Fingrid Group Management Review: January to September 2024
Fingrid, as Finland's esteemed transmission system operator, adheres to a six-month reporting period, in line with the Securities Markets Act, providing Management’s Reviews for the first three and nine months of the year. These Reviews typically contain essential insights into the company’s fiscal performance and operational advancement.
The present Review reflects Fingrid Group’s performance over the period from January to September 2024, comparing it to the same timeframe from 2023. As per International Financial Reporting Standards (IFRS), the statements are designed to give a clear picture of Fingrid’s operational efficacy, though they are unaudited.
Key Performance Highlights
This review period showcased remarkable achievements for Fingrid, including a high transmission reliability rate of 99.99930%, a slight decrease from last year's 99.99996%. Electricity consumption within Finland surged to 60.5 terawatt hours, a considerable gain from 56.7 in the prior year. The emission factor for the produced electricity recorded a significant improvement, dropping to 31 gCO2/kWh from 35 gCO2/kWh.
Investment levels surpassed those of the previous year, reflecting Fingrid's commitment to a robust infrastructure. The gross capital expenditure forecast for the period spanning 2024 to 2027 is expected to reach approximately EUR 2 billion, with EUR 747 million already committed to specific projects.
As the demand for connections to the main grid remains strong, there was a notable increase in connection inquiries. Notably, 1139 MW of renewable production capacity has successfully integrated into the main grid during this period.
Fingrid experienced a significant increase in turnover for January to September, with the balance service contributing to 54% of the total figure. However, operational costs persist due to expansion and the weather-dependent nature of the electricity system, leading to adjustments in grid service fees.
Financial Overview
Operating profit, excluding the variation in the fair value of operationally linked derivatives, was reported at EUR 167.8 million, showing substantial growth from EUR 112.7 million in the prior year. The financial health of the company is reassuring, with profit before taxes posting at EUR 139.1 million, a recovery from a prior loss of EUR 101.2 million. Fingrid’s balance sheet reflects a resilient financial position.
Strategic Insights from the CEO
Asta Sihvonen-Punkka, Fingrid’s President & CEO, emphasized the key developments and ongoing projects during her review. She highlighted Finland's position in the European energy landscape, particularly the dynamics of clean energy generation and the electrification of various sectors like heating and data centers.
During the summer months of July and August, Finland achieved the lowest average electricity prices across Europe. However, power plant maintenance and limited transmission capacity in September led to price increases and volatility.
Despite these challenges, the need for grid reinforcement endures. Fingrid remains alert to the evolving electricity landscape, acknowledging that the growth in renewable energy generation may not keep pace with demand due to slower-than-anticipated consumption project advancements.
The company is proactive in its development endeavors with ongoing projects such as the Aurora Line transmission link, expected to enhance cross-border electricity transport between northern Finland and Sweden by January 2026.
Main Business Developments
Fingrid reported a total electricity transmission volume of 60.5 terawatt hours for the reporting period, up from 56.7 in 2023. The company transmitted 48.3 terawatt hours, equating to about 79.9% of Finland’s total consumption. Investments in renewable capacities continues, with substantial contributions from wind and solar power throughout the review timeframe.
With plans to augment grid service fees by an average of 8% beginning in 2025, Fingrid aims to sustain the reliability and improvements necessary for its expanding operations.
Moreover, Fingrid reported positive strides in system security with minimal disturbances and increasing reliability, although certain challenges persist regarding connection requests from new projects.
The company is dedicated to enhancing its emergency preparedness, having actively participated in defense exercises that focus on safeguarding critical infrastructure from cyber threats.
Future Outlook
Fingrid has reiterated its commitment to address electricity storage requirements and optimize capacity for emerging renewable energy sources. The company has proposed a plan for future development of the eastern Finnish electricity grid in collaboration with local energy providers to ensure a balanced and sustainable energy future.
As Fingrid continues to tackle regulatory challenges, including a significant appeal regarding the terms of balance service management, the company is focused on advancing its objectives to shape a progressive and resilient power framework for Finland.
Frequently Asked Questions
What are the key highlights from Fingrid's review period?
Fingrid achieved a strong transmission reliability rate and a significant increase in turnover, alongside notable growth in renewable energy integrations into the grid.
How does Fingrid plan to address rising electricity demand?
The company is investing heavily in infrastructure and reinforcing the main grid while also collaborating on projects to boost renewable energy capacity.
What is Fingrid's financial position?
Fingrid reported substantial growth in operating profit and maintains a strong financial position, aiming for a sustainable return on investments.
Why is there an increase in grid service fees?
The raised fees, effective from January 2025, are in response to the company’s ongoing investments in infrastructure to enhance service reliability.
What future projects is Fingrid focusing on?
Fingrid is advancing the Aurora Line project and enhancing the eastern Finnish grid in partnership with local electricity stakeholders to ensure energy security.
