Fossil-free living within one generation
Vattenfall AB – Group presentation 2020
Fossil-free living within one generation Vattenfall AB Group - - PowerPoint PPT Presentation
Fossil-free living within one generation Vattenfall AB Group presentation 2020 Agenda Section Page Introduction Vattenfall 3 This is Vattenfall Vattenfalls Group executives Vattenfalls value chain Market trends Strategy 8
Vattenfall AB – Group presentation 2020
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Section Page Introduction Vattenfall 3
This is Vattenfall Vattenfall’s Group executives Vattenfall’s value chain Market trends
Strategy 8
Strategy & strategic targets Investment plan 2019-2020
Financials 13
Financial targets Financial highlights 2018
Sustainability 16
UN’s sustainable development goals Impact our CO2 emissions throughout the value chain Attractive partner
Operating segments 21
Introduction operating segments Customers & Solutions Power Generation Wind Heat Distribution
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Stornorrfors Harsprånget Uppsala Forsmark Berlin Amsterdam
Basic facts
producers of electricity and heat
state
gas and energy services
Germany, Netherlands, Denmark and the UK
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Key data
SEK bn FY 2019 FY 2018 Net sales 166.4 152.1 Underlying operating profit1 25.1 19.9 Operating profit (EBIT) 22.1 17.6 Profit for the period 14.9 12.0 Return on capital employed, % 8.5 7.0 Return on capital employed
9.6 7.9 Funds from operations/ adjusted net debt, % 26.5 20.7 TWh FY 2019 FY 2018 Electricity generation 130.3 130.3 Customer sales, electricity 119.0 119.2 Customer sales, heat 17.1 18.3 Customer sales, gas 59.2 60.72
Wind Biomass Hydro Gas Largest facilities are marked with a circle Nuclear Coal Solar District heating
Location of our operations and major plants
Ringhals Moorburg DanTysk Sandbank Thanet Pen y Cymoedd Horns Rev 3
1 Tuomo Hatakka will retire at the end of 2020. 2 Niek den Hollander has decided to leave Vattenfall and will stay on until 31 March 2020.
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President and CEO Magnus Hall CFO Functions Anna Borg Human Resources Kerstin Ahlfont Legal & CEO office Anne Gynnerstedt Communications Karin Lepasoon Strategic Development Andreas Regnell Operating Segment Heat BA Heat Tuomo Hatakka1 Operating Segment Customers & Solutions BA Customers & Solutions Martijn Hagens Operating Segment Wind BA Wind Gunnar Groebler Operating Segment Power Generation BA Generation Torbjörn Wahlborg Operating Segment Distribution3 BA Distribution Annika Viklund BA Markets Niek den Hollander2
3 The electricity distribution operations are regulated by the Swedish Electricity Act
(Ellagen) and the German Energy Industry Act (Energiewirtschaftsgesetz), and are unbundled from Vattenfall’s other operations.
Production Electricity distribution Sales of electricity, heat and gas District heating Energy services & decentralised generation Production from
Actively phasing out fossil-based production
supply via well- functioning distribution networks and smart network solutions
feed self-generated electricity into the grid (“prosumers”)
both electricity producers and consumers to optimise network functionality
and gas to consumers and business customers
price and service models, and gives customers the
understand and reduce their environmental impact
transformation towards fossil-free heating and cooling solutions together with partners, cities and regions
largest producers and distributors of district heating Offers energy services
electric vehicles
Provides marketplaces and access to marketplaces where customers can buy and sell electricity
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Sustainability is the business – and a prerequisite for access to customers, competence and investors.
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To best serve the needs of customers, the ability to deliver simple solutions in an increasingly complex energy landscape is required.
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Further electrification is a key enabler of fossil-free living and, given the pace required, demand for fossil- free electricity and infrastructure will increase significantly.
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Digitalization of the entire energy value chain is required to leverage flexibility and serve customers in a fossil free, robust and cost efficient energy system.
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Cost efficiency and competitiveness is a prerequisite for value creation and growth.
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New competencies, speed in learning and diverse and inclusive teams are critical in the energy transition.
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Outcome of our strategic targets in 2019
1 Including the heat operations in Hamburg, which have been sold and where emissions
amounted to 1.1 Mtonnes during the period January-September.
