Vattenfall Back in Black, Phases in Gas to Berlin
Swedish state power group Vattenfall reported a return to the black in its 2017 and 4Q results, published February 7, as it phased out coal in favour of gas in the German capital. It also bought a UK retailer.
CEO Magnus Hall said in 2017 the company converted its Klingenberg lignite-fired power plant in Berlin to natural gas and took the decision to close Reuter C, a hard coal–fired German power plant – as part of its strategy to phase out coal by 2030. It also noted that underlying operating profit in 2017 increased mainly as a result of higher subsidies for gas-fired combined heat and power (CHP) plants particularly in Germany.
Group profit for 2017 was Skr 9.57bn ($1.2bn), compared with a loss of Skr 2.17bn in 2016, while 4Q 2017’s krona 2.88bn profit reversed a Skr 3.96bn loss in the year-before quarter.
Wind power made a major contribution in 2017, with that segment's earnings more than doubling in pace with the commissioning of new assets, to account for 9% of Vattenfall's overall 2017 Skr 23.3bn earnings. Wind will also absorb 55% (or Skr 13bn) of Vattenfall's total 2018-19 capital expenditure of Skr 22bn. The company said it will invest Skr 3bn (13% of 2018-19 capex) in solar energy and new businesses such as decentralised solutions, energy storage and e-mobility.
Vattenfall's power generation was 7% higher year on year at 127.3 terawatt-hours in 2017. But sales of electricity were 19% lower at 157.3 TWh, with sales of heat 7% lower at 18.8 TWh. In contrast sales of gas were 3% higher at 56.4 TWh-gas (5.25bn m3) as it gained new customers in Germany. Vattenfall’s customer base grew by 3% (288,000 contracts) in 2017 thanks to its acquisition of UK gas and electricity retailer iSupplyEnergy in 3Q 2017, but it said that had yet to show up in the 2017 volume sold.
On February 1 this year Vattenfall agreed with two partners (SSAB and LKAB) to fund the krona 20mn cost of planning and design – but not yet construction -- of a ‘HYBRIT’ pilot fossil-fuel-free steel production plant at Lulea in northern Sweden. Swedish-Finnish steelmaker SSAB aims to go fossil-fuel free by 2045. LKAB is a Swedish iron ore producer.