Welcome to Vattenfall and this Q1 reporting event. I'm Andreas Regnell, and with me in the studio, I have, as usual, our CEO, Anna Borg, and our CFO, Kerstin Ahlfont. We will today describe the main events during the quarter and our financial performance, but we will also put quite some effort on discussing the implications of the war in Ukraine over the last quarter, but also going forward on the market and on Vattenfall. As usual, we will, after the initial discussion, open up for questions on the phone and on the web. The standard financial slide material is available on the web. Let's begin. Anna, what would you say are the main implications of the war in Ukraine? Well, first of all, the war is of course a human tragedy, and my thoughts go to all those who are affected by it. I also think that, indirectly, we are all affected, and the energy situation and the fuels, when it comes to the energy market in Europe, have never been higher on everybody's agenda, I think. That's a very direct effect as well. The European dependency on fossil fuels and on imported fossil fuels has become very, very evident, and it has also impacted us directly. We have stopped the planned deliveries of nuclear fuel and uranium from Russia. We have also stopped the coal deliveries that would have come to us from Russia. That's a very direct effect. I think it has also started a much broader discussion in Europe on how to reduce the dependency on Russian gas as quickly as possible. This increased uncertainty that we see now also makes it evident, and everybody says that now we want to speed up the transition towards a fossil-free energy system even further. Thank you. Kerstin, what are the more direct financial implications on Vattenfall? Well, when we now enter into 2022, it is important to bear in mind that 2021 was the year with an exceptionally good financial result. If you look at the first quarter, the short-term effects from the war have been mixed. High prices have impacted the wind business positively, whereas heat was negatively hit by the high gas prices. The effect on our large scale operations is a bit less visible because there we have the negative impact from our Nordic hedges and also negative impact from the price area differences. Thank you. We will come back to this, but let's start and kick off with some business highlights. Here are some highlights from Vattenfall's first quarter. In March, Vattenfall inaugurated Haringvliet Energy Park, a combination of solar, wind, and battery solutions. By combining these technologies, Vattenfall will be able to produce energy at a lower cost and making more efficient use of available grid capacity with less environmental impact. In the first quarter, Vattenfall secured more land space for solar parks in Germany and in the Netherlands. Vattenfall's new biofuel heat plant, Carpe Futurum, was inaugurated and taken into operation. The new plant will reduce carbon dioxide emissions substantially and is a milestone in Vattenfall's work to phase out fossil fuels. Through a new joint venture with Seagust, Vattenfall enters the Norwegian wind market and intends to bid on licenses in two areas in the North Sea. The Norwegian government has announced plans to build up to 4.5 GW from both floating and bottom fixed wind turbines. The licensing round is expected to take place within 2022. With the British government giving consent for Norfolk Vanguard, Vattenfall has now been awarded planning consent for the entire Norfolk offshore wind zone. The Norfolk Vanguard and Norfolk Boreas projects are part of the next generation of wind farms, more than twice the size of Hollandse Kust Zuid, Vattenfall's biggest ongoing wind project to date. The 50/50 partnership between Fred. Olsen Seawind and Vattenfall has successfully been awarded the rights to develop a floating offshore wind farm site located 67 km off the east coast of Scotland, called ScotWind. Together with Siemens Energy in Berlin, Vattenfall will pilot a high-temperature heat pump in the cooling center at Potsdamer Platz. This heat pump will use the waste heat produced in the cooling center, saving 6,500 tons of carbon dioxide and around 120,000 m3 of cooling water per year. Test runs are planned to start towards the end of 2022. Vattenfall and Ameresco, a leading American energy services company, have been selected as partners in the Bristol City Leap Project, a 20-year concession to decarbonize the city and attract GBP 1 billion of investment. Together with partners, Vattenfall have won a large public tender to install a minimum of 4,000 charging points in 67 municipalities in the Dutch provinces Gelderland and Overijssel until 2025. In a new international collaboration, Vattenfall will provide charging infrastructure for the delivery company Instabox's electric vehicle fleet. By the end of 2022, Vattenfall will operate 400 Instabox's terminals in Sweden, Denmark, and the Netherlands. Last but not least, HYBRIT, our fossil-free steel partnership project with LKAB and SSAB, will receive EUR 143 million from the EU Innovation Fund to demonstrate a complete value chain on an industrial and commercial scale for hydrogen-based iron and steel production. Another quarter with a big number of exciting events. Anna, when we discussed in the Q4, we talked a lot about the volatile markets and the high prices in the Q4. They're still volatile, they're still high, and even higher than actually before New Year's. Any comments on that? Yes, it's right, they are higher, but for very different reasons, because if you looked at it, last year, it was mainly driven by the fundamentals in the market. If you look at the first quarter this year, the weather has actually, in all of Europe and also in the Nordics, been quite warm, it's been quite wet, and it's been quite windy. Normally, that would mean lower electricity prices. The increase we see now is purely driven by the situation with the war in Ukraine, so the fuel prices are going up, gas and coal. The electricity prices