Vattenfall’s report for the first quarter shows stable financial development and a positive result, with strong production and availability, notably in the Swedish nuclear plants at Ringhals and Forsmark.
“I think we have come off to quite a good start. We can see very good production in nuclear and a good customer growth and we have introduced more renewables by commissioning new wind farms. So, a very positive period,” says Magnus Hall, Vattenfall’s President and CEO.
During the quarter, the net sales dropped slightly, while electricity generation picked up, much thanks to the mentioned high nuclear availability.
Stable financial performance
Even though electricity prices continues downwards, the development of Vattenfall’s underlying financial performance is still stable, as important parts of the operations are not primarily depending on the electricity price.
“While electricity prices drop, we have other business areas that are improving at the same time. For instance in Heat and Distribution and also with the development in Wind. So we are balancing the company in different ways so we are less reliant on the electricity price alone. And that’s part of the plan,” Hall says.
Temporary effects on the result
The underlying operating profit was similar to the same period last year, around 8.3 billion SEK. The reported result was however lower, around 3.8 billion SEK, mainly due to temporary effects.
“This year we have changes in the market prices that need to partially be reflected in the reported result. But these are mainly temporary effects that will reverse over time. Still we need to be very sharp on our cost management,” says Stefan Dohler, Vattenfall’s CFO.
78,000 new customer contracts
The first quarterly report shows progress in several areas.
BA Customers & Solutions has grown its customer base by 78,000 customer contracts. In Stockholm, Vattenfall will provide the city with chargers for electric vehicles on eight “charging streets” and in the Netherlands, Nuon has won a contract for 2,500 charging poles.
For BA Generation, the Swedish Energy agreement means lower costs, both for nuclear and Hydro. Nuclear increased its electricity generation by means of an availability at more than 98 percent, while Hydro’s generation decreased due to lower reservoir levels.
Also BA Wind shows high availability: 97.1 percent of producing assets. Also, new capacity was added, for example Sandbank in the German North Sea and Pen y Cymoedd and Ray in the UK. In addition, plans are to grow in the solar business, primarily by installing solar at wind farms.
For BA Heat, net sales increased notably from around 8.2 billion SEK to around 10.0 billion SEK, mainly owing to increased production volumes in Germany and the Netherlands.
BA Distribution increased net sales with around 10 percent and plan to invest 5.6 billion SEK in growth in 2017 and 2018.
Subsidy free wind power is here
Recently in Germany, a wind farm auction resulted in two energy companies offering zero bids, which means that they will now build offshore wind power without any subsidies. And even though Vattenfall didn’t win any of the auction contracts, Magnus Hall still see positive effects.
“It is positive because it means that we see a subsidy free opportunity for new renewable electricity generation and it will probably increase the opportunities to build wind offshore, where it is often also easier from a public opinion point of view. But it is more a play on forward price expectations so we will see how this fits Vattenfall’s strategy. That’s the next question.”
Watch the video interview with Magnus Hall and Stefan Dohler