Everyone a winner in Franco-German asset swap

Thursday, 1 October 2009

An extensive swap of generation assets and electricity drawing rights between Electricité de France (EdF) and German companies EOn and EnBW, including rights to 800 MWe of nuclear generation, is being hailed as a triumph for European competition.

EOn's plants, like Isar 2, will supply EnBW (Image: EOn)

The three companies have signed agreements on the swap of assets and rights representing more than 1200 MWe. 

 

Specifically, the deal will see German energy supplier EnBW, already jointly controlled by EdF, acquire drawing rights for 800 MWe from EOn's German nuclear power plants, EOn's majority shareholding worth 256 MWe in the Rostock coal-fired power station and a drawing right for 159 MWe from another EOn coal-fired power station at Buschhaus.

 

In return, EOn will take on EnBW's electricity drawing rights for 800 MWe of power from EdF's French nuclear power plants. In addition, EOn is to become the sole shareholder in SNET, France's only private-sector energy supplier, through an acquisition of EdF and Charbonnage de France's 35% stake in the company (EdF's 18.75% stake in SNET will be transferred to EOn).

The asset swap is the latest in a series that have seen EOn consolidate its position in the Swedish electricity sector and make inroads into the Belgian power market. EOn CEO Wulf Bernotat said that the SNET takeover would enable the company to better bundle its French activities and tap valuable synergies. "We are thus strengthening our position in the important French energy market, the second largest in Europe. The swap of generation capacities and drawing rights with EdF and EnBW is also another important step towards promoting competition in Europe," he said.

The latest swap forms part of a 2008 commitment made by EOn to the European Commission to promote competition in the German market by divesting a total of about 5000 MWe of its generation capacity and its German transition system network. The transactions also form part of a divestment program announced by EdF in February this year aimed at reducing its net financial debt by at least €5 billion by the end of 2010. However, EdF also points out that the deal strengthens its position in key European markets.

EnBW claims its gain of EOn's 50.4% stake in the Rostock plant plus the power drawing rights will effectively increase its German generating capacity to 1200 MWe.

No financial details on the transaction have been released, although the companies say it is due to come into effect on 1 January 2010, subject to approval by the relevant authorities.