Nuclear tax and low prices continue to impact Vattenfall
Swedish utility Vattenfall has announced a loss of SEK19.8 billion ($2.4 billion) in 2015, its third consecutive annual loss. It attributed this partly to continued low electricity prices and unprofitable Swedish nuclear power reactors.
The company said its net sales in 2015 totalled SEK164.5 billion ($19.6 billion), slightly down from SEK165.9 billion in 2014. Vattenfall recorded a post-tax loss of SEK19.8 billion in 2015, compared with a loss of SEK8.3 billion the previous year. It reported total impairment losses in 2015 of SEK36.8 billion, including SEK17.0 billion for its Ringhals 1 and 2 nuclear power reactors. Impairment losses totalled SEK23.8 billion in 2014.
While Vattenfall's total electricity generation was 173.4 terawatt-hours in 2015 - up from the 172.9 TWh produced in 2014 - output from its nuclear power plants dropped from 49.8 TWh to 42.2 TWh. This decrease was primarily attributed to extended outages at Ringhals 2 and Forsmark 3. The availability factor of the Forsmark plant - which generated 21.1 TWh of electricity in 2015 - was 76.1%, down from 88.9% in 2014. The Ringhals plant - which also generated 21.1 TWh - had an availability factor of 64.4% in 2015, compared with 77.3% the previous year.
"Continued falling prices and a nuclear tax corresponding to SEK0.07 per kilowatt-hour have put Swedish nuclear power in a critical situation."
Magnus Hall,
CEO of Vattenfall
Vattenfall - owner of a 70.4% stake in the Ringhals plant - announced in late April 2015 that it intended to bring forward the closure of units 1 and 2 of the plant to 2018-2020 instead of 2025 as previously planned, due to declining profitability and increased costs. In October it confirmed that Ringhals 2 is to be decommissioned in 2019 and Ringhals 1 in 2020.
The company noted Sweden's tax on nuclear power of 7 öre (0.8 US cents) per kilowatt-hour brings its nuclear operating costs to around 32 öre (3.8 US cents) per kWh. However, its revenue from nuclear power generation is only about 22 öre (2.6 US cents) per kWh.
Nordic spot prices were 29% lower in 2015 compared with 2014, mainly due to high rainfall and therefore greater hydropower generation, Vattenfall said. It noted that electricity future prices were lower in all the markets it operates in.
Vattenfall CEO Magnus Hall said, "The major challenge in 2015 continued to be the impact that today's very low electricity prices have on Vattenfall's profitability and the valuation of our assets. Unfortunately, combined with new regulatory requirements, this led to further write-downs, mainly on the values of Swedish nuclear power and German lignite in the summer."
He added, "Continued falling prices and a nuclear tax corresponding to SEK0.07 per kilowatt-hour have put Swedish nuclear power in a critical situation. The remaining reactors will be needed for many years into the future if we are to be able to shift to an entirely renewable energy system in a responsible and cost-effective manner."
Hall said, "Despite continued successful adjustment of our cost structure and, with significant cost savings of roughly 30% over the last five years compared with the cost base in 2010, the impairment losses recognized during this year once again led to a negative result after tax."
However, in a statement Vattenfall said, "If you look at the underlying business and ignore write-downs and provisions, Vattenfall's business is still profitable. The underlying operating profit for the year as a whole was SEK20.5 billion."
The company's chief financial officer, Ingrid Bonde, said: "In terms of our operations, 2015 was a fairly good year, particularly given the challenging energy prices we saw in Scandinavia. In this context, we should still be proud and pleased that we managed to adapt successfully on the operations side, reducing our costs, identifying new business models, and, as a result, making significant progress in the day-to-day transformation of the business. But clearly this is overshadowed by the fact that we can't guarantee the electricity price in Scandinavia and that we've had major write-downs."
Researched and written
by World Nuclear News
