Annual Report 2013 | Suomeksi |

Power

The Power Division consists of Fortum’s power generation, power trading and power capacity development as well as expert services for power producers.

EUR million 2013 2012 2011   Change
13/12
Sales 2,248 2,415 2,481 -7%
- power sales 2,117 2,282 2,353 -7%
- other sales 131 133 128 -2%
Operating profit 921 1,175 1,476 -22%
Comparable operating profit 858 1,146 1,201 -25%
Comparable EBITDA 1,003 1,260 1,310 -20%
Net assets (at period-end) 6,329 6,389 6,247 -1%
Return on net assets, % 14.6 18.7 24.6 -22%
Comparable return on net assets, % 13.8 18.5 19.9 -25%
Capital expenditure and gross investments in shares 180 190 148 -5%
Number of employees 1,709 1,846 1,847 -7%

In 2013, the Power Division’s comparable operating profit was EUR 858  million (2012: 1,146), i.e. EUR 288 million lower than in 2012. Significantly lower hydro volumes, the increased real-estate tax for hydropower in Sweden and the write-down of the Inkoo power plant were the main reasons for the decreased profit. The Nordic annual inflow was approximately 10% lower in 2013 compared to 2012. The annual inflow in Fortum’s hydropower production areas was approximately 30% lower than in 2012.

Operating profit was EUR 921 million (2012: 1,175). The operating profit was affected by sales gains totalling EUR 25 million (2012: 57) and by the IFRS accounting treatment (IAS 39) of derivatives used mainly for hedging Fortum's power production and nuclear fund adjustments amounting to EUR 38 million (2012: -28).

Power generation by source
TWh 2013 2012 2011   Change
13/12
Hydropower 18.1 25.2 21.0 -28%
Nuclear power 23.7 23.4 24.9 1%
Thermal power 1.9 0.6 2.2 217%
Total in the Nordic countries 43.7 49.2 48.1 -11%
Thermal in other countries 1.0 1.1 1.2 -9%
Total 44.7 50.3 49.3 -11%
Nordic sales volume
TWh 2013 2012 2011   Change
13/12
Nordic sales volume 45.3 50.7 50.0 -11%
of which Nordic Power sales volume 1) 40.2 46.8 44.3 -14%
1) The Nordic power sales income and volume does not include thermal generation, market price-related purchases or minorities (i.e. Meri-Pori, Inkoo and imports from Russia).
Sales price
EUR/MWh 2013 2012 2011 Change
13/12
Power's Nordic power price 2) 46.4 44.6 46.1 4%
2) Power’s Nordic power price does not include sales income from thermal generation, market price-related purchases or minorities (i.e. Meri-Pori, Inkoo and imports from Russia).

The achieved Nordic power price was EUR 46.4 per MWh, or EUR 1.8 per MWh higher than in 2012. The average system spot price was EUR 38.1 per MWh (2012: 31.2), and the average area price in Finland EUR 41.2 per MWh (2012: 36.6) and in Stockholm, Sweden, (SE3) 39.4 per MWh (2012: 32.3).  

Significantly lower water reservoir levels and lower inflow decreased hydro generation significantly compared to 2012. Olkiluoto and Forsmark had record-high production in 2013, nuclear outages were also shorter in 2013 resulting in higher volumes than during the corresponding period in 2012. Nuclear availability was at a good level in all reactors except Oskarshamn 1 and 2. The total nuclear volume was thus lower than during the corresponding period in 2012. In 2013, the Power Division had 1.9 TWh (2012: 0.6)  of thermal production in the Nordic countries. Hence, the CO2-free production amounted to 94% (2012: 97%).

The combined effect of volumes and the achieved Nordic power price had a negative impact of approximately EUR 235 million during January-December 2013 compared to the corresponding period in 2012. Operating costs decreased as a result of savings achieved through the efficiency programme, even with higher depreciation (EUR 9 million). In addition, the Swedish hydro power property taxes increased by EUR 45 million due to higher taxation values. The discontinuation of the Inkoo power plant caused an impairment loss of approximately EUR 20 million. 

In 2013, the division's total power generation in the Nordic countries was 43.7 TWh (2012: 49.2), which corresponds to an approximately 11% decrease compared to 2012. 

Fortum has two fully-owned reactors in Loviisa, Finland, and the company is also a co-owner in eight reactors at the Olkiluoto, Oskarshamn and Forsmark nuclear power plants in

Finland and Sweden. Nuclear availability was at a good level in all of the reactors except Oskarshamn 1 and 2, and all the annual outages were executed with good results. 

2013 was a good production year for Fortum’s Loviisa nuclear power plant. The plant produced a total of 8.04 terawatt hours, which is approximately 9% of Finland’s total electricity production. The load factor, which depicts the power plant’s availability, was 92.5%; Loviisa 1’s load factor was 92.1% and Loviisa 2’s 93%. On an international scale this was good compared to the worldwide load factor for pressurised water power plants of approximately 83% last year.

The process to update the real estate taxation values in Sweden for 2013 was finalised in the third quarter of 2013. The update is done on a six-year cycle and Fortum's costs increased by approximately EUR 45 million in 2013 compared to 2012. At the end of April 2013, Fortum filed a 

complaint with the EU Commission on the Swedish hydro tax to find out whether the structure of the tax is in line with the EU tax and State Aid regulations. The EU Commission informed Fortum in June that it will investigate the case in more detail, and the investigation was still on-going at the end of 2013. 

In autumn 2013, Fortum announced that it had decided to discontinue electricity production at its Inkoo coal-fired power plant in Finland. Production operations will end in February 2014, after which the company will mothball three units. As a consequence of the decision to cease production, Fortum booked  an impairment loss of approximately EUR 20 million in the Power Division’s results. The decision is based on the weak profitability of the Inkoo power plant. 

In October, Fortum announced that it will supply nitrogen oxides reduction systems to coal-fired power plants owned by EDF Group in Krakow and Wroclaw, Poland. The deliveries

are part of a project to be implemented in 2014-2015. The systems delivered by Fortum will bring the nitrogen emissions of the power plants to clearly below the European Union’s new, strict emissions norms that take effect in 2016. The value of the delivery is EUR 90 million, and the project is being implemented in co-operation with Instal Kraków S.A.

At year-end, the Power Division's total power generating capacity was 9,475 megawatts (MW) (2012: 9,702), of which 9,335 MW (2012: 9,562) was in the Nordic countries. Hydropower capacity in the Nordic countries totalled 4,624 MW (2012: 4,627), nuclear power capacity 3,276 MW (2012: 3,247) and condensing capacity 1,435 MW (2012: 1,688).

Power Division's power generation
in the Nordic area by source, TWh
Power Division's power generation
by area, TWh
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