Vattenfall turned from profits to a major loss last year, mostly due to write-downs of fossil-fuel assets, but the Swedish utility wants wind power to continue to account for the largest share of a hugely diminished pie of “growth investments.”
The company also said that it is following through with its previously announced split into a separate Nordic, and a UK and continental European unit that kicked in on Jan. 1, 2014.
“Apart from the fact that we have seen continued falling prices due to a surplus of generation capacity and weak demand for electricity, the entire traditional business model, based on large-scale electricity generation in conventional power plants, is now also being challenged,” says Vattenfall president and chief exectutive Øystein Løseth.
"Large volumes of subsidised renewable energy (wind and solar power) have emerged and are putting pressure on conventional gas- and hard coal-based electricity production.”
Vattenfall turned to a loss of Skr13.54bn (€1.53bn / $2.07bn) in 2013, from a profit of SKr17.05bn in 2012, as losses for impaired assets of SKr29.7bn accumulated during the first half weighed on company results.
Most of the impairment losses were recognised in Dutch and German hard coal plants.
Underlying profit – without taking into account the impairment losses – were almost stable at SKr27.9bn in 2013, slightly up from SKr27.53bn a year earlier.
Vattenfall's cut its planned overall investments for the 2014 to 2018 period to SKr105bn from SKr123bn in the 2013 - 2017 period.
Most of the planned investments will be for maintenance and replacement of existing assets, with only 17% remaining for growth investments.
Of those growth investments, 58% are earmarked for wind, which the state-owned company needs for its stated shift toward a more environmentally sustainable energy production.
Last year, only 3.9 terawatt hours out of a total generation of 170.8 TWh came from wind power, while the bulk of Vattenfall's electricity output still came from its hydro, nuclear and fossil assets.
Vattenfall has been criticised in the public in both Sweden and Germany for its reliance on heavily polluting lignite.
The construction of wind projects continues, but the scale of most of the new projects is not too large.
The utility says that it expects to commission the 15MW Bajlum wind park in Denmark and the 33MW Hjuleberg wind farm in Sweden in mid-2014.
Vattenfall also says it expects the 228MW Pen y Cymoedd wind farm in Wales to come on stream in late 2016, and the 36.9MW Clashindarroch wind park in Scotland in early 2015.
Construction start for a 15-turbine expansion to the Kentish Flats offshore wind farm in the UK is planned for mid-2015.