Market changes hurt Vattenfall's results
05 February 2014
Rapid change in European energy markets caused Vattenfall to record a SEK13.5 billion ($1.5 billion) loss for 2013, despite near-record performance from its nuclear power plants.
_250x172.jpg "Ringhals 3 and 4 (Vattenfall) 250x172") |
| Ringhals units 3 and 4 (Image: Vattenfall) |
State-owned Vattenfall said that a surplus of generation capacity in Europe, over-production from renewable sources and weak demand had caused power prices to continually fall. This meant the company could not capitalise on a 1.6% rise in power generation compared with 2012.
Company CEO Øystein Løseth said, "Large volumes of subsidised renewable energy have emerged and are putting pressure on conventional gas- and hard coal-based electricity production. Due to the elevated business risks for the industry, the estimated value of some of our assets in hard coal and gas-fired plants has been impaired. As a result in the 2013 half-year report we recognised SEK29.7 billion ($4.5 billion) in losses for impaired assets."
Around half of the impairment was to coal and gas assets in the Netherlands, including the new 1311 MWe Magnum power plant where Vattenfall decided to bring into full commercial operation only one of three units. Other impairments were recorded against hard coal in Germany and heat and power in Nordic countries, as well as a significant amount of goodwill on trading operations.
The major revision in the value of existing fossil power plants pushed Vattenfall into its first ever recorded annual loss - some SEK13.5 billion ($2.0 billion) - and meant it did not pay a dividend for the first time.
The company recently took a hit on its equity in German nuclear power plants, Brünsbuttel and Krummel, following their political shutdown in 2011, noting an impairment of SEK10.2 billion ($1.5 billion) at the time.
RWE closure
Also today, German utility RWE said it would mothball the Claus C gas-fired plant in the Netherlands due to low operating hours and low wholesale power prices. "This is mainly a consequence of the German energy transition, which is forcing renewable electricity onto the Dutch grid," said RWE. The 1300 MWe power plant is only two years old.
Vattenfall still owns 20% of Brokdorf nuclear power plant in Germany and this combined with seven units at Ringhals and Forsmark in Sweden produced 51.9 TWh in 2013, around 28% of the company's production compared with 48% from fossil plants and 20% from hydro.
Løseth said that it had become clear that "the entire, traditional business model based on large-scale electricity generation in conventional power plants is now being challenged... We are cutting costs, strengthening our cash flow, and we are developing new, sustainable and smart products and services that society and our customers are demanding."
Nuclear power will remain a major element in Vattenfall's generation lineup. A modernisation program means that Vattenfall's reactors at Ringhals and Forsmark are now planned for 60 years of operation, compared to previous planning horizons of 50 years, and early consultation is underway for the replacement of units at Ringhals.
Researched and written
by World Nuclear News