eventually the decision to phase out nuclear energy was made. Barsebäck I was shut down in autumn 1999 and Barsebäck's second reactor was also scheduled to be shut down. Further timetables are as yet undecided. During the years of political discussions, Vattenfall has continued to develop operational safeguards and safety planning. And a 50% increase in electricity production has been achieved over 20 years.

1980s Low consumption and deregulation

Conditions for all power companies changed with the sharp decline in electricity consumption from the mid-1980s onwards. In line with changing views about other infrastructure such as telephone, post and railway facilities, more open attitudes towards the electricity industry began to emerge. This, in turn, meant a new model for business activities. Great Britain and Norway undertook electricity market reforms around 1990, and the EU Commission affected development through the 1990 Transit Directive. The deregulation discussion coincided with a new openness in society, an openness reflected by the fall of the Berlin Wall and Sweden's decision to enter the EU. In order for Vattenfall to compete on a free market, it had to become a public limited company.

1992 Becoming a public limited company

Important business roles and structures – such as canal operations, and contingency planning for the entire power industry – could not be part of a company subject to competition. Instead individual solutions were sought, such as Svenska Kraftnät. Following EU directives on open trade in electricity markets, Vattenfall gained increased international business opportunities. Expansion, which had earlier been forged on technical innovations and rising electricity demand within geographically defined markets, could now take place through new markets in competition with international players.

1996 Competition introduced

For many years, Swedish-style co-operation was the model of rational electricity systems. Its main features included annual scrutiny of participants' supply capacity and the sharing of profits gained from the use of the cheapest production option. The system was based on complete transparency regarding production costs and power exchanges.
But this model could not continue when competition was introduced in 1996. In response to deregulation, Vattenfall moved outside the Nordic area, acquiring the Finnish network company Hämeen Sähkö. An office was opened in Hamburg and efforts to consolidate Vattenfall’s brand intensified, raising awareness of Vattenfall among stakeholders and the general public.

1997-1999 International expansion

In 1997, Vattenfall’s growth strategy was initiated with the vision to be a leading European energy company. Deregulation of the German electricity market occurred in 1998, with the country’s largest power conglomerates, RWE and Eon, forced to give up their assets in the former East Germany to prevent them dominating the German power market. Vattenfall acquired a majority of these company holdings, in part via HEW in Hamburg, which Vattenfall already partly owned. Vattenfall Europe was formed from the German companies after 2000. At about the same time, Vattenfall also became a major player in Poland by acquiring Warsaw's electricity and district heating company, EW, and Poland's largest electricity supplier, GZE. In 1999, Vattenfall acquired 25.1 per cent in Hamburgische Electricitäts- Werke AG (HEW), a company that had supplied Hamburg with electricity and district heat for over 100 years. Vattenfall also acquired a 55 per cent holding in Electrocieplownie Warszawiskie (EW). This saw the number of employees increase from approximately 8,000 (10 per cent outside Sweden) to just over 12,000 (40 per cent outside Sweden).

2000 Majority shareholder in HEW

Vattenfall became majority shareholder in HEW. HEW won the international tender procedure for the majority of shares either in the generation and transmission network company Veag Vereinigte Energiewerke AG or the fuel supplier Lausitzer Braunkohle AG, Laubag in eastern Germany . At the end of 2001, HEW took over the majority of shares in Bewag, a company with a long tradition in Berlin; its first plant was opened in the city in1885.

2001 Expansion in Poland

Business expanded in Poland following Vattenfall’s acquisition of 32 per cent of Górnośląski Zakład Elektroenergetyczny S.A. (GZE). GZE is Poland’s largest electricity distributor with about 1.1 million customers, and it was the first of the Polish distribution companies to be privatised.

2002 Vattenfall Europe

A merger of Bewag, HEW, Veag and Laubag formed Vattenfall Europe.

2003 Profit record

Vattenfall achieved its highest ever net profit (EUR 1.013 million). Also, Bewag merged with Vattenfall Europe, completing the major restructuring of Vattenfall’s operations in Germany. Vattenfall AB owns, directly or indirectly, 94 per cent of the shares in Vattenfall Europe AG, 70 per cent in EW and 54 per cent in GZE. GZE was consolidated into the company from January 1, 2003. 77 per cent of the company’s 35,300 employees were recorded as living outside Sweden.

2004 And another profit record!

A new net profit of EUR 1,307 million was recorded. Vattenfall further increased its ownership in GZE to 75 per cent. Several large investment programmes were initiated, amounting to EUR 2.66 billion for nuclear power and EUR 0.72 billion for hydro power. Vattenfall also decided to invest a further EUR 0.22 billion in improving operational reliability in its Swedish networks, bringing the total investment to EUR 1.11 billion over a five-year period.
In Germany, Vattenfall decided to expand the capacity of its high-voltage network by 3,000 MW with an investment of approximately EUR 0.26 million. Vattenfall acquired Örestad Vindkraftpark, forming plans to build a large off-shore wind-power farm in the Öresund, off the south Swedish coast – an investment of EUR 0.17 billion.

2005 The largest and the first

Vattenfall reached an agreement to take over approximately 24 per cent of the total generation capacity of the Danish companies Elsam and Energi E2, in exchange for the 35.3 per cent holding in Elsam that was acquired in February. In the deal, Vattenfall will take over three large coal-fired combined heat and power (CHP) plants, two gas-fired plants, Elsam’s wind power operations and 60 per cent of the wind power park, Horns Rev – equalling a total generation capacity of 2,500 MW of electricity and 2,100 MW of heat, and an annual generation volume of approx. 9 and 6 TWh. Vattenfall acquired Sweden Offshore AB and Östersjöns Vindkrafts AB, and is currently investigating the possibility of building the largest wind-power farm in Northern Europe – a multi-billion investment – in the Baltic Sea between Sweden and Denmark. The wind power plant would include 100 –150 turbines and produce more than 2 TWh of electricity per year. In May, Vattenfall decided to construct its first research plant with CCS technology. The plant will be built in conjunction with our coal-fired plant Schwarze Pumpe in Eastern Germany, with an investment of approximately EUR 60 million. It is expected to be put into operation in 2008.

2006 One Vattenfall

From 2006 the German brands HEW and Bewag, and the Polish brands EW and GZE, are replaced with the Vattenfall brand, which means that all operations now are working under the same brand. Vattenfall also increases the ownership in the Polish companies to 75 per cent.

On 1 July the Danish deal is concluded and 650 employees from Elsam and Energi E2 joins Vattenfall. In the deal, Vattenfall takes over three large coal-fired combined heat and power (CHP) plants, two gas-fired plants, Elsam's wind power operations and 60 per cent of the wind power park, Horns Rev, equalling a total generation capacity of 2,500 MW of electricity and 2,100 MW of heat, and an annual generation volume of approx. 9 and 6 TWh.

On 29 May Vattenfall is building the construction of its first coal-fired research plant with CCS technology in Germany, that is to be the first of its kind worldwide, and was officially launched in prescence of German Chancellor Angela Merkel.

Vattenfall increases the engagement in combating climate change and calls for a global price on emitting CO₂.