By prioritising profitable investments, operational excellence and collaboration, we continue to enable the fossil freedom that drives society forward as a profitable energy company. Our focus to provide value to our customers while leveraging the energy transition to shape the energy system of tomorrow remains.

Progress is rarely linear

Some stabilisation in European energy markets has occurred during 2024, even as we continue to navigate a world marked by growing geopolitical and economic uncertainties. Economic and supply chain challenges, political turbulence, and regulatory ambiguity remains. As a result, the energy transition has lost pace, although ambitious goals of reaching net-zero remain.

Navigating complexity with strategic focus

To deliver on both our financial and sustainability targets, we prioritise efficiency and prudence in our operations. This includes being a trusted partner to our customers, investing in the right projects with strong fundamentals, optimising our business processes, and ensuring that we are positioned to act swiftly as conditions change. Our early commitment to a fossil-free business model and footprint has made our business more competitive and resilient to the ever-changing world we operate in, while benefiting customers and climate alike.

In uncertain times it is easy to focus on what remains undone. But in doing so, meaningful progress and achievements are overlooked – important steps that collectively drive the energy transition forward. At Vattenfall we have decreased 53% of our CO₂ emissions in our own operations compared to 2017. Now, we are expanding our efforts to decarbonise our supply chains as well. A proven and successful track record, a strong financial position, and a solid plan throughout the organisation puts us in a good position to achieve this goal.

Transformation takes time

When news on progress gets overshadowed by those on setbacks, it is easy to forget that transition takes time, it is not linear nor without its challenges. The work we do today builds on the efforts of those who came before us. Whenever I visit our production sites, I’m inspired by the photographs of our former colleagues, such as those who built the first hydro power plants over a century ago. Their commitment and determination is still visible. Now we are building for coming generations.

Businesses and industries are in a transformation mode, expecting fossil-free electricity to be able to deliver on their own climate targets and meet customer demand. Collaboration across industries is key to create value chains and models that deliver affordable and competitive fossil-free products and services.

European citizens also show a willingness to contribute, as concluded by Vattenfall’s energy barometer published in December 2024. They are environmentally cautious and many have adapted their way of living to protect the environment. However, their drive to change is often overshadowed by the ongoing cost of living crisis.

It’s as much an energy development as a transition

Fossil-free electricity production plays a key role in decreasing CO₂ emissions, and it also minimises energy losses. Less renewable energy will be needed to replace the 95,000 TWh¹ of fossil fuels that are currently consumed every year globally.

This highlights that we are not only undergoing an energy transition, but also a process of energy development. To support this transition and meet the future energy demand, which might double in Sweden and increase even more in Europe, sustainable electrification is crucial. Achieving this will require significant investments in renewable electricity generation, grid expansion and storage solutions.

For the years 2025 to 2029 we have planned net investments amounting to SEK 170 billion, with the majority (61%) dedicated to growth investments.

Main projects include the development and construction of new wind farms such as Nordlicht I and II in Germany and the Zeevonk project in the Netherlands. We have also planned SEK 41 billion investment in our distribution business, to reinforce the electricity grids and secure quality of supply and connect new customers in Sweden.

We are also making important investments into hydro power such as increasing the capacity of the Harsprånget hydro power plant and investigating reopening our hydro pumped storage plant in Juktan. The work towards enabling new nuclear in Sweden is ongoing, although potential investments are further out on the horizon and dependent on a sound risk-sharing model with the Swedish state.

Continued efforts for fossil-free energy generation

A robust and stable energy system, requiring a balance of flexible electricity solutions and reliable baseload capacity, is crucial for both Sweden’s and Europe’s economic growth and competitiveness. For an energy system to be stable yet flexible, you need solid grids and a mix of fossil-free energy sources as they all have different characteristics and functionalities in the energy system that complement each other. To bridge between periods with high and low electricity generation energy storage and flexibility are also key contributors.

During 2024 we have furthered our efforts throughout the entire energy system. We have taken the directional decision to extend the operating time of Forsmark and Ringhals reactors from 60 to 80 years and our share of fossil-free electricity generation has increased to 90% this year, with Hollandse Kust Zuid and the Vesterhav projects in Denmark being large contributors.

