In order to face this challenging market and deliver on our targets, Vattenfall has defined five strategic focus areas.
Vattenfall's five strategic focus areas
1. Growth in renewables
Growth in renewable energy is important for Vattenfall. One of Vattenfall's goals is to grow faster than the market with respect to renewable energy capacity. This has to be balanced against limited financial resources and a growing surplus in the Nordic market.
Of the new investment plan (worth SEK 105 billion for the period 2014–2018), SEK 10 billion is earmarked for growth investments in renewable energy (mainly wind power).
2. Strong Nordic position
To continue to be a strong and profitable player in the Nordic electricity market, Vattenfall will:
- Work for a more efficient electricity market, with stronger transmission capacity from the Nordic market in order to enhance export opportunities. Vattenfall can influence developments in this area through lobbying and other advocacy work.
- Address the consequences of the EU's Water Directive. Implementation of the Water Directive in Swedish law could result in an approximate 10% loss of Sweden's current hydro power generation.
- Optimise the operational lifetime of Vattenfall's existing nuclear power plants. As a result of Vattenfall's extensive modernisation of the Forsmark and Ringhals nuclear power plants, the company can now plan for an operational lifetime of up to 60 years for five of its seven reactors, compared with 50 years previously.
3. Define measures to reduce Vattenfall's CO2 exposure
Vattenfall has cut its CO2 emissions from 93.7 million tonnes in 2010 to 88.4 million tonnes in 2013, mainly by selling production assets in Poland and Denmark. The measures currently planned will lead to a reduction to 79 million tonnes of CO2 emissions. Vattenfall's target is to reduce emissions to 65 million tonnes. To achieve this target, additional operations must be sold, fully or in part, in order to reduce emissions by another 14.6 million tonnes.
4. Offer smart and sustainable energy solutions (be a Smart energy enabler)
The changed market conditions in the end customer markets, where customers are increasingly asking for energy-efficient and sustainable energy solutions, represent a major opportunity for Vattenfall. This is summarised by the concept of being a Smart energy enabler.
5. Stronger focus on Operational Excellence and cost-cutting
Vattenfall aims to lower its annual costs by a further SEK 4.5 billion by 2015 on top of the annual cost savings of SEK 9 billion that were achieved during the period 2010–2013. This will not be achievable without substantial staff reductions. In 2013 costs were reduced by SEK 3.2 billion on a yearly basis, mainly through reduced operating and maintenance costs, and lower costs for sales and administration.
Vattenfall will continue to pursue Operational Excellence and foster a culture of continuous change, improve work processes and enable knowledge-sharing within the various operations.
Vattenfall will optimise its maintenance investments. Electricity and heat production are extremely capital-intensive operations, so every opportunity to reduce tied-up capital in the existing facilities frees up capital for investment in renewable energy production. Maintenance and replacement investments in 2013 amounted to SEK 14.3 billion.
Plants that are not profitable or strategically important will be divested or closed.