are being pushed up mainly by the fuel prices and mainly by gas. That's a different dynamic than what we saw then. I guess it's fair to say that given, unfortunately, we don't really see any signs of the end of the war. On the contrary, we see a lot of discussions on reducing the Russian fuels going to Europe and vice versa, quite a lot. I guess we have to get used to high volatility at a relatively high level. Well, most likely. It's of course difficult to speculate in what will happen, but right now that's the way it looks. Next, coming back to our commercial relationship with Russia. You mentioned at the beginning that we have stopped buying coal, and we immediately stopped buying nuclear fuel. But when it comes to gas, it's a bit more complex, isn't it? Maybe you can explain a bit. Well, Vattenfall does not import any Russian gas. Actually, we don't import any gas at all. We do buy gas in Europe. The way it works is that there are a number of companies importing gas to Europe, into the pipelines. We are not one of them. There are a number of companies buying at these marketplaces in Europe, and we are buying there. You, by definition, get a mix of what is in the pipelines because you can't sort of pick out one gas from another. It's, by definition, a blend. We know that the mix consists of 40% Russian gas. No direct commercial relationships, but just like everyone buying gas in Europe, you get the mix where there is a bit of Russian gas as well. That's also why it's now a political decision on how to reduce the dependency on the Russian gas, but to do that in a way that doesn't require, for example, industries to shut down in Europe. I think it's important to remember that there is another side of this coin, and that is Russia stopping exports of gas to Europe, which we have seen some examples of during the last few days. This will continue to be a very uncertain situation, I would say. The political management of dependence on gas will be crucial, and we'll get back a bit to that. Let's now get to the financial, Kerstin. Enlighten us. Well, financially, Vattenfall remains in a strong position. We have an FFO to adjusted net debt at 120.5%, and 38.1 if you exclude the impact from margin calls on the adjusted net debt. ROCE ends up at 21.8%. It's important to note that all of this is 12-month rolling figures. If you look at the result in the first quarter, the underlying operating profit is down to SEK 9.5 billion, which is 20% lower than the same quarter last year. The main driver for that are the achieved prices in the Nordics. They averaged at EUR 20 per MWh this quarter. As a reference, they averaged at EUR 33 per MWh the first quarter last year. Of course, we have seen since then that the system spot prices have increased between the years. I think we need to stay here a bit because that's not very intuitive that our achieved prices are lower in spite of the significantly higher SYS price. Maybe you can expand a bit and explain to us. Absolutely. I think I need to start a bit in how these price areas works, because the Nordic electricity market is divided into 12 different price areas. The sort of central reference price, the Nordic system price, which we also often refer to as SYS, is a price that is then calculated by Nord Pool based on the bids and offers placed in the different bidding zones. Historically, the system price has been a good sort of proxy for the different price area spot prices. There has not been a lot of differences between the prices in the different areas. What we have seen now lately, which is also visible on the graph here, is that we have large differences between the prices in the various price areas. The driver for that are bottlenecks in the transmission system. It means that we get a sort of a difference between the system price and the price that we deliver against when we produce. Okay, our hedging becomes very complex or imprecise, if you want, in this new development. What do we do and how does it impact us? Well, I mean, we hedge our Nordic production in SYS because there is no liquidity in the market for contracts in the different price areas. As you can see in the graph here, we have large parts of our production, mainly the hydropower production, located in SE1 and SE2, where the prices have been significantly lower than the SYS price. This impacts Vattenfall in two steps. Firstly, when it comes to the hedged volumes, we have to pay the sort of the spread between the system spot price and our hedge price since the prices have increased and since we went into these hedging contracts. When we deliver, we get the prices in the low price areas. That means that you're not able to capture the high system price. Instead, we get low SE1 and SE2 prices for large parts of our production. Okay. What are the consequences of all this? Well, because of this, we have made the decision to revise our hedging strategy and lower our hedge ratio in the Nordics. Because when we have these large discrepancies, then the SYS price is not a relevant proxy anymore for our production up north. Of course, this means that we will increase our merchant exposure, but this is the prudent way to act from a financial risk perspective. Again, I would like to mention that this is caused by the transmission bottlenecks. This increased risks is not only sort of something that we are exposed to. This goes for all actors that have assets up in the north of Sweden. Thank you. The major price area difference was a major contribution to the drop in contribution from the power generation segment. There was also a quite significant drop in the realized trading results from the same segment. Maybe you can comment a bit on that as well. Yes, indeed. Again, I would like to mention that when we compare to 2021, that was an exceptionally good year, and that goes specifically for the realized trading result. If you look at this quarter, then it is lower, as you say, and that is because it has been more difficult to optimize our gas