Vattenfall has defined a strategy with the purpose to Power Climate Smarter Living and enable fossil free living within one generation. This commitment to our customers, stakeholders and employees provides clear direction, engagement and focus as well as significant business opportunities.
The pace of change towards fossil free energy must be accelerated and Vattenfall is driving this transition through further electrification and greater reliance on renewable energy.
Major trends shaping the energy sector
Central to our strategy is the context in which we operate. We have identified six major trends that will shape the energy sector going forward and which Vattenfall is basing its strategy on. Understanding these trends will allow us to unlock opportunities to grow and thrive in an increasingly fast-moving and competitive marketplace.
Sustainability and customer focus
Customer centricity and sustainability are prerequisites to attract customers, talent and investors. Customers are increasingly considering climate impact, social and environmental performance, and energy efficiency when choosing energy solutions and suppliers. Strong values, with a focus on sustainability and customers, will attract the customers, talent, partners and investments needed for Vattenfall to drive the energy transformation.
Further electrification is a key enabler to reduce CO2 emissions in the transportation, heating, and industrial sectors. In the Nordic countries, electricity generation is already almost fossil free, while on the Continent, fossil fuels need to be phased out from the electricity system in parallel with further electrification. Suppliers of renewable electricity and heat play a key role in combating climate change.
More decentralised energy solutions
The future energy system will consist of both centralised and decentralised energy solutions. Cost reductions and increased functionality are driving a shift towards decentralisation, which is creating opportunities for new competitors and business models along various parts of the energy value chain. The importance of flexible technologies such as battery solutions, is increasing, and market share for centralised generation is decreasing. Centralised production and distribution will however remain a system anchor for utilities also in the coming years.
The entire energy value chain is being digitalised. Energy consumption is becoming increasingly smart and new technologies enable loads to be steered to times when energy supply is high, and price is low in order to relieve grid constraints. Customers expect instant information, access and feedback, and customer service and interaction are moving from call centres to smartphone applications and internet-based solutions. Digitalisation and control of data, along with advanced data analytics, drive these developments.
Changing demands on competences and capabilities
As our industry transitions into new ways of interacting with customers, technology and society, new skill sets and competencies are required. The ability to quickly adapt to new ways of working is an important competitive advantage that allows us to deliver new products and more efficient processes. To foster this environment and attract new talent, we are creating a company-wide culture that is inclusive to diverse viewpoints. We want to be the employer of choice. Another important area is to leverage external competence through partnerships and to outsource non-core processes.
High cost efficiency requirements
Globalised markets and lower perceived risk levels in renewable energy have resulted in an increasingly competitive environment, which puts pressure on our industry margins. This limits expectations for the return in both our core and new businesses. Value creation is increasingly derived from improving cost efficiency throughout the value chain. Efficient operations require a high utilisation of people and assets, lean and digital processes and high cost awareness.
Our strategic objectives
Vattenfall’s strategy builds on the goals set in our purpose to Power Climate Smarter Living, the six major market trends we have identified and the competitive landscape in which we operate, combined with the requirements we have on our business. Our updated materiality analysis confirms that our strategy is aligned with stakeholder expectations.
Vattenfall’s strategy can be summarised in four strategic objectives:
- Leading towards Sustainable Consumption by increasing customer centricity, building a sizeable position in decentralised energy and promoting electrification and a climate smart society.
- Leading towards Sustainable Production by growing in renewables and implementing our CO2 roadmap to make fossil-free living possible within one generation.
- Having High Performing Operations by improving operational efficiency, accelerating digitalisation and taking social and environmental responsibility throughout the value chain.
- Having Empowered and Engaged People by being an attractive employer, developing an engaging and inclusive company culture and securing necessary competence through recruitment and continuous learning.