This might be a stupid question.

But why did Vattenfall do this transaction? Vattenfall is a giant company with a giant balance sheet and excellent access to the debt markets. The project is already completed so they don't need a PPA to secure bank lending, even if it were financed on a project basis.

Couldn't they just have absorbed the price risk, without feeling the need to sell off half the project cheaply just to get a fixed price for the output? If worst comes to worst, Vattenfall has an immensely strong owner with a AAA credit rating, which means a rights issue to inject new equity would be no economic problem at all, even if it might be politically (and legally? EU state support rules?) fraught.

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Well even for them, this is a big risk (1.5 GW, 3bn euros, and close to 5 TWh/y of unhedged power). By doing this they reduce the impact on their balance sheet (which preserves their rating) and get cheaper capital into the project.

The other reason is that for some reason the generation and the trading departments of big utilities (and it is the same in the oil&gas companies) don't talk to each other, so they cannot do internal hedging, it all needs to be done with "the market". They kill their main competitive advantage, but there you go.

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