OSLO (Reuters) – Europe needs to increase its electricity transmission capacity and fossil-free power generation to ensure energy security, the CEO of Swedish utility Vattenfall said on Thursday as the company reported a steep drop in fourth quarter earnings.
State-owned Vattenfall reported underlying earnings before interest and tax of 531 million Swedish crowns ($48.66 million), down from 4.5 billion crowns a year earlier.
Net profit fell to 5.1 billion crowns from 5.7 billion crowns a year ago.
The drop was a result of lower spot power prices in the Nordics, which dropped 46% year on year, and higher provisions for the back end of nuclear operations such as dismantling and taking care of spent fuel, CEO Anna Borg told Reuters.
At the same time, Borg said the company has been able to offset some of the price impact by selling production ahead of time at higher prices.
Looking ahead, Vattenfall said it will spend 170 billion crowns over the next five years, most of it on wind power and grid projects, and planning for new nuclear generation.
Europe needs both more transmission capacity to let power flow more easily between market areas and optimise prices and there is a need for more fossil-free electricity production, Borg said.
“Both from a sort of independence perspective and the security perspective, because also in the geopolitical context, there is a need to be more self-sufficient in Europe in general,” she added.
At the same time, the demand outlook is challenging, with some companies holding back on investment due to a more uncertain market and political environment, Vattenfall said.
($1 = 10.9129 Swedish crowns)
(Reporting by Nora Buli, editing by Terje Solsvik)