Strategic targets to 2020 FY 2019 Comments Customer engagement, Net Promoter Score relative (relative customer satisfaction): +2 +1 Improved performance by Vattenfall and peers Commissioned new renewables capacity 2016-2020: ≥2,300 MW 1 226 MW Commissioning of Horns Rev 3 (407 MW) and Slufterdam (29 MW) Absolute CO2 emissions, pro rata: ≤21 Mtonnes 19.31 Mtonnes Lower coal-fired generation Return On Capital Employed (ROCE): ≥8% 8.5% Higher gross margin in Power Generation and capital gain (Hamburg) Lost Time Injury Frequency (LTIF): ≤1.25 2.1 Unsatisfactory level, major ongoing efforts Employee Engagement Index: ≥70% 69% Strong improvement
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Fossil-free energy solutions available for all our customers Our operations in the Netherlands are coal-free 2020 2023 2025 2035 We provide electric charging for half a million cars 10 GW of third party renewables capacity under management 600 MW additional, flexible hydro capacity enables more renewable generation We generate fossil-free electricity to power 30 million homes We pilot 100 MW of green hydrogen gas production from fossil- free electricity The Nordic production fleet is free from fossil fuels We are not done, more to come… 2030 Coal is phased out from all our heat
Our emissions are reduced by 40%, in line with required level to limit global warming to below 2˚C
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61% 23% 16% Growth, 35bn SEK Maintenance, 13bn SEK Replacement, 9bn SEK 37% 31% 12% 11% 9% Netherlands, 13bn SEK Denmark, 11bn SEK Sweden, 4bn SEK UK, 4bn SEK Germany, 3bn SEK
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Total capex 2020-2021
58bn SEK 70% 11% 8% 8% 3% Wind power, 25bn SEK Heat grids, 4bn SEK Distribution grids, 3bn SEK New businesses, 3bn SEK Solar energy & batteries, 1bn SEK
Growth capex per technology 2020-2021
35bn SEK
Growth capex per country 2020-2021
35bn SEK
1 Mainly decentralised solutions, energy storage, e-mobility and initiatives like HYBRIT 1
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1 5–7 years 2 The key ratio is based on average capital employed
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Financial targets Targets over a business cycle1 Outcome 2019 Comment Profitability Return on capital employed: ≥8% 8.5%2 The return on capital employed was 8.5% (7.0%). Higher gross margin in operating segment Power Generation and capital gain from divestment of district heating operations in Hamburg contributed positively Capital structure FFO/adjusted net debt: 22%–27% 26.5% FFO/adjusted net debt increased to 26.5% (20.7), mainly due to higher EBITDA as a result of higher achieved prices in operating segment Power Generation and lower paid tax Dividend policy Dividend: 40%–70% of the year’s profit after tax 3.6 billion SEK Vattenfall’s Board of Directors revised its previous dividend proposal for 2019 from SEK 7,245 million to SEK 3,623
the Annual General Meeting
lower contribution from Distribution due to the storm ”Alfrida”, higher transmission costs and depreciation
dividends as well as higher provisions for pensions and nuclear power
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19.9 25.1 17.6 22.1 12.0 14.9 FY 2019 FY 2018 Underlying EBIT (SEK bn) EBIT (SEK bn) Profit for the year (SEK bn) 112.3 132.0 26.5% 20.7% FY 2019 FY 2018 FFO/Adjusted net debt (%) Adjusted net debt (SEK bn)
Earnings Adjusted net debt
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wind, onshore wind, and solar, all while striving to reduce costs
climate science to limit warming to 2° or less
service disconnected
decentralised solutions like solar power, heat pumps, and microgrids
networks and developing fossil-free decentralised energy solutions
and enabling integration of renewable energy sources
heating networks through our investments in grids, infrastructure, and technologies like power-to-heat, which uses excess renewable electricity in district heating networks
services to reduce emissions from transport
policies in our supply chain via our Code of Conduct for Suppliers
maximising production while minimising fuel consumption and waste
enable customers to make smart choices.
