Fossil-free within one generation. Vattenfall AB Group presentation 2018

Transcription

1 Fossil-free within one generation Vattenfall AB Group presentation 2018

2 Agenda 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 Financials 12 Financial targets Financial highlights 2017 Sustainability 15 UN s sustainable development goals Impact our CO 2 emissions throughout the value chain Attractive partner Operating segments 19 Introduction operating segments Customers & Solutions Power Generation Wind Heat Distribution

3 Introduction Vattenfall 3

4 This is Vattenfall Basic facts One of Europe s largest producers of electricity and heat 100% owned by the Swedish state Main products: electricity, heat, gas and energy services Main markets: Sweden, Germany, Netherlands, Denmark and the UK About 20,000 employees Key data SEK bn FY 2017 FY Net sales Underlying EBIT EBIT Profit for the period ROCE, % ROCE excl. IAC, % FFO/adj net debt, % TWh FY 2017 FY Electricity generation Customer sales, electricity Customer sales, heat Customer sales, gas Continuing operations (excluding divested lignite operations) 2 Underlying operating profit excluding items affecting comparability 4

5 Vattenfall Group executives Board of directors President and CEO Magnus Hall CFO Functions Anna Borg Legal & CEO office Anne Gynnerstedt Strategic Development Andreas Regnell Human Resources Kerstin Ahlfont Communications Karin Lepasoon Operating Segment Heat Operating Segment Customers & Solutions Operating Segment Wind Operating Segment Power Generation Operating Segment Distribution 1 BA Heat Tuomo Hatakka BA Customers & Solutions Martijn Hagens BA Wind Gunnar Groebler BA Generation Torbjörn Wahlborg BA Markets Niek den Hollander BA Distribution Annika Viklund 1 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. 5

6 Vattenfall s value chain Production Electricity distribution Sales of electricity, heat and gas Production from Guarantees secure Sells electricity, heat Hydro supply via wellfunctioning and gas to consumers distribution and business Nuclear networks and smart customers Coal network solutions Focuses on various Natural gas Enables customers to price and service Wind feed self-generated models, and gives Solar electricity into the grid customers the Biomass ( prosumers ) opportunity to reduce Waste their environmental Actively phasing out impact fossil-based production District heating Drives the transformation towards fossil-free heating and cooling solutions together with cities and regions One of Europe s largest producers and distributors of district heating Energy services & decentralised generation Offers energy services Heat pumps Solar panels Charging solutions for electric vehicles Battery storage Network services Smart meters Provides marketplaces and access to marketplaces where customers can buy and sell electricity 6

7 Market trends Trends and opportunities/actions Sustainability and customer focus Customers increasingly considering climate impact when choosing energy solutions and suppliers Electrification Climate goals drive electrification of transport, industry and heat More decentralised solutions Technological trends drive integration of renewables, decentralised generation and storage Digitalisation Entire energy value chain is becoming digitalised Consumption steered to times when energy price is low New ways of working are driving value and growth Pressure on wholesale markets remains Increasingly competitive environment put pressure on margins - Focus on customer journey - Climate-smart offerings - Infrastructure for electric vehicles - Portfolio of heat offerings including heat pumps - Industry partnerships - Small-scale generation - Energy storage - Smart grids - Focus on data governance to capture the value of data - Efficiency improvements based on data analytics - Digital customer interactions - Embrace new ways of working - Keep focus on risk management, innovation and operational excellence 7

8 Strategy 8

9 Strategy and strategic targets Customer centric and strong brand Sizable position in decentralised energy Driver of electrification and climate smart society Leading producer of renewable energy Fossil-free within one generation Clear and engaging purpose Attractive employee value proposition Right and diverse competence First quartile in cost efficiency Digital utility Sustainable value chain 9

10 Strategy and strategic targets Outcome of our strategic objectives for 2017 Strategic targets to 2020 FY 2017 Comments Customer engagement, Net Promoter Score relative (relative customer satisfaction): Continued improvement at lower pace Commissioned new renewables capacity : 2,300 MW Absolute CO 2 emissions, pro rata: 21 Mtonnes Return On Capital Employed (ROCE): 8% 652 MW Strong continuous growth 22.6 MT CO 2 roadmap continues 7.7% Significant improvement Lost Time Injury Frequency (LTIF): Core focus Employee Engagement Index: 70% 64% Improved but not satisfactory 10