storages in this market with very high and volatile prices. If you look at the generation operation, that has been performed very well with high availability and also stable production, specifically Swedish nuclear. Thank you. What else would you like to mention when we get to the operating segments? Well, maybe it's worth saying a few words about our wind segment. They have shown a very strong operational performance, both in the existing assets, where we actually produce more than we did the same period last year, but also when it comes to new capacity coming online. Last year, we inaugurated Kriegers Flak, which is the large offshore wind farm outside Denmark, and that's now fully up and running. That, of course, gives an additional contribution as well. These two things in combination with the high prices on the continent and in the southern part of Sweden and in Denmark, where we have a lot of assets as well, as Kerstin described, has of course increased the profitability. If you just compare quarter-over-quarter, we actually went from SEK 1.8 billion - SEK 4.9 billion in underlying EBIT in our business area wind segment alone, and that's quite a good improvement, I would say. When it comes to our customers and solutions business and our sales, we also performed well. We can see that more customers are choosing Vattenfall as a supplier, so we have a growing customer base. We also see that we have a lower churn, both in the Netherlands and in Germany than what used to be the case. I think that in these quite uncertain markets and times, hopefully we can be perceived as a sort of reliable and stable supplier, which is what we would like to, of course. If we continue with heat, there we report a negative result this quarter, and that is due to the high fuel prices and specifically gas prices, which lowers our production margin in our gas fire generation assets. This is particularly hitting our heating business in Berlin. We are hedging a part of that exposure, but that is then done on group level. Then the last operating segment is distribution, and there we also report a slightly lower result, and that is due to the electricity prices again. There is an electricity price component in the fee to the TSO, and it also increases our cost for net losses. Then when you compare between the years for distribution, then you need to remember that we divested Stromnetz Berlin last year. All in all, I think, we delivered a sort of good financial result given the circumstances. We see this negative impact that we get from the higher fuel prices. We see the negative impact we get from the differences in the price area prices. Also this very good realized trading result last year also of course impact the comparison between the years. The operating performance is good and stable, and we are still resilient with a very good balance sheet. Thank you. With all these ups and downs that you reported and all the uncertainty we have in the markets, I'm sure many of our listeners would like to hear something of what you believe about the rest of 2022. Yeah, I can imagine. When it comes to that, we don't give any projections. Of course, in this market environment, it is more difficult to navigate, and it is hard to predict. Managing these market risks, I think that is something that is really at the core of what we do in Vattenfall. I think also if you look at our strategic direction, that is sort of more in line with the overall development than ever, I think. I think that will also be visible in our financial results going forward. Thank you. No financial projections, but maybe you can, in a similar direction, what would you say are the main risks that we need to be aware of? We look at a few main risks, and one is higher prices and supply chain disruptions. I mean, stopping purchases from Russia is one thing, but we need to look at the whole sort of system of production and logistics of our procured goods. We do that, and so far, we have not seen any large impact on Vattenfall, but this needs to be monitored and worked with closely going forward as well. The other part I would mention is the risk to have sort of some kind of disruption in the energy market. I mean, that is also discussed quite a lot these days. That could take different routes. One is that we would get sort of no gas or limited or tight gas supply in Europe next winter. The other part is also these high and volatile prices that we might see sort of counterparties or customers go into default. That credit risk is something that we are monitoring very closely. Up until now, also there, no major impact on us. I think that's a good summary. In addition, I think that this inflow of customers that we see is also a sign of this uncertainty in the market, and maybe especially pick up on what Kerstin said, that we have actually seen some competitors going insolvent due to the uncertainty in the market and especially the liquidity needs, and the volatility in the market. At Vattenfall, that is not an issue because we have a strong financial position, and we also have a strong liquidity position. We are well-equipped to manage these challenges. I think we will see some of this also going forward. Many of our customers are struggling, both when it comes to household customers, but also industrial customers. Many of the household customers have received an increased energy bill. We're trying to support in different ways by giving advice on energy efficiency, on what kind of contract that could be best suited for each and everyone. Also with payment plans, if that is needed in order to manage this. I think that's also worth mentioning here is that in these difficult times, we actually see EU countries in Europe, but also our industry and different kind of industry actors increasing the pace of the transition. That's really good because that is what is needed in order to counteract some of these topics that we have discussed. I think it's extra important to be careful now with market