invest in mitigating activities, for example strengthening hydro power dams against potential heavier rainfall, or installing underground electricity distribution lines to prevent damage from an increase in severe storms
refineries, and steel manufacturing to reduce their CO2 emissions
ambitious yet feasible city-specific climate neutrality roadmaps, such as the coal-exit feasibility study done with the City of Berlin
Vattenfall understands businesses and industries will play a decisive role in the achievement of the UN’s Global Sustainable Development Goals (SDGs). Our activities contribute to the achievement of all SDGs, either directly through our operations, or indirectly through our supply
Enabling fossil-free living within one generation
1 Primarily related to natural gas sales 2 EPD – Environmental Product Declaration – a third-party environmental declaration in accordance withISO 14025
3 LCA – Life cycle Assessment18
Customers1
CO2 – emissions 2018
choices
Suppliers Own business
A sustainable supply chain is a competitive advantage Increased credibility leads to more business opportunities Internal and external actions and continued focus needed
science
e.g. WindEurope & Bettercoal
stakeholders e.g. NGO
and buy-in
targeted, high-risk suppliers
assessment reporting, measurement and follow up
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Reducing risk Reducing cost Improving reputation
Examples of partnerships
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Research project for a carbon dioxide- free steel industry Market place for energy sharing Cooperation in large scale bio-diesel production Support of a major enterprise for battery production in Sweden Study on electrified cement production Northern Europe’s largest charging network for e-vehicles Electrification of mines and smelters Storage projects at a number of wind parks Co-operation for e-mobility Powering sustainable data centres
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Overview of operations and major assets
Our operating segments
and energy services in all of Vattenfall’s markets
Business Areas. Responsible for Vattenfall’s hydro and nuclear power operations, maintenance services business, and
business customers
Vattenfall’s wind farms as well as large-scale and decentralised solar power and batteries
and decentralised solutions) and gas and coal-fired condensing plants
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Leading market position in the retail segment in Sweden, the Netherlands, Hamburg and Berlin
1 Operating profit excluding items affecting comparability 2 NPS was reported for the first time in 2016
Overview Key data
with close to 900,000 electricity contracts
Netherlands with 3.6 million electricity and gas contracts
as an electricity supplier
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Highlights 2019
10.2 million contracts mainly due to growth in Germany and acquisition of Delta Energie in the Netherlands
network, which has a total of 14,900 charging points
charging network for e-vehicles, in cooperation with the city of Amsterdam
FY 2019 FY 2018 Net sales (SEK bn) 89.9 81.3 External net sales (SEK bn) 87.3 78.9 Underlying EBIT1 (SEK bn) 1.3 1.3 Sales of electricity (TWh) 89.5 88.3
28.0 27.4
6.5 4.9
55.0 56.0 Sales of gas (TWh) 54.2 55.5 Net Promoter Score (NPS) relative2 +1 +1 Electricity customers 6,930,000 6,600,000 Gas customers 2,470,000 2,350,000 5%
Share of underlying EBIT
One of Europe’s largest providers of fossil-free electricity
1 Operating profit excluding items affecting comparability
Overview Key data
capacity and 11.7 GW hydro power capacity, mainly in Sweden but also in Finland and Germany
fossil-free electricity, with a total generation of 89.2 TWh, out of which 35.8 TWh from hydro power and 53.4 TWh from nuclear power
market access, and a leading player in PPA markets in northwest Europe
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Highlights 2019
preparing for the decommissioning of Ringhals reactor 1 in 2020.
