Welcome to Vattenfall and this Second Digital Capital Markets Day. I'm Andreas Regnell, Head of Strategic Development, and I will lead you through the discussion over the coming couple of hours. You will today get the opportunity to listen to and ask questions to a large part of the Vattenfall executive group management. Let's take a look at the agenda. We will start by listening to Anna Borg, our CEO, followed by Kerstin Ahlfont, our CFO. After that, we will do four deep dives involving our business area heads on topics that we think are particularly relevant and interesting in the current market environment. Firstly, we will look at industry partnerships and the role of hydrogen. Secondly, how we plan to decarbonize our own operations. Thirdly, the growth of renewables and the resulting increased need for flexibility. Fourthly and finally, how we serve our customers in this environment and the role of digitalization. After the four deep dives, we will, as usual, have a Q&A session. The slides that we will show today, and some additional information has been emailed to you this morning, but they're also available on the Vattenfall Investor Relations web. Should you want to ask questions, which we of course hope during the Q&A session, you use the number that you received in the invitation. Now, it's time to begin. Welcome, Anna and Kerstin. Anna, you will begin by giving a perspective of the market and how Vattenfall is creating value in it using our purpose, Enable Fossil-Free Living Within One Generation, as a guiding star. Anna, the floor is yours. Thank you very much, Andreas, and g ood afternoon to all of you. It's very nice to see you here today. We are actually standing at the doorstep of one of the most fundamental transformations that we have seen in history and industry over the last few hundred years. You can clearly see that the urgency and the need to act from a climate perspective is increasing by the day. The IPCC report the other week further strengthens the importance of actually taking action now. You can actually have two ways of viewing these fundamental transformation and changes. You can either look at the future as something that will happen, something that you will have to find out what it will look like, and something that will have consequences for your business. You can actually say that the future is something that we are all part of creating, and something that we have the possibility to influence going further. Vattenfall is at the center of this transition. Our aim to enable a fossil-free living within one generation is our business strategy. With our integrated utility approach and a diverse portfolio of businesses, we are clearly showing progress, and increasingly strong results. We are ramping up for the future, and we want to be part of creating this future, not only looking at it. Today, we are announcing that we at Vattenfall increase our ambitions even further. We commit to reducing our emissions in line with the 1.5 degree climate trajectory, the most ambitious scenario of the Paris Agreement. Two degrees is not enough. This means we will reduce our emission intensity by over 77% between 2017 and 2030. The 1.5 degree target is approved by the Science Based Targets initiative, which means that our action plans are validated by external parties. We also commit to being net zero by 2040, meaning we will achieve net zero emissions in our full value chain by then. This includes not only our own operations, but also what we buy from our suppliers and what we deliver to our customers. In order to ensure that we create value for our stakeholders in this market environment, it will be more important than ever to prioritize and engage in areas where Vattenfall has a competitive edge. That can, for example, be a structural advantage, proven experience or skill, or a superior cost position. Not everyone rushing into these green business opportunities will succeed. There are risks for overheating also in the green economy. We need to make the right choices and constantly challenge ourselves to be better, sharper, and faster. We have a number of ambitions that will guide us to reach our 2030 commitments. However, in this age where global economics and politics are so interconnected, a triggering event such as extreme weather, a political shift somewhere in the world, or a new technology breakthrough, have the potential to disrupt or radically impact our world. Customer demand is shifting much faster than industrial processes. All of this is introducing new risks and opportunities in the general business environment. In such a setting, it's key to build organizations with strategies and business operations that are flexible enough to adapt to changes. This is exactly what we need to ensure. Vattenfall has chosen an integrated utility strategy, meaning we want to be active throughout the energy value chain. Our strategy wheel summarizes how we focus in order to deliver on our ambition. Being integrated is a conscious strategic choice, because we think that this model serves us well right now. An integrated model offers a diversified risk profile, as value can shift from a business in one part of the value chain to another over time. In addition, the combination of power generation and customer offtake offers possibilities to ensure long-term supply of fossil-free electricity for customers, while reducing the merchant exposure for Vattenfall. In an increasingly volatile energy market, that's important. A stable regulated income from power distribution reduces the overall risk picture further and enables us to scale up our growth. Another benefit of being integrated is the ability to leverage synergies across the value chain. Our energy trading competence, sales and marketing capabilities, as well as technical expertise, can boost cross-selling, but also create a competitive advantage within the different businesses. In order to deliver in all aspects of this strategy, securing the right competence and getting public acceptance for the construction of the new power plants, grids, and industries are key success factors. Another key element of our strategy is our aim and capacity to enable other industries to lower their climate impact. We do this by partnering up with industry companies, looking together at the total value chain and how we can create business with the aim to lower emissions. I will give you a few examples shortly. First, I would like to say something about our targets. On the road to achieving our 2030 ambitions, we actively steer on our 2025 strategic targets. They were set 2020 and capture value for multiple stakeholders and our shareholder. The 2025 targets cover both financial and sustainability aspects, also including customer perception, CO2 emission intensity, safety, employee engagement, and financial performance, of course. The outcome so far is well on track. With the exception of Lost Time Injury Frequency, which we are firmly dedicated to improve, the development during 2021 shows we are in line with targeted trajectory towards 2025. The financial performance KPIs, FFO over Adjusted Net Debt, and return on capital employed, are exceptionally strong in 2021, supported by improved market conditions, and also major positive one-off effects from nuclear compensation and the divestment of Stromnetz Berlin. This is something we have strived for in order to ramp up for the major investments that we are facing the next few years. During this year, we've been breaking new ground, also reduced uncertainty. The HYBRIT initiative have delivered sponge iron produced with fossil-free hydrogen in the pilot plant in Luleå. That sponge iron has been used by SSAB to produce fossil-free steel. It's here, it works, and it is for real. The customer demand is clearly there, and now we are developing the demo plant as a next step. We have divested Stromnetz Berlin to the city of Berlin. The execution of the transaction has been made in very good cooperation with the city, and the business handed over is well-prepared to support them in their further ambition to decarbonize the City of Berlin. Vattenfall is also an important enabler of that with our district heating business going forward. We have reached a final agreement with the State of Germany regarding compensation for early closure of nuclear, and we have