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Vattenfall Hails Wind Farm Radar Breakthrough in UK as Company Readies to Split in Two

Swedish energy company Vattenfall has invested in innovative radar technology to enable it to go ahead with extending one of its offshore wind farms in the UK.

Vattenfall claims that its deal with U.S. firm C Speed marks the world’s first ever permanent installation of a fully wind farm-capable radar system.

The system, called C Speed LightWave radar, is currently on trial at Manston Airport in Kent, England, which is the nearest airport to Vattenfall’s Kentish Flats offshore wind farm.

Kentish Flats was built in 2005 and comprises 30 Vestas turbines. Vattenfall wants to add a further 17 turbines to the site but there were concerns on the impact this would have on air traffic at Manston, which is mainly used by Dutch airline KLM to fly to the Netherlands, France, Italy and Portugal.

The airport is also to be used as a base by British Airways for its Airbus A380, the world’s largest passenger plane, where it will be used to train pilots and cabin crew.

Vattenfall’s solution was to contract C Speed to design and install its system at the airport, where it is currently gathering data. If it proves successful it will be the first time that a wind farm-capable radar has been installed, integrated and then submitted to regulator the Civil Aviation Authority for approval.

Vattenfall’s project manager for Kentish Flats, Goran Loman, said: “We gained consent for this scheme earlier this year on condition we tackle this radar issue effectively. Vattenfall is confident the C Speed system will mitigate the potential impact of our project on Manston Airport and we look forward to getting the condition discharged to allow the wind farm and the airport to safely co-exist.”

He added: “If this technology works, as we expect, it’s hoped the UK government will be satisfied this issue has been dealt with.”

Company Split

Amid this technology breakthrough, Vattenfall has announced that it is to split its operation in two as a result of “increased uncertainty” about the European energy market, which it predicts “will not recover in the foreseeable future”.

And the company also announced today that it is writing down SEK29.7bn ($4.5 billion) off the value of the its assets “as a consequence of market developments and higher business risks”.

Vattenfall — which is best known for its wind business but is also active in biomass — has also initiated a recruitment freeze and is to put “major restrictions” on the use of external consultants.

As of January 1, 2014, the group’s operations will be split into two regional units: Nordic and Continental Europe and the UK.

Vattenfall believes this change will give it “greater financial and strategic flexibility” in a time of “increased uncertainty about the development of the single energy market in Europe, especially in continental Europe”.

In a joint statement, chairman Lars Nordstrom and chief executive Oystein Loseth said: “The new structure will allow the regions to focus on their respective core issues and will open up opportunities for risk-sharing in Vattenfall’s continental operations over time.”

Vattenfall explained the write-downs announced today by stating that “like other European energy producers, Vattenfall is affected by the increasingly gloomy market prospects”.

“The company now makes the assessment that the market will not recover in the foreseeable future. To reflect the increasing business risks, future cash flows have been valuated using a higher discount rate. As a consequence of this, the company is writing down its asset values by a total of SEK 29.7 billion.”

The write-downs include SEK14.5bn in relation to gas and hard coal-fired power plants in the Netherlands; SEK 4.1bn for hard coal-fired plants in Germany; and SEK2.5bn for combined heat and power plants in the Nordic region.

Nordstrom and Loseth said in their statement: “The impairments are significant and this is obviously a difficult task. But this is the reality we are facing and we have to react according to what we know about the marketplace today. It means that we must adjust the book value of our assets. It also means that we have to take steps that we deem are necessary to ensure in the long term a sustainable and strong Vattenfall.”

They added: “Up to now Vattenfall has tackled the challenging market situation through consolidation and significant savings but further substantial measures must now be implemented.”

The company has also scaled up its cost reductions and ongoing streamlining measures. Cost cuts planned for 2014 have been increased from SEK1.5bn to 2.5bn and a new savings target of SEK2bn has been set for 2015.

Annual costs have been cut by SEK7.5bn since 2010. Investments for the next five years have been reduced to SEK105bn compared to SEK123bn for the period 2013-2017.

Lead image: Road split via Shutterstock

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