Building the energy system of the future comes with significant investments. The profitability challenges in today’s uncertain environment calls for innovative approaches. Vattenfall collaborates across value chains, and we have several extensive partner collaborations underway such as those with global chemical company BASF and Swedish industry collaboration Industrikraft. Synchronised investments in supply and demand can manage risk and drive progress by both decreasing project risk and supporting industries in their decarbonisation journey.

Overcoming challenges

For the energy industry, a big concern is that electricity prices in many European markets are not at a level that enable European industry to invest in new electricity production. This in combination with bottle necks in supply chains and overly complicated permitting processes many times makes the cost for investing in new fossil-free electricity production currently higher than the market prices.

This is a threat for the economic growth and competitiveness of both Sweden and Europe and we need to accelerate in finding a pragmatic solution. Clear incentives, fair carbon pricing, and market-driven solutions are key to enable investments that support the energy transition while ensuring companies profitability and competitiveness.

Another challenge is the limited number of suppliers in key value chains. This lack of competition hinders cost reductions, and geopolitical regulations further restrict supplier availability.

On the other hand, we also operate in a time of transformative technologies that are scaling fast and open up opportunities for the energy transition. An example of this is HYBRIT, our collaboration with SSAB and LKAB. After six years of research, we have successfully demonstrated the feasibility of fossil-free steel production. We can say with confidence that direct reduced iron produced with the HYBRIT process has superior characteristics compared to iron produced with fossil fuels. Proving that sustainable solutions are not just theoretical but achievable and better.

By aligning innovation, investments, and regulatory frameworks long-term conditions are established that enables us to build a sustainable energy system that secures economic and environmental resilience.

Sustaining momentum – future-proofing the business

Our integrated business logic and diversified portfolio has served us well, acting like a natural hedge positioning us to better manage risks and maintain resilience.

Our return on capital employed is now at 12.4% (5.3% in 2023), and we have maintained a strong capital structure, with our FFO/AND above the target interval at 49.2%. This outcome largely reflects the positive market changes in energy derivatives as well as capital gains related to the sale of 49% of Nordlicht I & II in Germany to BASF and the sale of Norfolk offshore wind zone in the United Kingdom to RWE.

We accelerated our efforts to strengthen our resilience and profitability this year. Being prudent with investments, only investing in line with our strategic priorities and when it gives us a competitive advantage, will continue to be a top priority for us. We will also continue to work on efficiencies within the business to reach operational excellence. This includes reviewing common processes to leverage synergies as well as the potential of AI. Operational excellence is key.

To ensure future competitiveness forward new skills are necessary, making it essential to secure the right talent and support our colleagues. This year, we have launched initiatives to strengthen our culture and values and continuously work on developing leadership within the organisation.

As we introduce new strategic targets for 2030 alongside updated financial targets, I look forward to work together with our 21,000 colleagues to ensure that Vattenfall remains a stable and profitable energy company.

Being a leader in the transition towards net-zero

Reflecting on 2024, we can take pride in completing key projects, delivering on our financial and strategic targets and advancing sustainability goals. These achievements highlight our unwavering commitment to reaching net-zero throughout our value chain by 2040.

Climate change is the most important issue of our time, and it is our collective responsibility to work towards a safe, liveable world for future generations. The energy transition, while not the sole solution, is a crucial piece of the puzzle. The key to solving both the climate issue and ensuring energy security is electrification, using fossil-free electricity.

To achieve this, we must collaborate across regions and sectors, mobilise investments, and forge partnerships. Stable investment frameworks and continued commitment to the European Green Deal through the implementation and enforcement of recent EU climate and energy policies is crucial to incentivise investments in a fossil-free future.

We need to be quick on our feet as conditions evolve. We aim to remain at the forefront of the energy transition by providing innovative, sustainable solutions; for here and now, and the future. After all, we are building for the next 100 years.

Anna Borg, 
President and CEO