entered into a groundbreaking partnership with BASF regarding the wind farm Hollandse Kust Zuid. The deal with BASF constitutes the largest transaction of its kind between an industrial player and an energy company so far. It's anchored in both companies' strategic direction and leading positions in our respective industries. The construction of the wind farm is ongoing as we speak and will, when it's commissioned in 2023, be the world's largest operating offshore wind farm. This partnership is reducing risk for both parties. BASF gain direct access to green electricity while Vattenfall achieves risk-sharing and can put capital into reuse faster. The deal enables continued wind growth while maintaining a balanced risk profile for us, and I am sure that there will be more transactions like this, where industrial players seek direct access to the current limited supply of fossil-free electricity. At Vattenfall, we have an attractive pipeline of projects to put into use when we are now moving towards our 1.5-degree target, and at the same time, delivering profitable business. Thank you, Anna, for that very upbeat presentation. When listening to you, it's very clear that Vattenfall and the industry, we are in the very epicenter of the development. There are multiple growth opportunities, but also that there are unclarities exactly how the market will develop. Clear is that there is a lot of opportunity and a lot of players and a lot of capital going for it. Now, let's take a more financial perspective on the same development. Kerstin, but before you start with your numbers, many of you have met Kerstin in the quarterly reports, but maybe not everyone. Tell us a bit about who you are in Vattenfall. Absolutely, Andreas. Well, I am Kerstin Ahlfont. I am 26 years with the company, most of the time in different finance roles, but the last six years, I've been heading HR for Vattenfall. Since 1st of November last year, I am in this position, and it has been a busy year of focused on a lot of strategic topics, value creation, but also prioritizations. If you look at the last year, we have seen a big shift in market sentiment, reflected in a significant increase of power prices in all the key markets where we operate. If you look at the Nordic power prices, they are very much dependent on the weather effects, and we have seen a strong recovery due to a very low hydrological balance at the moment. On the continent, the prices are fueled by increased prices for CO2 allowances, as well as fuel prices. Regardless of these developments, we in Vattenfall need to continue to focus on financial prudence, as well as balancing our risk profile in order to develop and deliver on our strategy, and t hat, we are doing. Our operating assets are operating well, and we have been able to close out significant uncertainties during the last year. We have delivered a strong financial position, and we see increased contributions from both sales and generation of electricity, and also heat to the underlying performance. For example, one thing to mention is that we have produced more electricity this year compared to last year, even though we closed down Ringhals 1 end of 2020. In addition to that, we have the compensation for early closure of nuclear in Germany, coming in as a one-off effect with EUR 11.1 billion, coming in as a one-off effect on ROCE. We also have, in the corresponding period of last year, the impairment of SEK 10.6 billion, connected mostly to our Moorburg Power Plant in Germany, which we have since then stopped for further coal-fired generation. Looking at FFO/Adjusted Net Debt, we see an impact from net margin calls. We have an inflow of SEK 23.6 billion in the first half year, and t he main driver for this are increased prices on continental power, as well as gas and CO2 allowances. Vattenfall have entered into long positions when it comes to sourcing our customer portfolio with gas and power, as well as a long position when it comes to sourcing our assets with gas and CO2 allowances. We went in in these positions when the prices were lower than current market prices. If we deduct that impact on margin calls, as well as the sale of production rights from nuclear in Germany, the FFO/Adjusted Net Debt ends up much closer to the target ratios. In summary, we are delivering a strong financial performance well above target levels, and we are continued committed to deliver according to the targets set by our owner, the Swedish state. Looking forward, there will be a number of factors that impact these KPIs, and if you start with the factors that might have a downward impact, we have some heavy investments also going forward, and the cash flow contributions from these investments will only come after a few years. We also have the situation surrounding the regulated WACC in Sweden, which is still unclear, and we have not yet seen the full impact of that in our results year to date. We also have a very strong liquidity position, which is supported by margin calls from our trading and hedging activities. Although we do not know how the electricity prices or other commodity prices will develop going forward, we expect these margins calls to be reversed in a period up to three years, but front-loaded. With this strong financial result year to date, it is also likely that we will see a larger dividend according to policy, which is 40%, 70% of the net result. If we look at our investments, we are investing roughly SEK 57 billion in the next two years. We have large investments in our existing assets, like hydro, nuclear, and our distribution network. Almost 60% goes into growth investments, where the major growth areas are wind and distribution networks. If we dig a bit deeper into the investments in the distribution network, where we are well-positioned to leverage the energy transition going forward. We have divested Stromnetz Berlin, which gives us the possibility to now focus on our Swedish operations, where we have a strong position. We are the owner and largest operator of regional networks in Sweden and also one of the top three players when it comes to local networks. If you look at the map here to the left, you can see where we have our grids located in Sweden. A major part of the energy-intensive industry in Sweden, they are actually connected to our grids. Many of them are now taking large efforts to decarbonize their business, for which they need to gain access to fossil-free electricity. We also see a large build-out of renewables. Many wind farms are being and will be constructed. They also need access to the grids. In addition to that, we also need to reinforce and replace some of our aging assets. All in all, we see increased investments in this business area, up to SEK 7 billion per year in average in the time up until 2030. This means also an increase of our regulated asset base, t hat will grow roughly 50%, i f you compare 2020 with 2030. That is more than compensating for the regulated asset base that left us with Stromnetz Berlin in July this year. This is a business that contributes to an attractive and well-balanced portfolio, both today and in the future. I think we are well-positioned financially to deliver on our strategy and continue to develop strong and attractive growth options. Thank you. Also, a quite upbeat presentation. Thanks a lot for that, and thank you, Anna, for yours. Now it's time to get to the first deep dive. Andreas, before we do that, Anna talked earlier about BASF and the partnership, but that is not the only thing we are doing, and you are quite involved in both business development and industrial partnerships. Can you not share a little bit about that? I'll try to restrain myself in terms of timing, because it's incredibly interesting. Coming back to your point about us being busy, I think many of our clients and corporations in Sweden and in Europe, they're very busy thinking about how they should do the transition, because it's often very fundamental to go from a fossil fuel to electrification and all of what that means. We are part of many of those discussions. The question is, what can we add? I think, first of all, of course, we can add competence about electricity, electricity trading, electricity risks, and also the electrical infrastructure. There is also a component that has to do with that we are part of many