to PreussenElektra in Germany
services company
FY 2019 FY 2018 Net sales (SEK bn) 102.4 100.0 External net sales (SEK bn) 38.4 36.1 Underlying EBIT1 (SEK bn) 15.4 9.4 Electricity generation (TWh) 89.2 90.5 Customer sales of electricity (TWh) 27.0 28.7
22.8 24.6
4.2 4.1
Share of underlying EBIT
58%
Stornorrfors power plant, Sweden
One of the biggest renewable energy players in Europe
1 Operating profit excluding items affecting comparability
Overview Key data
wind power in the world
wind power in Denmark and the Netherlands
wind power turbines with total installed capacity of approximately 3.3 GW across five countries
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Highlights 2019
Denmark
Hollandse Kust Zuid 3 & 4 offshore wind farm (~750 MW) in the Netherlands
FY 2019 FY 2018 Net sales (SEK bn) 13.5 11.9 External net sales (SEK bn) 6.6 5.7 Underlying EBIT1 (SEK bn) 4.2 3.7 Electricity generation (TWh) 9.5 7.8 Investments (SEK bn) 9.2 5.6
Share of underlying EBIT
63% 36% 1%
Offshore Onshore Solar
3.3 GW
33% 23% 13% 12% 20%
UK Denmark The Netherlands Sweden Germany
3.3 GW Split by type of generation Split by geography 16%
Slufterdam onshore wind farm, the Netherlands
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Name Capacity (MW) Commissioning Country Hollandse Kust Zuid 1-4 ~1,500 2022/2023 NL Vesterhav projects 344 2023 DK Thanet Extension 272 2024 UK Norfolk Vanguard 1,800 2027 UK Norfolk Boreas 1,800 2028 UK South Kyle 240 2022 UK Jaap Rodenburg 38 2021 NL NK II ~150 2021 DK Nørre Økse Sø ~50 2021 DK Total >5 GW Name Capacity (MW) Country Thanet 300 UK Ormonde (51%) 150 UK Aberdeen Bay 97 UK Kentish Flats 90 UK Kentish Flats extension 50 UK Pen y Cymoedd 228 UK Ray 54 UK Lillgrund 110 SE Stor-Rotliden 78 SE Horns Rev 3 407 DK Horns Rev 1 (60%) 158 DK Klim (98%) 67 DK DanTysk (51%) 288 DE Sandbank (51%) 288 DE Alpha ventus (26%) 60 DE Nordzee Wind (50%) 108 NL Prinsess Alexia 122 NL Other onshore 651 Total 3,311 MW Name Capacity (MW) Commissioning Country Kriegers Flak 605 2021 DK Wieringermeer 180 2019/2020 NL Wieringermeer ext. 118 2020 NL Moerdijk 27 2021 NL Haringvliet 22 2020 NL Nieuwe Hemweg 19 2021 NL Blakliden + Fäbodberget 353 2022 SE Total 1,736 MW
In operation In construction Pipeline
Offshore Onshore
Pen y Cymoedd Thanet Kentish Flats + Kentish Flats Ext. Ray Ormonde Prinsess Alexia Sandbank DanTysk Horns Rev 1 Klim Lillgrund Stor-Rotliden Nordzee Wind Alpha Ventus
Wind farms above >50 MW
% Vattenfall ownership
Aberdeen Bay Horns Rev 3
One of Europe’s largest producers and distributors of heat
Overview Key data
distributors of heat with approximately 2.2 million end customers
coal and peat by 2030 and replace fossil gas by 2050, at the latest
customers
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Highlights 2019
in Hamburg completed
Hemweg 8 in Amsterdam and Reuter C in Berlin
fuel in heat-only-boiler in Uppsala
FY 2019 FY 2018 Net sales (SEK bn) 31.4 34.0 External net sales (SEK bn) 15.9 15.8 Underlying EBIT1 (SEK bn) 0.6 0.8 Sales of heat (TWh) 17.1 18.3 Electricity generation (TWh) 31.7 32.0 CO2 emissions2 (Mtonnes) 19.3 22.0 Nitrogen oxide, NOx (ktonnes) 7.43 9.9 Sulphur dioxide, SO2 (ktonnes) 2.33 4.2 Particulates (ktonnes) 0.13 0.2
Share of underlying EBIT
2%
1 Operating profit excluding items affecting comparability 2 CO2 emissions are pro rata 3 Excluding the divested heat operations in Hamburg
Leading owner and operator of electricity distribution networks in Sweden and Berlin, Germany
1 Operating profit excluding items affecting comparability 2 SAIDI: System Average Interruption Duration Index 3 SAIFI: System Average Interruption Frequency Index
Overview Key data
electricity distribution networks in Sweden
household customers in Sweden and in Berlin, Germany
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Highlights 2019
(Ei) announced significantly lower revenue frames for the next regulatory period, reducing the scope for needed investments
“Alfrida” with related costs of approximately SEK 800 million
FY 2019 FY 2018 Net sales (SEK bn) 22.5 22.4 External net sales (SEK bn) 17.9 17.8 Underlying EBIT1 (SEK bn) 5.0 6.3 Investments (SEK bn) 7.2 6.6 SAIDI2 (minutes/customer) Sweden 439 187 Germany 10 15 SAIFI3 (number/customer) Sweden 2.4 2.9 Germany 0.2 0.3
Share of underlying EBIT
19%