First nine months 2022: Stable result and strong financial position in troubled times

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Vattenfall’s President and CEO Anna Borg comments on the interim report for January-September 2022:

“Based on enquiries to our customer support and the public debate at large, we know that many of our customers feel anxious ahead of the winter. Vattenfall is actively engaged in initiatives and dialogues that can help mitigate effects of the current situation. For example, we support our customers by providing advice about energy savings and various types of contracts. It is important to reduce energy consumption in Europe in the short term, especially at peak times, since lower electricity consumption affects both individual customers’ energy bills and contributes to lower market prices for electricity.

Major market uncertainty following summer

Electricity market prices continue to fluctuate greatly around historically high levels. High fuel prices remain the primary driver of electricity prices on the Continent; that in Germany and the Netherlands have been three to four times higher than in Q3 2021. In the Nordic countries, particularly in southern Sweden, prices have been affected by the Continent but unfavourable weather and wind conditions also impacted, especially in August. Even as fuel and electricity rates have declined somewhat, the situation remains strained. The delayed restart of Ringhals 4 is naturally particularly unfortunate in this situation. The reactor is expected to come back online on 31 January 2023.

Stable result and strong financial position

Profit for the period declined by SEK 24.9 billion to SEK 17.0 billion. This is mainly due to major positive one-off effects during 2021 related to the sale of our electricity distribution business in Berlin and compensation for the early closure of German nuclear power. Underlying operating profit increased by SEK 1.8 billion to SEK 23.8 billion, primarily driven by our wind business.

Our sales operations also performed well as customers increasingly chose Vattenfall because of our greater capacity to handle market uncertainty as an integrated utility. Price area differences continued, however, to impact our Nordic power portfolio negatively. Looking ahead, we see major uncertainties related to intermediate goods and fuel costs, but also higher credit risks driven by the market situation.

Several market actors have experienced difficulties as a result of major outflows of margins related to futures contracts. Vattenfall has had net inflows of margin calls and our financial position is strong. In order to safeguard our strong financial position, we are currently engaged in optimising our business flows and pre-emptively building up additional liquidity buffers to be able to manage future outflows.

Important to continue investments in new energy

During the quarter, Vattenfall used its option to continue to develop the wind farm project N-7.2 off the German North Sea Coast, that is expected to produce fossil-free electricity corresponding to the annual electricity consumption of over a million households. In the Netherlands, all the foundations have now been installed and the first electricity has been delivered from Hollandse Kust Zuid, which will be the world's largest wind farm when commissioned next year. In our partnership for fossil-free steel, HYBRIT, the pilot plant for hydrogen storage has now started, and test findings show that the quality of fossil-free sponge iron produced via the HYBRIT process is higher than its fossil counterpart.

Our society needs secure and fossil-free electricity that is affordable. Also, sectors such as transportation and industry need to be electrified, not least for the sake of competitiveness. That is why it is more important than ever that we do not slow down and take the necessary steps for a decarbonised future. Vattenfall contributes to this by investing in all types of fossil-free electricity production and power grids.”