discussions, so we can be encouraging in this discussion and together, give the, if you want, the courage to take some of the steps. As I said, some of them have to do with electrification and some of them have to do with hydrogen, so t ake a look at this. Hydrogen produced from renewable energy can play an essential role for the decarbonization of society. In particular, it can help reduce heavy CO2 emissions, typical to sectors such as the steel and chemical industry, but also heavy duty and public transport. The technology, through electrolysis to produce hydrogen out of plain water, has been around for generations. High costs and high energy input have kept it in the shadows, but system costs have begun to drop, and fossil-free power is more available. The debate over green hydrogen economy is getting steaming hot. One example is HYBRIT, Hydrogen Breakthrough Ironmaking Technology. This pioneering project started in Sweden in 2016, when Vattenfall teamed up with mining company LKAB and steel producer SSAB to put fossil-free hydrogen to the test. About a month ago, SSAB manufactured the world's first fossil-free steel and delivered it to a customer. It is a test delivery, but a major step toward fossil-free steel production and a milestone for the HYBRIT partnership. Is hydrogen the solution to combat climate change? Truly exciting. I'm sure we will discuss a lot about hydrogen and the development of that market in the coming capital market days and quarterly reports. Just coming back to our cooperation with industries, it ranges from, as we saw here, HYBRIT, but also the use of batteries to increase the security of supply of electricity via electro fuels to transport, as we saw in the film, so a very wide range of things, but a s I said, many will involve hydrogen. How do you see our position in hydrogen? Where do you think we can create value? I think first and foremost, our role is to supply the fossil-free electrons for the hydrogen production. There might be situations where we can create value by investing on our own or alongside partners. Sometimes it's just easier to get aligned interests if you invest together, for example, in HYBRIT. In some other instances, it might be that there is a significant amount of flexibility in value chain, and there we have some specific skills that we can create value from. Thank you, a question to you, Anna, y ou participated in that launch on fossil-free steel a couple of weeks ago. Having been part of that and also being close to this HYBRIT project for a couple of years, on a scale of one to 10, how would you rate the possibility to be successful with this project? Definitely 10, i t will happen, and I would like to put that into context. Because I think that, as I mentioned initially, either you can view the future as something that will happen, that you discover and maybe you can adapt to be part of, or you can see the future as something as you are part of creating by the sort of decisions that you make and the development that you push for. At Vattenfall, we clearly show the latter, and I think HYBRIT is a tremendously good example of that. It's one of many projects that makes us dare to say that we are scaling up our ambitions further. As we are announcing here today, we are actually setting the target of reaching this one and a half degree trajectory, the most ambitious scenario in the Paris Agreement. We also commit to being net zero in 2040. That actually means that not only should we get all the emissions out of our own operations, we should also get the emissions out of our suppliers' deliveries to us, and enable our customers to do that in their business as well. HYBRIT is a brilliant example of that. Thank you. It will happen, and thank you, Anna and Kerstin, because now we'll talk decarbonization of our own operations. Welcome Ulrika Jardfelt. Thank you. Head of BA Heat. As Anna just indicated, we're committing to the 1.5 degree target, but that means that we have to clean up our own operations, and where your BA has an important role. Before we go into that, you recently joined. Tell us a bit about why and what you've done since you started, and your first impressions. Of course. Yes, I started in December only, so just not even a full year yet. Well, ever since I went to school, my dream was to work with climate change, do something about that, and I never really talked about that. It's always been an underlying driver. I think it's been amazing, these. Now I got more than I asked for. Also, to see the energy and the motivation that it drives for the purpose that we have of fossil-free. When you say it out loud and you're on this journey, it's good for everyone, I think. It's fun, it's motivating, creates a lot of energy, so. Thank you. A good start. Let's go down to business. How will you decarbonize the heat business? Yeah, it's an entire transformation. Over 90% of all the emissions in Vattenfall, it comes from BA Heat, and so it's a lot of work. We have already started, of course. Two of the main things that we have done the last few years is, of course, closing down all the condensing units that we had on coal. The Hemweg plant and also now the Moorburg plant. That means that we have no more coal-fired condensing units. Going forward, this means also more focus on district heating and what to do with the fossil fuels in the district heating networks that we run. I see that it's a little bit different. The challenge looks different in the different countries. That also means that we aim now to decarbonize the heating sectors of cities, of course. If you look at Sweden, where we run district heating in about 15 municipalities, then almost all buildings are connected already to the district heating network. We believe we will be completely fossil-free already 2025, so t his is sort of ongoing. When you look at the Netherlands, where our biggest networks are in Rotterdam and Amsterdam, we, at the moment, the market share in the heating markets, it's only about 20%. If you want to decarbonize the heating sector, you need to, of course, extend your networks, exchange from individual gas boilers to a network. In the Netherlands, there is also a lot of waste fuel, so we can actually heat our customers with only that is heat that's residual from industries. That's very inspiring. In the U.K., district heating is something new. It's like the new kid on the block and, o f course, when the U.K. wants to get out of natural gas, district heating is an option. It's also very small at the moment. I think the biggest challenge is in Berlin. We have still the market share is about 33% of the heating market in Berlin. We also have still coal-fired units left and also a lot of natural gas. Almost entirely based on fossil fuels. When you have district heating and you are heating your houses with hot water, you cannot just shut down the plant. You need to have a different solution in place. The main transformation will be in Berlin and how to enable a secure heating supply whilst shifting from fossil fuel to something else. You often talk about that there are three main routes in Berlin. Yes. Of course, when we set up this plan, I think this is the biggest question for all utilities around the world, how to get out of these fossil fuels. There are so many question marks still, what will be the solution for the future. We have identified three main scenarios that we see for 2040, when we aim to then be fossil free, or have fossil free deliveries, I would say. Because we think that CCS could be one solution. It means that we have natural gas. We remove the carbon at site. CCS at the moment is not accepted by the German public or the regulators, so it's not an option today. Of course, when climate change becomes more imminent, that might change. One road is CCS, that is acceptable. The second scenario that we see is that hydrogen, that we saw in the movie also, will be available and cheap enough to be able to use for heating purposes. It is also very unclear today, but it is also possible. The third alternative that we have is to go more into biomass. This is also a very challenging subject and has a lot of resistance in the public opinion. That, of course, also might change until the decision we have to take. We have these three scenarios. They are all almost as probable, and none is certain. The plan