Vattenfall Group presentation 2014

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Group presentation for utility company Vattenfall: …

Group presentation for utility company Vattenfall:
Key data about Vattenfall, owners assignment and history
Financial and sustainibility targets
Organisational structure
Strategic focus areas
Investment plan
Generation volume and capacity per volume

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  • 1. Group Presentation 2014 March 2014
  • 2. 2 | Group Presentation 2014 Content 1 Vattenfall key data, owner’s assignment and history 2 Financial and sustainability targets 3 Organisational structure 4 Strategic focus areas 5 Investment plan 6 Generation volume and capacity per region
  • 3. This is Vattenfall • One of Europe’s largest electricity producers • 100%-owned by the Swedish state • Main markets: Nordic countries, Germany, Netherlands • Vattenfall also has operations in: UK (mainly within wind power) • Main products: Electricity, Heat, Gas • Operations span the entire energy value chain: Production, Distribution, Trading, Sales and energy advice 3 | Group Presentation 2014
  • 4. Key data 2013 4 | Group Presentation 2014 Key facts Net sales 171,684 MSEK (19,379 MEUR*) Underlying operating profit 27,900 MSEK (3,149 MEUR*) Reported operating profit -6,453 MSEK (-728 MEUR*) Electricity generation 181.7 TWh Sales of electricity 203.3 TWh Sales of heat 30.2 TWh Sales of gas 55.8 TWh Number of employees (FTE) 31,819 Number of customers: Electricity 6.2 million Gas 1.9 million Electricity network 4.3 million Exchange rate EUR/SEK 8.8591. Values in EUR shown only to facilitate comparisons between SEK and EUR Electricity generation Vattenfall produces electricity and heat from six energy sources: Hydro Nuclear Coal Wind Biomass Gas
  • 5. 5 | Group Presentation 2014 Articles of association and core values The object for the Company’s activities is to generate a market rate of return by operating a commercial energy business that enables the company to be among the leaders in developing environmentally sustainable energy production. The owner’s assignment Core values Safety Performance Cooperation
  • 6. History of Vattenfall 6 | Group Presentation 2014 2010–2013 Consolidation phase 2000–2009 Major expansion in Europe 1950–2000 Organic growth and national market deregulation 1909 Founding of The Swedish State Power Board 1951 Inauguration of Harsprånget, A hydro power plant in Sweden 1970–1980 Construction of 12 nuclear reactors in Sweden 1999–2009 Acquisitions in Germany, Poland and the Netherlands 2010 Inauguration of UK offshore wind farm Thanet 2011–2012 Divestments of non-core operations in Belgium, Finland and Poland 1909–1916 First large hydro power plants: Porjus, Olidan, Älvkarleby, Sweden 1909–1950 Part of developing the Swedish energy system From a domestic Swedish hydro power generator to an European energy company
  • 7. Financial targets and outcome 2013 7 | Group Presentation 2014 Metric Target Outcome FY 2013 Return on Capital Employed (ROCE) 9% -2.1% (9.2% excl. IAC*) Net debt/Equity 50-90% 81.8% FFO/Adjusted net debt 22-30% 19.6% Dividend pay-out 40-60% Zero dividend pay-out * IAC = items affecting comparability
  • 8. Sustainability targets and outcome 2013 8 | Group Presentation 2014 Metric Target Outcome FY 2013 Lower CO2 exposure Vattenfall will reduce the company’s CO2 exposure to 65 million tonnes by 2020 from 93.7 million tonnes in 2010. CO2 emissions in 2013 totalled 88.4 million tonnes. Growth in renewable electricity generation Vattenfall’s rate of growth of installed renewable capacity will be higher than the average rate of growth for ten defined countries in northern and central Europe. The target pertains to new, renewable capacity in the form of solar power, wind power and biomass. Hydro power is not included. Vattenfall’s growth rate was 9.1%. Estimated growth rate for the defined reference countries is 11-15% Energy efficiency Vattenfall’s short-term target for 2014 is to save an average of 1 GWh per day, for a total of 365 GWh in 2014. Decision made for target for 2014.
  • 9. Nordic • Sticking to harmonized EU approach to energy market regulation → market provides the investment incentives • Distributed generation and demand side participation less cost competitive in the Nordics compared with Continental • General oversupply and low prices on the continent increasingly affecting Nordic market Vattenfall has reorganized the Group into two regions Continental/UK • Increasingly national approach to energy market regulation → regulator provides the investment incentives • Energiewende (Germany) • New Energy Deal (Netherlands) • Energy Market Reform (UK) • Increased cost competitiveness of solar energy and demand side participation in Germany. Change is faster than expected • Effective 1 January 2014 the Group was reorganized in two regions: Nordic and Continental/UK • The new organisational structure enables the regions to focus on their respective topics and opens up for opportunities for risk-sharing in the Continental operations over time 9 | Group Presentation 2014
  • 10. Organisational structure as from January 2014 10 | Group Presentation 2014 CEO Nordic Continental/UK Wind Distribution Distribution Sales Sales Hydro Mining & Generation Ringhals Heat Forsmark Renewables Decomm. & Waste Nuclear Projects Corporate Staff Functions Asset Optimization and Trading Chief Financial Officer Operations Support
  • 11. Vattenfall’s five strategic focus areas 11 | Group Presentation 2014 • Work for a more efficient electricity market. Encourage the development of interconnectors. • Manage implications of the EU Water Directive. • Renewables growth • Optimise the operational lifetime of existing nuclear power reactors. Strong Nordic Position • Rate of growth of new installed capacity to be higher than the average rate of growth for ten defined countries in northern and central Europe. This must be balanced against limited financial resources and a growing surplus capacity in the Nordic market. Reduce CO 2exposure from 88.4 billion tonnes in 2013 to 65 billion tonnes by 2012: • Partnering/risk sharing • Co-firing of biomass with coal • Fuel switching. • Lower operating hours in fossil plants due to more renewables Vattenfall aspires to be perceived as a “Smart Energy Enabler” - meeting changing customer demands by developing current downstream business and prudently developing new profitable business models. • Reduce cost level by a further SEK 4.5 billion by 2015. • Continue to pursue Operational Excellence. • Optimise maintenance investments. • Divest or decommission non- core/non-performing assets. Growth in renewables Define measures to reduce Vattenfall’s CO2 exposure Offer smart and sustainable energy solutions Stronger focus on Operational Excellence and cost- cutting Sustainable Heat and Electricity Production Sustainable Consumption Sustainable Financial Performance 1 2 3 4 5
  • 12. Investment plan 2014-2018 Electricity networks Heating networks Gas storage IT 12 | Group Presentation 2014
  • 13. Generation volume and installed capacity per region 13 | Group Presentation 2014 Group total generation (2013) Electricity 181.7 TWh Hydro 35.6 TWh Nuclear 51.9 TWh Fossil 87.9 TWh Wind 3.9 TWh Biomass, waste 2.4 TWh Heat 30.2 TWh (Gas sales 55.8 TWh) Continental /UK 20 374 14% 0% 81% 4% 1% Nordic 18 732 45% 37% 13% 3% 2% HydroNuclearFossilWindBiomass, waste Continental /UK 89 3% 0% 92% 2% 2% Nordic 93 35% 56% 6% 2% Electricity generation, TWh Electricity capacity, MW Heat Electricity Gas Continental/UKNordic Volume, TWh