interventions, because to create additional uncertainty in this market situation is definitely not what is needed. Now we need relatively much certainty in order for the investments to pick up pace and really meet this increased need of fossil-free electricity produced in Europe. Dwelling a bit on that, I think many politicians today, they think about next winter and how to ensure that there is enough gas, enough heat, enough electricity in the system. I think many leading politicians have already voiced the potential solution to introduce price caps as a way to mitigate those issues. When you hear price caps, what's your view? I think that would be very unfortunate because it would, among other things, mean that LNG would be steered away from Europe while we need more gas into Europe from other countries in order to be able to manage this reduced dependency on Russian gas. That is what Europe has said that they want to achieve. But I do understand the need to support vulnerable customers because that's also very evident. I think that one example is that it's better to do that via direct support to those customers rather than by intervening in the market mechanisms and the price setting. Because again, we need the stability in order to make sure that all the investments now actually become a reality as well. Yes. I think the real long-term solution to this is, of course, to avoid the fossil fuels. We've seen quite some more upping of the targets for renewable production, notably in the UK. Yeah Germany. Which means that the pace needs to be very, very high, because we don't have much time to 2030 or whatever date you referred to. What would you say are the main obstacles that's actually achieving those targets? I would say that the main hurdle is actually the pace of the transition. I mean, the technology is there, the market actors are there, the financial market is there. It's basically about being able to do this fast enough. The pace of the transition, and especially when it comes to permitting, is absolutely critical. It is a bottleneck today, I would say, in basically all European countries. Now we see some examples that I think are really positive. First of all, Germany has said that there is an increased ambition when it comes to renewable energy. In order to achieve that, they've also said that that's an overriding matter of public interest and security, which gives the possibility to speed up the permitting processes in Germany. In Sweden, we can see that the government has taken a number of initiatives in order to accelerate the pace in the permitting processes here. That's also really good. Now I would really be interested in seeing the impact of these actions in reality as well, because that's what is needed. Another topic that I think is important is to balance conflicting interests with each other, because we're talking about a major transformation in Europe, building and rebuilding energy infrastructure to a large extent. There will naturally be different kind of interests and conflicting interests that are all important from time to time. To figure out how to balance these with each other on a European level, but also on national levels, will be critical. Yes, and I think a reflection is that the debate here within our company, but also in the world in general, is that even before the war in Ukraine, we had to achieve the targets and the missions. The last two months, we have upped those targets, and we have to achieve them as well because there is no other solution that we do meet those renewables targets. I think that's. We just need to be able to do what's required. That's very true, I would say. I think that although it's very strange and also a bit terrible times in Europe, I also think that when I see the European Union and the European countries come together and act jointly, in terms of action in relation to the war, but also when it comes to pushing for the energy transition, that actually gives me hope that there is a way to move forward here. We will do what we can in order to accelerate our efforts. Thank you. I think that was ending this discussion on a positive note. Thank you all. Now we open up for questions on the phone and on the web. Thank you. I'll start with two questions on the web from Carlos Razuri. Can you explain the profit drivers of the heat business? How did negative clean spark spreads in the Netherlands during Q1 2022 affect financial performance? That's the first question. The second question is, on renewables, can you remind us what are your medium-term capacity targets? Aside from offshore wind, which technologies are you focusing on? Number one, can you explain the profit drivers of the heat business? How did negative clean spark spreads in the Netherlands during Q1 2022 affect your financial performance? Yeah, I can start maybe with the heat drivers. In the heat businesses that we have, you have revenues from your heat production, of course, and they are. There, the tariffs are a bit mixed in the different countries. It's a fixed part. It's often a moving part, and then sometimes there is also a component which connects it to the fuel price. So that is one of the sort of revenue drivers. You have also, mainly in the Netherlands and in Germany, partly also in Sweden, electricity generation, which also gives you revenue. There, of course, you have impact from the electricity prices. The main cost is your fuel cost. There you have in the continent, quite a lot of gas. In Germany, also some coal still. You have two coal-fired power plants in the grids. In Sweden, it's mostly biomass. These are the drivers. It's a lot, of course, the revenues. The heat revenue is fairly stable, but the electricity and fuel costs or prices are then what is driving, and then you need to look at the spreads. The second question was the clean spark spreads in the Netherlands, and the clean spark spreads in general have been lower due to the high gas prices, which has not been fully compensated by increased electricity