then is to, until 2030, we have a very clear investment plan, because we need to start now. We are now investing in new generation assets that keep all of these three scenarios open. We know what to do for the coming years, and then hopefully we'll get more answers on what will be accepted as fossil free, decarbonized, net zero, or climate neutral when the years go by. Optionality is key? Yes. We make some non-regret investments now, but also like to keep our options open. We think that, yeah, this business will change, suppliers will change, new technologies will appear, and we will see what is best for our portfolio. We are very much a de facto partner to the cities we're talking about, even though there is no co-ownership. How would you say that relationship with the cities are developing? Because they all think its their ambition. Yeah Is it working well or how would you say? I think so far it's been tremendous. There is election now in Germany, also who will be the ruling government of Berlin, we don't know. I think they are all, at the moment, we have in talks with everyone, it seems to be that we are on the same line. They are all committed to this 1.5-degree trajectory also for Berlin. Everyone knows that we need to do this every step of the way, because, of course, the transformation is not obvious for everyone at the same time that it's necessary. We need to have the public opinion, we need to have the customers on board, then the regulators, and the city is in sort of the center of all this. The plans we have right now, we are developing them in very close alignment with the city s o far it's looking good. That's very good to hear. Thank you, Ulrika. Thank you. Thanks a lot. An interesting journey ahead of Vattenfall, decarbonizing our own operations. Now, let's talk growth of renewables and the need for increased flexibility. Power plants have traditionally delivered energy into the system year after year at a nice, steady pace. Distribution of electricity has been predictable and relatively stable. When the share of renewables rapidly grew, it meant new challenges. The growth of intermittent renewables production results in increased demands for grid capacity and flexibility. The energy transition is the main driver of future electricity demand, driven by an ever-increasing electrification of industries, heating, and transports. What does it take to make all these demands come together in harmony? Let us welcome Annika Viklund, Head of Business Area Distribution, Helene Biström, Head of Business Area Wind, and Torbjörn Wahlborg, Head of Business Area Generation. Together, you more or less can fix it, if I would say so, with the distribution and the power together. Let me start with you, Annika. What we saw in the film, h ow does it all impact distribution, and notably in Sweden? Well, distribution is the key enabler of the energy transition, and that means electrification of industry and transport, but also to connect new industries and customers. The energy transition will have a dramatic growth of energy demand. There where we come to all these beautiful grids. We need to build grids to connect new customers. Not only do we have the industry you saw on Kerstin's, the CFO's map as of today, but we also welcome new customers. In all, we will invest a lot, just because it's important for our customers and for the climate. Investing, that requires that you get the permit to invest, the environmental permit to build all this infrastructure out in the nature. What would be your comments there, or your views? Well, that is true. We have been in a phase for very many years where we have had and maintained all our grids. Now we're building new ones, and that means we need concessions, we need permits. I think it has become more of awareness this year, and the past two years, that we need permit processes that are, of course, robust and have the democratic aspects of it, but they are also lean and effective. This is where we have been struggling a little bit. I think the awareness on all levels, political levels, on customer level, it has shown that we have found new ways to work together with our customers to continue to work in parallel with also the permit processes. I'm positive that we will see improvements in the permit processes the coming years. That's so important. Progress, but more to be done. More to be done. Thank you, Annika. Now to Torbjörn. Being head of nuclear and hydro, which has a very fundamental role in this system, providing stability and also providing flexibility. What is Generation's role in this transition? Well, our hydro and nuclear assets are really central in the Nordic fossil-free energy system, providing stable and low-cost electricity, I would say. I would even say that it's the backbone of the Swedish energy system, which is today quite challenged by the increasing volume of intermittent electricity. The hydropower plants, of course, are very well equipped to balance out that intermittent energy. As a matter of fact, also the reservoirs that we have can actually function as a giant fossil-free battery for the Nordic market, but also for neighboring markets. Nuclear electricity, of course, stable, plannable base load, which is very much needed today. Relating a bit to the hydro that you can then expect to have higher and high value as the value of flexibility goes up, do you have any practical consequences already in how you manage hydro, and also the wear and tear of the turbines? Do you see that already, or is it something you expect? Well, first of all, I can confirm that there is such a trend. We see that we make more and more money from ancillary services based on, you can say, flexibility. It's also a fact that, yes, there are increased costs for wear. I would like to point out that very often what we do is that when we modernize a hydropower station, we make it more flexible than it was, because not all hydropower stations were built to be flexible. Many of them were actually built to be base load. Nowadays, we change that so that we get more and more plants really focused on flexibility. For the curious engineers on the call, what is the difference between a flexible and a not so flexible hydropower plant? Yeah. Well, first of all, you have to build it, so that it can cope with all the increase and decrease of the power output. It's also a matter of where you have the best efficiency. If you build it for base load, you can peak, so to say, at a certain efficiency. When you make the plant more flexible, you have a lower efficiency, but wider operating range, simply. Oh, thank you. Another question for you, Torbjörn. The European power system will become more integrated, or will need to become more integrated to have a security supply. What do you think will be the role of interconnectors in the Nordic region and to Europe? I think it's a very good question, very relevant these days, because we see now that the gap between continental prices and Nordic prices are bigger than ever. We will need more interconnectors and there are more interconnectors coming online. I think it's also worth mentioning that it's not only about interconnectors. They will not solve everything. What we see today is also typically that there is a lack of transmission capacity in countries like Germany, Sweden, Poland. I think the best example is if you look at the southern part of Sweden, which is very much, I would say, price-wise, connected to the continent. While in the northern part of Sweden, we have much lower electricity prices. That can be a factor of two or three sometimes. Yeah, there will be large economical values in increasing the interconnectors. Yeah, t ransmission. Transmission. Thank you, Torbjörn. Now to Helene and Head of BA Wind. I realize that you're also quite new to the audience, and maybe you want to introduce yourself very briefly as well before we get into the wind discussion. Okay. Thank you, Andreas. Yes, I started actually in May, but I have a long history in Vattenfall before I resigned in 2010. Coming back now, it's just perfect timing with this exciting moment in time. Yes. Wind. Yes. Need for flexibility and your reflections. Yes. Is wind a solution or more a problem? Both, a ctually, we are the ones causing all these challenges, I understand that. As we are all aware, we really need strong