One-off effects, rising electricity prices boost Vattenfall’s profits in Sweden

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OSLO, July 20 (Reuters) – Swedish utility Vattenfall (VATN.UL) announced a 33% increase in its underlying profit before interest and taxes (EBIT) for January-June, due to one-off effects and higher prices.

Underlying EBIT reached SEK 17.3 billion ($ 1.99 billion), up from SEK 13 billion a year earlier.

The first half net profit reached 23.6 billion crowns compared to a loss of 1.6 billion crowns a year ago.

The company recorded a one-time compensation for the early shutdown of its nuclear power plants in Germany of SEK 11.1 billion in the second quarter, Vattenfall said. Read more

“We also saw more power generation and slightly more normal prices,” CEO Anna Borg told Reuters, adding that heating sales were also higher.

The benchmark electricity price for the Nordic system has increased year on year after a cold, dry winter and booming fuel and carbon markets, averaging 42.05 euros per megawatt hour in the first half of 2021, compared to 10.53 euros per megawatt for the same period in 2020.

However, the large differences between the price of the system in the Nordic countries and the individual price zones due to the higher renewable energy capacity in the north of Sweden and the constraints of the grid lowered the price obtained after the blankets, Vattenfall said.

“I think for a while the market will have to live with this,” Borg told Reuters.

Although grid constraints decrease over time as capacity increases, there will still be more volatility than before due to the increased share of renewables in the energy system, she added.

Vattenfall is hedging against price volatility by selling some of its future production on futures markets and by the end of June it had reached Nordic electricity prices of 30 euros per megawatt hour (MWh) for that year.

For the 2022 production, it covered 73% of its planned production, against 56% at the end of March, with an unchanged price at 28 euros / MWh. For 2023, it has covered 33% at an average of 33 euros / MWh, against 25% and 26 euros / MWh at the end of the first quarter.

On the wholesale market, Nordic electricity for 2022 traded for the last time at 31.85 euros per megawatt hour.

($ 1 = 8.6989 Swedish kronor)

Reporting by Nora Buli in Oslo Editing by Mark Potter

Our Standards: Thomson Reuters Trust Principles.


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