11 Investment plan Total capex Growth capex per technology Growth capex per country % 14% 12% 35% 46bn SEK 47% 9% 4% 14% 22bn SEK 59% 9% 11% 13% 22bn SEK 16% 39% Growth, 22bn SEK Maintenance, 16bn SEK Replacement, 8bn SEK Wind power, 13bn SEK Distribution grids, 3bn SEK Heat grids, 2bn SEK Solar energy, 1bn SEK New businesses*, 3bn SEK Denmark, 8bn SEK Germany, 4bn SEK Netherlands, 3bn SEK Sweden, 2bn SEK UK, 2bn SEK Other, non-assigned, 3bn SEK * Mainly decentralised solutions, energy storage and e-mobility 11

12 Financials 12

13 Financial targets Financial targets New targets over a business cycle 1 Old targets over a business cycle 1 Outcome 2017 Comment Profitability Return on capital employed: 8% Return on capital employed: 9% 7.7% 2 The return on capital employed was 7.7% (0.5%). Capital structure FFO/adjusted net debt: 22% 27% FFO/adjusted net debt: 22% 30% 21.5% FFO/adjusted net debt decreased slightly compared with 2016, to 21.5% (21.6%). Adjusted net debt was stable, while FFO decreased slightly mainly due to higher interest paid in 2017 as a result of a partial repurchase of a bond maturing in Capital structure Debt/equity ratio 3 : 50% 90% 63.0% The debt/equity ratio increased to 63.0% (60.5%) compared with 2016, mainly due to a reclassification of SEK 15.7 billion in nuclear power provisions to debt, which was partly offset by a positive net cash flow of SEK 7.1 billion after investments. Dividend policy Dividend: 40% 70% of the year s profit after tax Dividend: 40% 60% of the year s profit after tax 2 billion SEK The Board of Directors proposes payment of a discretionary dividend of SEK 2 billion for years 2 The key ratio is based on average capital employed 3 The target for debt/equity ratio was removed at an extraordinary general meeting in December 2017 when new financial targets were set by Vattenfall s owner 13

14 Financial highlights 2017 Earnings Adjusted net debt % 21.5% FY 2016 FY 2017 Underlying EBIT (SEK bn) Profit for the Period (SEK bn) EBIT (SEK bn) FY 2016 FY 2017 FFO/Adjusted net debt (%) Adjusted net debt (SEK bn) Underlying EBIT increased by SEK 1.6 bn to SEK 23.3 bn due to continued focus on lowering costs and increased earnings in Wind and Distribution EBIT increased by SEK 17.3 bn to SEK 18.6 bn and Profit for the year by SEK 11.7 bn to SEK 9.6 bn was affected by impairments mainly related to the lignite sale Adjusted net debt was unchanged compared with the levels at 31 December 2016 FFO/Adjusted net debt at 21.5% was below target of 22% Return on capital employed (ROCE) at 7.7% was below target of 8% 14

15 Sustainability 15

16 UN s Sustainable Development Goals Vattenfall s activities contributes to the UN s Sustainable Development Goals, and we understand that businesses and industries will play a decisive role in the extent to which the SDGs are achieved. Though we impact all goals either directly or indirectly through our supply chain, we have identified the six SDGs that are most relevant for Vattenfall and where we can have the greatest global impact Partner to keep welfare recipients from having their electricity or heat service disconnected Invest to improve grid stability and reliability while keeping costs down and enabling integration of renewable energy sources Invest in technologies and solutions to phase out fossil fuels from heating systems and replace fuel in our plants to reduce CO 2 Strengthen guidelines for responsible purchasing and human rights policies in our supply chain via our Code of Conduct for Suppliers Strive to achieve best-in-class efficiency in all our operations, maximising production while minimising fuel consumption and waste Our Environmental Product Declarations and Life Cycle Assessments enable customers to make smart choices. Enable customers to participate in the energy transition via decentralised solutions like solar power, heat pumps, and microgrids Enable cities to reduce their environmental impacts by expanding our district heating networks, developing fossil-free decentralised energy solutions, and expanding our e-mobility initiatives Commit to becoming fossil free within one generation Collaborate with the cities in which we operate to use our industry knowledge and co-develop ambitious yet feasible city-specific climate neutrality roadmaps. Facilitate further integration of renewable energy in electricity and heating networks through our investments in grids and infrastructure, and Create opportunities for partners and consumers to electrify processes using fossil-free electricity and thereby reduce their own emissions. Form partnerships with energy-intensive industries like cement, refineries, and steel manufacturing to reduce CO 2 emissions Partner with a food company to use their surplus heat to warm local homes instead of just releasing the heat. Drive international development by joining EV100, a global partnership initiative to promote the electrification of transportation 16