growth of new, low-cost renewable capacity to meet our climate targets, so t here we are. We see actually really interesting, attractive growth opportunities in all our markets. When it comes to Sweden Nordics, the growth is mainly driven by and when the increased demand is coming. While looking at the continental Europe, of course, there we are also needed now to support coal phase out. Of course this is really, really interesting for us. Anna and Kerstin talked a lot about competition and a lot of players entering the market. As Anna said, not everyone will make money in this green market, even though it's booming. I guess that goes for onshore, offshore wind as well, and solar for that matter. Of course. How will we meet that increased competition and make sure that we are competitive and make money? First of all, it's quite basic. We need to prioritize the right projects, and we need to achieve cost leadership. That's absolutely needed now in this increased competition and also this maturing market. Of course, we look into different ways to do that, and one way is, of course, being a fully integrated energy company. We have really close access to customers and offtake, and by connecting that with our renewable growth, we can actually make really good combinations for us. We will mitigate the risk of merchant exposure. We will increase our profitability while the customers will get help in their decarbonization journey. I would say it's really attractive opportunities here. I'm sure some people on the call, they would want to know a bit about how are you thinking. What are the more attractive and at least maybe not less attractive, but where is your favorite market right now? Yeah. Actually, of course, we always look into the most attractive projects and markets. I would say that what makes a market attractive or a project attractive is actually different aspects, of course, but s tarting on the demand side. Of course, it's much better to build new capacity where the demand is really strong, so we get to pull from the industry. By that, we can also achieve better political as well as public acceptance and support for what we are doing, and we will find the good business opportunities. Of course, other aspects as wind location, framework conditions, et cetera, all of these are playing a role when we determine what projects to go for. Thank you. I think we've heard here the very important fact that the three of you really need to cooperate for us to get a good business with Vattenfall, but also a safe and reliable energy system. Thanks a lot to all three of you. Thank you. Thank you. Thank you. We will invite the last two guests on stage, and actually one will be not on stage, but digitally. Customers, how we serve customers, and the role of digitalization. Digitalization plays a huge part in the current energy transition and is affecting our entire value chain, sometimes in unusual ways. It is chatbots tending to some of the basic customer needs. It is through virtual and augmented reality tools, enabling us to safely train our staff to deal with nuclear service and decommissioning. It is AI and facial recognition ensuring that fish safely pass our fish ladders, and that sea birds and rare eagles on the move do not get hurt by our offshore wind farms. It is the algorithm steering our flexibility platforms, making sure that supply meets demand and that there are no bottlenecks in the grid. They also optimize flexible assets towards both the short-term wholesale market and the grid. Of course, we have developed InCharge, Northern Europe's largest charging network for e-vehicles. In the Netherlands, it even comes complete with flexible charging that controls the charging speed depending on the availability of electricity at any given moment. What does digitalization look like in the future? Let me now welcome Anna-Karin Stenberg and Martijn Hagens, who's joining us on Teams. Let me start with Anna-Karin, Head of BA, Business Area Markets. How is BA Markets contributing to the transition? Well, we are the so-called market hub within Vattenfall, and one of the core activities that we're having is to maximize the value of the Vattenfall portfolio and, o f course, we do that by optimizing the assets, by dispatching them, by hedging, by sourcing, et cetera. We also help our customers to become fossil-free by signing PPAs and corporate PPAs with them. You can argue that you're a bit at the center of the wheel for the market and the distribution and the generation. At least that's how I like to think about BA Markets. How does digitalization in BA Markets support the energy transition? It's really key for us, of course. It's a major driver to maintain and increase competitiveness. With more and more, as we heard recently, renewable generation in the energy system we need, it's a challenge to balance supply and demand at all times in all locations. We need flexibility. A really good example of that is how we have automated our German pump storages, fully automated using algos that will optimize them, and then we bring the flexibility to the short-term markets. A bit on the same line, and the final question for you, how are we developing activities around system balancing, storage, and optimization? Well, we are continuously, of course, looking at this topic by automating and developing our optimization processes. As I said, we use a lot with algos and, o f course, recently, we had the opportunity to work with a customer, two large industrial customers, where we could help them to adjust supply and demand for part of their production based on the axis of renewable energy. I think that's a good example of how we can jointly contribute to the energy transition. Thank you, Anna-Karin. Now to Martijn Hagens, the Head of Business Area Customer Solutions. This transition surely means quite dramatic changes for our customers and you're serving all these customers, Martijn. How are Customer Solutions supporting in this transition by helping our customers? Yeah. Thank you very much for that question. I think first of all, our customers will also decarbonize and they are doing so, as we speak. I think what we see is that one part is just maybe even without our customers noticing, or at least without them having to take action, and that's by constantly increasing the percentage of fossil-free electricity in our supply mix towards our customers. They will get greener every year just by staying with us. Second element, and this is much more challenging, I think, for our customers, is how to move away from heating based on gas, which we specifically see in our Dutch and German markets, of course, still as a very big area where decarbonization is really yet to start. We see on one hand that we're helping, for example, housing corporations to greenify with heat pumps, with HYBRIT solutions. We see, for example, this year that our turnover in that specific segment will double. We really see a growing trend in that area. The next one is really the homeowners that need to move away from heating with gas. For that, we are developing products, and we started this year and launched the sale of biogas, which is, of course, one of the answers, and also by selling heat pumps. We, of course, have a great platform for that, especially in the Netherlands with our Feenstra brand and our 800 people every day on the road, helping people to change the way they heat their homes. I think what is also interesting to mention is customer-based flexibility. Also, Anna-Karin Stenberg already mentioned it, and we see that we have already an established business and a growing business in B2B Nordics. There are more and more industrial customers are offering parts of their plants as a flexibility solution, and we will see that increasing. Also, as was already mentioned in the film, we have the flex power concept with e-mobility, where our public charge points in Amsterdam are actually helping to stabilize the grid. A very wide variety of activities, but i f we hone in on digitalization, and that aspect of it, how are you using the digitalization to enable your customers to decarbonize? I think first of all, it's very important when we talk about digitalization in the customer area, it's first and foremost about the customer, to make it very easy for customers to deal with us. We have now