annual-and-sustainability-report-2014

malkyl

annual-and-sustainability-report-2014

Strategic direction | StrategyVattenfall’s investment planIn recent years Vattenfall has gradually scaled back itsinvestment plans, especially with respect to growth inelectricity generation. This is a result of a market situationcharacterised by a surplus of production capacity, weakdemand and low electricity prices. Today the majority ofgrowth investments are being made in renewable energy,mainly wind power. The investments that are still plannedin fossil-based production relate to the completion ofprojects that were decided on several years ago, when themarket conditions looked entirely different.Vattenfall’s investment plan for the five-year period 2014–2018, whichwas decided on in 2013, total SEK 105 billion. Compared with thepreceding five-year period, 2013–2017, this meant a decrease ofSEK 18 billion. Due to the difficult market situation, which is characterisedby a surplus of production capacity and low prices – which areputting pressure on profitability and cash flow – Vattenfall has limitedits most recent investment plan to cover only the next two years,2015–2016, compared to rolling five-year plans as previously.For the two-year period 2015–2016 Vattenfall plans to invest atotal of SEK 41 billion, of which SEK 30.8 billion, or 75%, relates toinvestments in electricity and heat production. The company plans toinvest the remainder, SEK 10.2 billion, primarily in electricity and heatnetworks, for SEK 7.3 billion and SEK 1.8 billion, respectively.Of the investments in electricity and heat production, SEK 11.1 billion,or 36%, relates to growth, i.e., expansion of production capacity. Thelargest share, SEK 9.1 billion, or 82%, is planned for renewable energyproduction – mainly wind power. Vattenfall’s goal is to have a faster rateof growth in renewable production capacity than the market average(see also page 23). The growth investments that continue to be made infossil-based production are to complete projects that were decided onand started several years ago, when the market situation and outlookwere entirely different than they are today. An example is the hard coalfiredMoorburg plant in Hamburg, which was decided on back in 2006and will be in commercial operation in 2015.A large share of the total investment plan is earmarked for main -tenance of existing plants. A significant portion also pertains to legallymandatory investments due to various regulatory decisions, such as innuclear power. Of total investments, SEK 25.7 billion relates to maintenanceand legally mandatory investments, and SEK 3.1 billion relatesto replacement of plants that will be phased out due to their age.Investment plan 2015–2016Total investments, SEK 41 billionGrowth investments 12.2Replacementinvestments 3.1Maintenance andlegallymandatory 25.7Geographical breakdown of investments,SEK 41 billionGermany 17.8Sweden 16.8UK 3.7Netherlands 1.8Denmark 0.3Finland 0.2Group (IT) 0.4Total investments, SEK 41 billionProduction ofelectricity and heat 30.8Non-productionrelatedinvestments 10.2Total investments in electricity and heatproduction, SEK 30.8 billionGrowth investments in electricity and heatproduction, SEK 11.1 billionHydro power 3.2Nuclear power 5.2Fossil-based power 12.2Wind power 9.4Biomass, waste 0.8Nuclear power 0.1Fossil-based power 1.9Wind power 9.1Biomass, waste 0.0520 Vattenfall Annual and sustainability report 2014

More magazines by this user
Similar magazines