Vattenfall chief executive Anna Borg said maintaining the pace of the energy transition is the only long-term solution to reduce fossil dependency as she warned a rationing of gas in Europe is “becoming an increasingly likely scenario” this winter.

Sharply rising gas prices in the wake of Russia’s invasion of Ukraine pushed power prices in continental Europe on average three to four times higher than in the same period in 2021, which through interconnection also drove prices up in southern Sweden.

Average electricity spot prices during the second quarter of this year surged by 210% to €187 per megawatt hour in Germany from a year earlier, while they rose by 189% to €121.10/MWh in the Nordics, Vattenfall said. Gas fuel prices in the same period roughly quadrupled to €99/MWh.

“At present, the big question is what the natural gas supply will look like in Europe this winter with rationing becoming an increasingly likely scenario,” Borg said while commenting on the latest results.

“The uncertainty has sent electricity prices to new record levels even as we are in the middle of the summer when prices are usually lower.”

Vattenfall on the heels of higher power prices saw its net sales increase by 39% to SKr48.17bn ($4.69bn) in the second quarter of 2022 from the year-earlier period.

But its earnings before depreciation, amortisation and impairment (Ebitda) fell to SKr15.39bn from SKr20.53bn during the period, while the utility’s net profit plunged to SKr4.23bn from SKr13.21bn, as the company in 2021 still had one-off gains from a compensation for the early decommissioning of German nuclear power.

Despite Europe’s efforts to secure gas for the upcoming winter, “the pace of the energy transition needs to remain high,” Borg stressed.

“This is the only way we can reduce fossil fuel dependency in Europe.”

Vattenfall this year had recorded some key successes in its own energy transition such as receiving a construction permit for the Kriegers Flak offshore wind project on the Swedish side of the Baltic Sea border, and securing contract for difference (CfD) support for the first phase of the Norfolk zone in the UK part of the North Sea.

But Vattenfall still generates most of its electricity from nuclear, hydro and fossil energy.

Wind power – which is only the utility’s fourth-largest generation source – thanks to higher power prices still had a positive contribution of Skr1.5bn to operating segments during the second quarter.

Vattenfall at the end of June 2022 had 4.2GW in operating wind power assets, up from 4GW a year earlier, thanks mainly to the commissioning of the 353MW Blakliden Fäbodberget wind farm in Sweden.