integrated elements like WhatsApp, chatbots, and so on. We see that around 70% of our customer interactions are already through digital means and t hat is increasing constantly. Also, we see that we have really a good trend in our Net Promoter Score, so customers really find it quite easy to deal with us. Secondly, this is where we can help them decarbonize. We, of course, have a lot of data on the consumption of our customers, on their situation. With that, we can help them more and more with personalized advice through digital means, but also through interactions and even through video calls, where we offer advice to customers how to become more sustainable in their homes. The last area about digitalization that I would like to mention is very important to us, is the use of data to understand customer behavior, but also the market. For example, dealing with price comparison sites, you need to understand very well what kind of inflow you can get for every Euro that you invest into this. This has been extremely important to us, working with all the customer insight, and all the data that we have from all the years of operating to build very sophisticated models and algorithms that help us steer our investments into sales channels. By that, we actually keep a very good net present value for our customer portfolio. We steer our sales channels in such a way that we really get bang for our bucks and keep our profitability at a high level. Interesting, Martijn, and then o ne final question. What we call e-mobility business is under you as well, and so transport, so electrification of transport. We have grown quite rapidly over the last couple of years, but where do we stand today, and what would you say are the near-term prospects and actions? What we see is that this is, of course, a massively growing, and I think also very favorable development. Of course, we're moving petrol into electricity, which is good also for us as a company, but h elping our customers, we see that we have really nice growth in our e-mobility business, we are now close to 27,000 connected charge points on our platform. We sell also a lot of freestanding charge points to our customers. We are already one of the biggest players in the Netherlands and Sweden, and we still have a world to win in Germany, but we have seen sales going up quite intensively also in the German market. What is important to us is that we now expand more into the B2C area as well, and we have started in Germany with that. There we see that we are now on a monthly basis capable of selling between 500 and 1,000 charge points to individual customers connected with an energy contract that helps them to lower cost. I think this will become increasingly important towards the future, especially for homeowners. Imagine being a homeowner in 2027, having solar panels, having a heat pump, and having an electric charger for your car. It is really about how to manage your energy cost in the best way to keep your total cost of energy as low as possible. I think we are very well-positioned to deliver that service. All in all, as I stated, we're now at 27,000 charge points, and we have the ambition to grow that to 500,000 charge points connected on our platform. Thank you, Martijn. I would say the one common denominator for a lot of what we heard today is that either there is a hockey stick expected, or we're actually in the middle of the hockey stick, because we see dramatic growth in many, many areas. That actually concludes this part of the session. Now I will ask everyone to come back on stage because we will start our Q&A session. Time for Q&As, and a s I mentioned in the beginning, if you want to ask questions, you can call in on the telephone number that you received in the invitation. Let's now go to our first question. The first question comes from the line of Jakob Magnussen from Danske Bank. Please go ahead. Hello. Thank you. I hope you can hear me, t wo questions, if I may. First question is around your ambitions within nuclear. You're setting this ambitious decarbonization target, but you do not, as far as I've understood, mention anything about elaborating on your nuclear fleet. Are you investing in maybe prolonging lifetimes? So just wondering where you're standing on that, and maybe here, Anna, how you view the prospects for getting a permanent solution for spent nuclear fuel as sort of a by question, so t hat was the first one. The second question is around your longer-term CapEx budget, also on the back of your new and more ambitious renewables plans. It does sound like things are going to be a little bit more expensive. If you're looking at your medium-term CapEx plans, will the run rate be higher than this, what is it, SEK 57 billion over a two-year period? Will the run rate be higher in the medium term? That's my second question. Thank you. I'll leave it over to Anna. I will start with the 1st one, and then maybe Kerstin can also add on the second one. Nuclear is an important sort of backbone of our electricity generation assets and will continue to be so. We have invested in our existing nuclear fleet in Sweden in order to make sure that it is safe, efficient, and will run well into the 2040s. That will be an important piece of the puzzle in order to achieve this net zero target 2040. As I said, we already invested in them in order to be up and running until 2040, and those investments are also being carried out. When it comes to prolonging the lifetime even further, that will of course be analyzed as well. We have not drawn any conclusions yet, but I'm quite sure that the nuclear fleet we have will play an important role in the fossil-free economy for a long time to come. When it comes to the spent nuclear fuel, we had, of course, hoped for an integrated decision on both the midterm and the long-term storage possibilities. That has not happened so far, and it's still urgent that we get this decision. First and foremost, we need to make sure that there can be an extension of the midterm storage in order to have a good situation the next five years to 10 years. Also the long-term solution is important because we keep living with the uncertainty until there is a decision there. Maybe when it comes to the CapEx plan, Kerstin would like to add. Yes. When it comes to the CapEx plan and the two-year plan that I presented, it is important to mention that is a net CapEx plan. That is when we have deducted any proceeds from partnerships or when we have developed assets and then sold them afterwards. We believe the SEK 57 billion that we have for this two-year period is a quite heavy investment plan. I will not give you any numbers on exactly what it will look like in the midterm, but we foresee that this is a level where we will roughly be at. Thank you. I hope that answered your question, Jakob. Any other questions on the phone, please? There are no questions on the phone so far. I will ask. I'll go to Anna. Go for it. Go for it. The political situation in Sweden is slightly uncertain with just the parliament, but also a new prime minister being elected relatively soon. Does that have an impact on Vattenfall, or should we be worried, should we be happy, or what should we be? Well, the business strategy of Vattenfall is not determined by the exact political situation in Sweden. Our strategy is our business strategy. When we say that we want to enable a fossil-free living within one generation, we choose that business strategy because we think that is the best way to be a competitive company in the market environment we see in the future. That strategy is valid regardless of the short or mid-term political discussion in any of the markets where we're at. It's, of course, important, in Sweden and in all our markets, that there is joint forces across a broad coalition of politicians when it comes to setting the prerequisites for this energy transformation going forward, because there are lots of investments needed here, and they are there for quite some time. It's long-term investments, so the prerequisites needs to be reasonably stable. From that perspective, I hope that we will see a broad agreement on the importance of the development of the energy system and the industry. T hat's relevant for Sweden, but also all our different markets. It's relevant for everywhere. Yes I would say. Definitely in