prices. Specifically in the Netherlands, we have some plants, for example, our Eemshaven plant, which is then not connected to a heating system. There we are fairly flexible and have been able to capture quite well the peak prices. There we are not so hit by the clean dark spreads. Maybe I can answer the question on wind. Yes. We don't have specific volume targets for our wind growth, but we have identified wind as our main area for growing the business in Vattenfall, and that's also where we put the majority of our growth investments. One example is, of course, the fact that we're now building the Hollandse Kust South project outside the Netherlands, which will go live next year. We also announced that we are part of the process of bidding for Hollandse Kust West also. We have the Norfolk project coming up in U.K. This is our sort of main target area for growth, but not a volume target. We rather have a sort of value creation target. Apart from offshore wind, we also do quite a lot of onshore wind, and we do more solar than we used to. That is actually something that might be a slight change from before, where we see that the demand for solar, and maybe especially in the market like Germany, is increasing. We are increasing our efforts there as well when it comes to large-scale solar parks. Thank you. Now comes three questions from Andrew Moulder. Number one: Are the transmission bottlenecks being actively addressed by the system operator? Is the situation likely to change anytime soon? Number two: How tight is the market for nuclear fuel with many nuclear generators not taking Russian fuel? Is this affecting your costs? Number three: Why do you think LNG would be steered away from Europe with a price cap on gas? Would you not expect governments to provide some kind of top-up to the cap so that international LNG producers were paid the market price? I'll start with the transmission bottlenecks. Yes. Maybe Kerstin can comment on the nuclear fuel. It's true that the transmission bottlenecks are there, and they will not go away near term. There's a lot of projects going on that the transmission operator is running, but the time plan is not until later. I would very much like to see a speeding up of this, of course. What we are proposing and also discussing is different kind of market actions where you can sort of do different kind of trades between the two areas in order to even out the prices, but also make sure that there is more of a possibility to do intra trading, intraday trading, et cetera. Unfortunately, I think that these bottlenecks from a physical point of view will be there for quite some time. When it comes to the nuclear fuel and if there will be a sort of more tight supply than when less operators buy from Russia, I think the supply will be tighter and that we have also seen in the market, and that will also most probably increase the prices slightly. What is important to remember in that respect is that if you look at sort of the nuclear business, the production cost is sort of fairly low compared to your revenues. Then when you look at your production cost, the fuel cost there is an even smaller portion. Even if you will have increases, it will not impact our profitability that much. Maybe finally about LNG. I mean, everything else equal, if you put a price cap on gas, then the gas that is movable, so to say, which LNG is, because it's not in pipelines, it's on ships, will go to where they get most paid for the LNG. So in that way it will steer, or at least risk steering LNG away. There was a comment, if there is a top up somewhere, and then we're talking about another market intervention, and that's another thing, of course. I think that that's also the risk you run if you start doing market interventions. You get effects, and then you have to make another intervention in order to counteract that. Keep on. Yes. I think those were the three questions from Andrew. Then we have a question from Mats Peisker. Many apologies for asking a question you possibly have already explained. I came in a bit late. You mentioned that you have changed your hedging strategy. Can you elaborate a bit on that? Maybe I can take that. Yes. Yes. We have decided to change our hedging strategy and reduce the hedging ratio in the Nordics. The background for that is that we see huge or large discrepancies between the prices, spot prices in the different price areas, which means that the SYS price is no longer a relevant hedge for our Nordic production. That means that we will reduce in order to sort of not have these effects that we saw this quarter. Thank you. Another question from Mats Peissinger, and another very different question. You decided to enter the latest tender in Holland with BASF on one of the sites rather than going on your own and potentially farming down at a later stage. What is the reasoning behind this, and why only on one of the sites? Well, the reason we're partnering up with BASF is that we have a partnership with them, which we consider to be long-term and quite broad. Both companies have strategies that matches well together. We also see that the kind of innovation that's going on in both these companies will sort of enrich the business in both companies and also the projects we do jointly. For us, it's a way of being able to scale up our wind investments, of course, because we can share the cost but also the risk, but it's also a way to sort of get the fruits out of this partnership together. That felt quite natural for us. When it comes to the other site in Hollandse Kust West, that is slightly different, and there are also different criteria for winning that one, where the synergies might not be exactly the same. Thank you. I think that is all the questions we have on the web, at least for the time being. Any questions from the phone? No questions from the phone. No more questions. Thanks a lot. Let's conclude this Q1 reporting event, and I wish you all very welcome to the coming Q2 reporting event. Thank you.