17 Impact our CO 2 emissions throughout the value chain Becoming fossil-free within one generation CO 2 emissions 2017 Suppliers ~ 5 Mt Transparency on climate footprint Collaboration for phasing out fossil fuels Own business ~ 23 Mt Climate neutral in the Nordic region 2030 Coal phased out 2030 in the heat portfolio Fossil-free within one generation Customers 1 ~ 15 Mt Products and services with clear climate footprint (EPD 2 / LCA 3 ) Renewable decentralised solutions Low carbon district heating Climate targets together with cities E-mobility Electrification of industries 1 Primarily related to natural gas sales 2 EPD Environmental Product Declaration a third-party environmental declaration in accordance with ISO LCA Life cycle Assessment 17

18 An attractive partner in the energy transition Examples of partnerships Research project for a carbon dioxide-free steel industry Cooperation in large scale bio-diesel production Study on electrified cement production Storage projects at a number of wind parks Market place for energy sharing Support of a major enterprise for battery production in Sweden Northern Europe s largest charging network for e-vehicles Attract industries to Sweden 18

19 Operating segments 19

20 Introduction to operating segments Overview of operations and major assets Our operating segments Location of our operations and major plants Customers & Solutions - Responsible for sales of electricity, gas and energy services in all of Vattenfall s markets Power Generation - comprises the Generation and Markets Business Areas. The segment includes Vattenfall s hydro and nuclear power operations, maintenance services business, and optimisation and trading operations Wind - Responsible for development and operation of Vattenfall s wind farms as well as large-scale and decentralized solar power and batteries Heat - Responsible for Vattenfall s heat operations including sales, and gas and coal-fired condensing Distribution - Responsible for Vattenfall s electricity distribution operations in Sweden and in Berlin, Germany 20

21 Customers & Solutions Leading market position in the retail segment in Sweden, the Netherlands, Hamburg and Berlin Overview Leading position in Sweden with more than 900,000 retail electricity customers Leading position in Berlin and Hamburg as an electricity supplier and one of the leaders in gas Key data FY 2017 FY 2016 Net sales (SEK bn) External net sales (SEK bn) Underlying EBIT 1 (SEK bn) Sales of electricity (TWh) Highlights 2017 Entered the British retail market with sales of gas and electricity to B2C customers InCharge, launched in late 2016, has become a leading e-mobility solution provider, offering easy and accessible charging during Underlying operating profit is defined as operating profit excluding items affecting comparability 2 NPS was reported for the first time in 2016 Share of underlying EBIT 92% 8% - of which, private customers of which, resellers of which, business customers Sales of gas (TWh) Net Promoter Score (NPS) relative Electricity customers 6,450,000 6,300,000 Gas customers 2,340,000 2,200,000 21

22 Power Generation One of Europe s largest providers of fossil-free electricity Overview Operates a portfolio with 7.3 GW nuclear capacity and 11.6 GW hydro power capacity across Sweden, Finland and Germany One of Europe s largest providers of fossil-free electricity, with a total generation of 87.5 TWh, out of which 32.3 TWh from Swedish hydro power and 51.9 TWh from Swedish nuclear power Highlights 2017 Decision taken to invest in independent core cooling in Ringhals reactors 3 and 4 to enable operation into the 2040s Increase in payments to Swedish nuclear fund from avg SEK/kWh to 0.05 SEK/kWh Share of underlying EBIT 56% 44% Key data FY 2017 FY 2016 Net sales (SEK bn) External net sales (SEK bn) Underlying EBIT 1 (SEK bn) Electricity generation (TWh) Sales of electricity (TWh) of which, resellers of which, business customers Underlying operating profit is defined as operating profit excluding items affecting comparability 2 Values have been adjusted compared with information previously presented in Vattenfall s 2016 Annual and Sustainability Report 22