Europe, if the Fit for 55 targets are to be implemented on national level and actually be possible to carry out within the timeframe. Thank you. Yes, we have a question. Question, please. We have a question from the line of Karim Sadouri from Schroders. Please go ahead. Hi, everyone. Thank you for the presentation. I had a couple of questions o n your BASF partnership, I just wanted to understand what's the logic behind an industrial play in acquiring a wind farm? Also, in terms of your renewable portfolio, what percentage of subsidized electricity output do you aim to contract using PPAs going forward? I start commenting on the BASF deal, and then Kerstin can comment on the different kind of revenue streams. BASF will, of course, have to answer themselves for their logic of entering into this partnership. Something that we found out that we have in common is a strategic direction of actually building strong companies with a sustainable business model. I also know that many industrial clients and companies in Europe are looking to electrify their processes or use fossil-free electricity as an input in their industry production in order to reduce their carbon footprint. So far, the access to fossil-free electricity is limited. A lot is being built, but the demand is shifting faster than the industrial processes. This is most likely a way of securing access to important tools in order to carry out the strategy. For Vattenfall, it fits very well with our ambition to also enabler industries to decarbonize in the future by using our fossil-free electricity, so t hat would be the logic for the partnership, I'm actually quite sure we will see more of these kind of partnerships going forward. There was a huge interest for partnering up with Vattenfall in Hollandse Kust Zuid and I'm quite sure we will see more examples like this. If you look at the revenue streams we have now from our renewable assets, the absolute majority is regulated or semi-regulated. That is also how we foresee it will be during the next decade. However, we see also, of course, that as the industry is maturing and the technology is maturing, there will be more and more auctions and so forth, where we will have merchant exposed projects. We will take that sort of case by case, and we will look at partnerships, but I think also PPAs will be a tool that we will also utilize going forward. It fits well with us being an integrated utility. We think it brings or even increases the profitability, and it gives also stable revenue, which makes the project also attractive to other partners and partnerships. I would like to add one thing there. At Vattenfall, we're not particularly scared of merchant risk. That is a core of our business and has been for a long time due to the fact that our Nordic production fleet, nuclear and hydro, are exposed to the merchant risk. We are quite used to handling this and to have different kind of tools to do that. As Kerstin rightly points out, the renewable assets that we have are to a large extent subsidized or semi-subsidized. The merchant risk is there in some cases and it will definitely be there in the long run. We have the tools to manage that in a good way. Good. Thank you. Next question. The next question comes from the line of Andrew Moulder from CreditSights. Please go ahead. Yes, h i, so t hanks very much for the presentation. I had a few questions, but I'll just stick with a couple at the moment. Your balance sheet is obviously very strong at the moment, and your financial metrics are a lot better than those that are currently being imposed on you by the Swedish government. You talked about investments, and you also talked about having a much higher dividend. Can I perhaps ask you, how do you expect your financial metrics to evolve over, say, the next couple of years? Is that mostly going to be through investment, or is a lot of it going to be because you're going to significantly increase your dividends to your owners? That's the first question. Second question, I just wanted to ask Helene, actually. Andreas asked about the best geography for renewables, but I'm sorry, I must have missed the answer because I didn't actually hear you specify which geographies you thought were most attractive for building either onshore or offshore wind. Maybe you could just clarify that one for me. Finally, I just feel I have to ask about gas prices. We've got gas prices rising significantly in Europe, which is forcing up energy prices as well, electricity prices, and I imagine you're fairly heavily exposed to that on your supply businesses in Germany. Can you perhaps just comment on how you're dealing with that and how long you expect this system to persist? I think it's important, and we've obviously seen the governments taking action in Spain to try to reduce the end prices to customers. Do you anticipate any political actions, either in Germany or in the Nordic market if this gas price crisis continues? Thank you. Dividend. Thank you. Very relevant questions, all three of them. Maybe we start with the KPIs and the dividends. I will give an overall answer, and then Kerstin will give the details. It's true that we have strong financial ratios. If you remember a year ago when we stood here, we clearly said that we are facing an investment period going forward, which actually require us to take some action in order to be able to make sure we can carry these investments and still be within our target range of KPIs. That is what we have spent a lot of time and effort on during the last year. We are ramping up in order to be able to carry out these investments. When it comes to dividends, we have a quite clear policy for what that looks like. Kerstin will tell you in a moment, and it's my clear ambition that we will deliver on our growth targets, on our financial targets, and on our dividend policy at the same time. Yes, exactly. We are not giving any sort of projections on our financial KPIs, but when it comes to dividend, the owner has a policy that we should dividend out if we are above our sort of hurdle 22% FFO-adjusted net debt between 40% and 70% of the net result. That is, I think, at least what we expect that we will do. It will rebalance between dividend and investments going forward. Good. Are we then ready for the Helene question? Okay. You have to answer it now. Yep. I have to answer. Sorry for not answering earlier. First of all, we are looking into, of course, Vattenfall's core markets and possibly adjacent markets close by. The reason why I was a bit vague is because it is actually, as I said, the attractiveness of a project is really determined by so many aspects. We need to look into each project. To be a little bit more specific, right now, with the situation we have, we see maybe the Nordics is not the most attractive for some projects, but not all. That's, as I said, a timing issue. The demand is so much stronger in continental Europe and U.K. I would say North Sea, Baltic Sea, is really interesting areas and, o f course, because that is also close to our existing farms. Now I'm talking offshore. I hope that was a little bit more specific. Maybe we touch upon the gas topic as well, and I think there are two angles of that. The first one is gas used in our power plants and the district heating networks. Then we'll come back to the end customer side of it, and then maybe Martijn can comment as well. If you look at gas in the Vattenfall portfolio, we are mainly exposed to the Clean Spark Spread, not to the gas price as such. The difference between the electricity price on one hand and the gas price and the CO2 price on the other hand. We are actually fairly well hedged in our sourcing of gas and when it comes to the spread development. Yes, it will have an impact, but we will not see a full impact of the gas prices that we see now due to the hedges. It will be rather limited compared to what it would have been if we had been fully exposed. Of course, it also has an impact on the end customers, especially in the countries where we have a lot of gas-fired heating of homes and houses, and that is what the second part of the question is aiming at, what will happen in that environment. We are working with quite a lot of efforts in order to support our customers here, as well, both short and long term. I will ask Martijn to please comment on that more