Price hedging

Vattenfall continuously hedges its future electricity generation through sales in the forward and futures markets. Spot prices therefore have only a limited impact on Vattenfall's earnings in the near term.

Following the sale of the lignite operations, Vattenfall's portfolio and risk exposure have changed substantially. The dominant risk exposure is now related to price exposure for Nordic nuclear and hydro power base load generation. In addition, Vattenfall's continuing operations generate a higher share of regulated revenue from distribution, heat and subsidies from wind power, which reduces the total risk exposure. On the Continent Vattenfall continues to have some price exposure between electricity and used fuel. Such an exposure has a lower risk profile than in the Nordic countries. Based on this, Vattenfall has decided to decrease its price hedging activity and to focus on hedging its Nordic generation.

Average indicative Nordic1 hedge prices as per 30 June 2018

EUR/MWh 2018 2019 2020
  27 27 30

 

Sensitivity analysis – Continentalportfolio

Market quoted +/- 10% price impact on future profit before tax, MSEK 3
Observed yearly volatiliy
  2019 2020 2021  
Electricity +/- 1,513 +/- 1,397 +/- 1,449 15% - 19%
Coal -/+ 360 -/+ 303 -/+ 268 20% - 28%
Gas -/+ 768 -/+ 713 -/+ 652 14% - 16%
CO2 -/+ 278 -/+ 318 -/+ 347 35% - 47%

 

Vattenfall's estimated Nordic1 hedge ratio (%) as per 30 June 2018

Item title Nordic hedge ratio
2018 75
2019 64
2020 30

1) Nordic: Sweden, Denmark, Norway, Finland

2) Continental: Germany, the Netherlands, the United Kingdom

3) The denotation +/- entails that a higher price affects operating profit favourably, and -/+ vice versa.

To view the interactive image please update your web browser to a newer version.

Last updated: 2018-08-20 13:54