Year-end report 2021: Strong result and strategic progress

Vattenfall’s President and CEO Anna Borg comments on the year-end report 2021:

“Vattenfall’s 2021 results is strong, mainly owing to compensation for the closure of German nuclear power and the divestment of the distribution operations in Berlin. The earnings impact from higher electricity prices has been limited since we hedge our generation and achieved prices were at the same level as last year in the Nordic region. Fossil-based generation decreased markedly at the same time as nuclear, hydro and wind power made higher contributions. We increased sales of electricity, heat, and gas and reached milestones across a number of projects that are driving the energy transition forward.

Volatility in Europe’s electricity markets

Electricity prices have risen significantly across all of our markets during the year, and the average price for 2021 was five times higher than the previous year in the Nordics and three times higher on the Continent. The fact that Vattenfall's achieved price in the Nordic countries remained unchanged compared to 2020 was primarily a result of the price hedges we have in place to balance risks as well as the impact of price area differences in Sweden. In the fourth quarter, electricity prices continued to reach record levels while volatility was at historic highs. On the Continent, rising prices for gas and CO₂ emission allowances had the greatest impact. This also affected electricity prices across the Nordic countries, but cold and dry weather were also major contributors. The market situation affected many customers, especially those who did not have fixed electricity price agreements. When our customers are in contact with us we aim to offer them tailored solutions regarding electricity contract, consumption and payments.

Major result impact from one-off effects

Profit for the year 2021 amounted to SEK 48.0 billion for the full year and SEK 6.1 billion for the quarter. Compensation for the closure of German nuclear power and the sale of Stromnetz Berlin bolstered the results for the year by SEK 12.5 billion and SEK 8.4 billion, respectively. The market situation had a major temporary impact on our adjusted net debt, which declined significantly as a result of received margin calls. Taking into consideration these results with large one-off effects, the Board of Directors proposes a dividend of SEK 23.4 billion. This will allow us to retain financial stability as reflected in the balance sheet and Vattenfall will continue to invest in the energy transition.

Our operations developed very well. The underlying operating profit rose by SEK 5.4 billion to SEK 31.2 billion. Wind power nearly doubled its contribution thanks to increased capacity in Denmark and the Netherlands as well as higher electricity prices in the UK and on the Continent. Our pumped storage power plants in Germany also made a significant contribution.

New climate target an important step

An important step for Vattenfall for the year was our new emissions target, which complies with the 1.5-degree scenario set out in the Paris Agreement. To reach this target, we will need to expand our renewable electricity generation and phase out fossil fuels in our heat business. During the year, we opened the biggest offshore wind farm in Scandinavia, Kriegers Flak in Denmark, and in Sweden the first heat was delivered from the biofuel plant Carpe Futurum in Uppsala. We are dedicated to establishing more partnerships, like our sale of a 49.5% share of the offshore wind farm Hollandse Kust Zuid to BASF. By partnering with customers in respect of both ownership and production of new renewable capacity, we share risks and release resources for more investments.

In-depth climate partnerships

For Vattenfall, 2021 was also a year in which we engaged in in-depth relationships to help the climate. We attended the climate meeting COP26 where we launched the First Movers Coalition. This means that we, along with 32 other companies, have committed ourselves to increasing demand for new technology with high potential to reduce the world's CO₂ emissions. We have also entered into multiple partnerships to pave the way for the energy transition. One example of this is our latest collaboration with Shell, LanzaTech, and SAS to develop sustainable aviation fuel. Another milestone, in July 2021, was the production of the first fossil-free steel within our partnership HYBRIT and subsequent delivery by SSAB to Volvo Group.

I would like to thank everyone who contributed to making 2021 such a strong year for Vattenfall. I look forward to the new year with confidence. In spite of an uncertain and volatile market, the road ahead is clear for Vattenfall. Together with my colleagues, I am looking forward to continuing our journey towards a fossil free life.”