specifically. Yes, I think it's very clear that we see concerns rising. Newspapers are actually quite full of it also here in the Netherlands and also I saw in Germany some first articles where there is a plea being made in order to keep people's buying power upright to help with the energy bills in the coming year. I think we need to see what happens there. It's not excluded that there will be some measures on the energy tax, which will reduce the overall cost again a little bit more. One thing is for sure, energy costs will go up next year for end consumers. I think the good news is that with us, as we have a tendency to source a bit longer into the future than many of our competitors, that it will take a bit longer before customers start feeling that pain with us. They can profit from better prices for a longer time. Of course, the main impact that we foresee will be on bad debt, which might increase a little bit in the future. On the other hand, it's good to state that I think at this point in time, bad debt is at a record low position. During COVID, we have seen that the people have really paid their bills in time and at a good pace. From a very good starting point, our expectation is clearly that with the rising energy prices, we will see some pressure on that debt. We would not be surprised if countries would take some measures in the energy taxes in order to alleviate the pain for the customer. Thank you, Martin, and h opefully that answered your questions, Andrew. Any additional questions? We have no more questions from the phone. I will just ask you one more question, and Helene touched upon it a little bit, and that's the geographical scope for our operations. I'm sure that a lot of people out there are a bit curious. Is this it, or are there opportunities to expand the scope in this growing market with so many opportunities, or does focus mean stay put? What's your view there, Anna? Well, reality keeps changing, and you have to adapt. It's never a done deal in that sense. Right here, and now, and in the foreseeable future, we see that there are plenty of growth opportunities in Europe. We also see that our strategy as an integrated industry player serves us well, and that we actually see a lot of opportunities where we can look at the entire value chain, not only piece by piece. That's also a good argument for us to make sure we have a bit more of a substantial business in the markets that we are, rather than spreading too thin. In the future, you never know, but right now we feel there are plenty of growth opportunities within Europe, so that's where we'll stay for now. Thank you. One more question. Question, please. Next question comes from the line of Andrew Moulder from CreditSights. Please go ahead. Yes, hi, b ack again, j ust a couple of clarifications, actually. You talked about, in your 2030 plan, increasing renewable capacity, I think it was wind and solar, by 4x. I just wondered if you could be a little bit more precise. You've currently got about 4 GW of installed capacity. Are we talking 16 GW by 2030, or is it more than that? It seems as if that's quite a low target considering that I think your current pipeline is already about 7 GW on top of the 4 GW. If you could just perhaps maybe put a number on where you see your renewable capacity by 2030. Finally, you also talked about reducing your group emissions to net zero, I think, by 2040, and that that would include Scope 3 emissions. I almost find it a bit difficult to get to grips with Scope 3 emissions, and I just wonder exactly how do you plan to control the Scope 3 emissions of your suppliers? What sort of measures are you going to put in place to get Scope 3 emissions down to a sort of net zero level as well as Scope 1 and Scope 2? Thank you. Maybe we start with the growth topic and the 2030 ambitions. We set a long-term target on being in the 1.5 degree trajectory and make sure that we are there 2030. We have the net zero target in 2040, and we have the strategic targets in 2025. In addition, we have these strategic ambitions in 2030, which are the ones that you are referring to, where we also show that in order to reach this, we will have to work in all areas of the business. One of them is to substantially increase our renewable capacity. If it will be exactly times four or something else, that depends on where the profitable business opportunities are, because that's what we're steering on, not the volume target as such. I think it's more than realistic to see that we have that kind of growth in our portfolio. As you say, it's also reflected on our pipeline. However, it's important to remember that not all of a pipeline is always coming through in the end. We need to make sure we have an even larger pipeline in order to deliver on those ambitions in the end and I don't know if Helene would like to add something on that. No, I think that was clear enough, actually. That's exactly how we work. We want to present the most attractive projects and hope that we will win. Maybe something around the net-zero emissions. It's true, it's both Scope 1, 2, and 3 that we are aiming for in order to be net-zero in 2040. There could be some emissions in Scope 3 left that we have to offset somewhere, but the majority of them should be out. We actually had the suppliers' day just two weeks ago, I think, where we also discussed this with our suppliers and told them that we are ramping up our ambition. We are already today working with them in order to reduce the emissions in the entire chain, both in their production, in their transportation, and in their way of cooperating with us. We will incorporate that in our procurement activities and also make sure it's part of the criteria we set when we go into the procurement processes for the projects. Yeah, maybe a quick addition to that. When you use the word control, and that supplier day, I think highlights that it's maybe more incentivized than control, because j ust as we say that we believe the transition will go very fast, our suppliers believe the same. Of course, we'll need to take actions to reach our target for net zero, but a lot will happen over time until 2040. I fully agree to that and I think also the preparations for setting this target was also done in the project that we called SCORE. There we have had intensive dialogues and very open dialogues with our suppliers to find these solutions and understand what their ambitions actually are. We are already today actually putting in sustainability in parts of our business and are awarding suppliers specific points if they have ambitious CO2 targets or if they have solutions that are CO2 efficient. Yes. Great answer I think we gave to that question. Any more questions? There are no more questions from the phone at this time. Should we then maybe conclude that it's time to wrap up this discussion? Before we do that, finally, any comments from you, Anna or Kerstin? I think that this is only the beginning of a journey that we have started, where the direction is clear and has been so ever since we set our aim to enable a fossil-free living within one generation. We are now stretching ourselves even further to make sure that we are competitive in the market environment that we see around us. It's easy to talk about all the challenges that there are in order to reach the climate neutrality targets. I think there's plentiful of business opportunities out there. What we want to do is to build a strong, competitive, profitable company, taking the lead in that transition. I see that as a huge responsibility, but also as a huge business opportunity. Anna talks about huge business opportunities and you're supposed to guard the money. Are you in agreement? I think so. I think we are well-positioned financially to deliver on our strategy, also to deliver on the 2025 targets and the 2030 ambition when it comes to 1.5 degree target and the net zero in 2040. There will, though, need to be a very high focus on value creation and prioritization because we are fully committed to stay within our target set by the owner. We need to do exactly what Anna said, and we need to do it by being profitable still. Thank you, Anna. Thank you, Kerstin. Thank you all for listening to this Vattenfall Capital Markets Day and we hope to see you soon again in one of our quarterly reports. Thank you and goodbye.