23 Wind One of the biggest producers of offshore wind in the world Overview One of the biggest producers of onshore wind power in Denmark and the Netherlands 354 MW of new renewable capacity installed in 2017 Key data FY 2017 FY 2016 Net sales (SEK bn) External net sales (SEK bn) Underlying EBIT 1 (SEK bn) Electricity generation (TWh) Investments 2 (SEK bn) Highlights 2017 Submitted the first non-subsidised tender in the world, for the offshore wind farm Hollandse Kust Zuid, the Netherlands. Was in March 2018 announced as the winner Began construction of three battery projects, with a total capacity of 27 MW Share of underlying EBIT 91% 9% Split by type of generation 42% 2.8 GW 58% Onshore Offshore Split by geography 24% 36% 2.8 GW 13% 13% 14% UK Denmark The Netherlands Sweden Germany 1 Underlying operating profit is defined as operating profit excluding items affecting comparability 2 Values have been adjusted compared with information previously presented in Vattenfall s 2016 Annual and Sustainability Report 23

24 Operating wind farms, construction and pipeline In operation Name Capacity (MW) Country Thanet 300 UK Ormonde (51%) 150 UK Kentish Flats 90 UK Kentish Flats extension 50 UK Pen y Cymoedd 228 UK Ray 54 UK Lillgrund 111 SE Stor-Rotliden 78 SE 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 offshore 10 Other onshore 669 Total 2,764 MW Ormonde Pen y Cymoedd Wind farms above >50 MW Ray Kentish Flats + Kentish Flats Ext. Thanet Offshore Horns Rev 1 DanTysk Sandbank Klim Alpha Ventus Nordzee Wind Prinsess Alexia Onshore Stor-Rotliden Lillgrund In construction Name Capacity (MW) Commissioning Country Aberdeen UK Horns Rev DK Slufterdam NL Wieringermeer NL Total 707 MW Pipeline Name Capacity (MW) Commissioning Country Wieringermeer ext. ~ NL Blakliden + Fäbodberget ~ SE South Kyle ~ UK NK II ~ DK Danish Near Shore DK Danish Kriegers Flak DK Hollandse Kust NL Sandbank Plus < DE Thanet Extension UK Norfolk Vanguard 1, UK Norfolk Boreas 1, UK Total ~6.5 GW 24

25 Heat One of Europe s largest producers and distributors of heat Overview One of Europe s largest producers and distributors of heat with more than 2 million end customers Supporting the City of Berlin s goal to phase out coal by 2030 by replacing the lignite-fired combined heat and power plant in Klingenberg with a refurbished gas-fired unit three years ahead of schedule and saving 600 KtCO2/year Highlights 2017 Haus Strom was launched enabling tenants in Berlin and Hamburg to install solar panels on their roofs, providing them with excess electricity from micro- CHP units that Vattenfall operates in the buildings Share of underlying EBIT 86% 14% Key data FY 2017 FY 2016 Net sales (SEK bn) External net sales (SEK bn) Underlying EBIT 1 (SEK bn) Sales of heat (TWh) Electricity generation 2 (TWh) of which, fossil-based power (TWh) - of which, biomass and waste (TWh) CO 2 emissions 2 (Mtonnes) Nitrogen oxide, NO x (ktonnes) Sulphur dioxide, SO 2 (Ktonnes) Particulates (ktonnes) Underlying operating profit is defined as operating profit excluding items affecting comparability 2 Values have been adjusted compared with information previously presented in Vattenfall s 2016 Annual and Sustainability Report 25

26 Distribution Leading owner and operator of electricity distribution networks in Sweden and Berlin, Germany Overview Leading owner and operator of electricity distribution networks in Sweden Approximately 3.3 million business and household customers in Sweden and in Berlin, Germany Key data FY 2017 FY 2016 Net sales (SEK bn) External net sales (SEK bn) Underlying EBIT 1 (SEK bn) Investments 2 (SEK bn) Highlights 2017 Granted a licence to begin operating electricity networks in the UK Microgrid project initiated in Askersund Municipality, Sweden. The project includes solar energy, battery storage, power control and e-vehicle charging in a locally integrated system 1 Underlying operating profit is defined as operating profit excluding items affecting comparability. 2 Values have been adjusted compared with information previously presented in Vattenfall s 2016 Annual and Sustainability Report. Share of underlying EBIT 75% 25% 26