annual-and-sustainability-report-2014

Overview | Vattenfall’s value chainProductionOptimisation and TradingDistribution 1SalesVattenfall’s production of elec-Optimisation and tradingVattenfall distributes electricityTo end customers Vattenfalltricity and heat is based on sixincludes Vattenfall’s dispatch ofand district heating to businesssells:types of energy: hydro power,electricity generation, hedgingcustomers as well as house-Electricitynuclear power, coal, naturalof future production, purchasesholds. Electricity distributionGasgas, wind power and biomass,of fuel, and purchases and salesis a price-regulated monopolyHeat and coolingincluding waste.in the wholesale market. Withinbusiness that is monitored bystrict risk mandates, Vatten-national regulators. OperationsVattenfall also offers energyfall also conducts proprietaryare conducted both throughservices such as; electric vehicletrading.regional and local networks.charging stations, sales andinstallation of solar panels,solutions for energy efficiencyimprovement and energyadvisory services.Share of the Group’s underlyingShare of the Group’s underlyingShare of the Group’s underlyingShare of the Group’s underlyingoperating profit 2operating profitoperating profitoperating profit77%Most earnings from these operationsare included in Production.17% 6%Strategies/activitiesStrategies/activitiesStrategies/activitiesStrategies/activitiesReduce CO 2exposure by:Further improve dispatch ofContinued focus on costContinued focus on costDivesting lignite operationsall the Group’s power plantsefficiencyefficiencyDivesting or closing otherHedge future electricityFurther improve reliability inIncrease customerplants that are not part ofgenerationthe electricity and heatingsatisfactionthe core businessEnsure sustainability in thenetworksDevelop and offer smart andContinued growth in renewa-supply chainModernise and expand exist-sustainable energy solutionsble energying networksMaking further improvementsMeet customers’ and author-in plant availability, operatingities’ needs for smart andsafety and efficiencysustainable energy solutions,Improving the use ofe.g., smart gridsresources throughoutWork for the expansion ofVattenfall’s production opera-interconnectors from thetions (read more on page 39)Nordic countries to the EuropeanContinent and the UKKey drivers and challengesKey drivers and challengesKey drivers and challengesKey drivers and challengesElectricity price developmentUncertainty about develop-Price regulation of electricityProfit marginPrice development of fuelsment of electricity pricesdistribution operationsCost efficiencyand CO 2emission allowancesPrice hedging strategy forLosses caused by load varia-Customer satisfactionProduction costsuncertain price developmenttions in electricity networksSecurity of supplyPlant capacity, availability andPrice development of fuelBalancing of many smallAdd-on servicesefficiencyand CO 2emission allowancesproduction plants amongMeet demand for new typesEnergy and environmentalCost efficiencycustomersof services and productspoliciesSecurity of supplyfor customers that becomeFlexible control of production“prosumers”of base power to ensureFind new, profitable businessbalance in electricitymodels in the new energynetworks in connection withlandscapefluctuations in renewableelectricity generation1) The electricity distribution operations are legally and functionally unbundled from the operations that are subject to competition.2) Including dispatch and hedging.Vattenfall Annual and sustainability report 2014 11