Helen Group’s interim report January–September 2024: Europe’s largest electric boiler plant accelerates the green transition and electrification of district heating while lowering costs
July–September 2024
- Consolidated net sales decreased year-on-year and amounted to EUR 200 million (EUR 246 million).
- Operating profit decreased and amounted to EUR 12 million (EUR 22 million).
- Electricity sales increased by 32 per cent to 1,204 GWh (915 GWh).
- Electricity distribution in Helsinki increased by 2 per cent to 1,015 GWh (993 GWh).
- Heat sales decreased by 3 per cent to 466 GWh (483 GWh).
- Cooling sales increased by 31 per cent to 99 GWh (76 GWh).
January–September 2024
- Consolidated net sales decreased year-on-year and amounted to EUR 1,103 million (EUR 1,299 million).
- Operating profit decreased and amounted to EUR 92 million (EUR 101 million).
- Electricity sales increased by 5 per cent to 3,562 GWh (3,395 GWh).
- Electricity distribution in Helsinki increased by 5 per cent to 3,314 GWh (3,152 GWh).
- Heat sales increased by 7 per cent to 4,206 GWh (3,922 GWh).
- Cooling sales increased by 22 per cent to 205 GWh (168 GWh).
Consolidated key figures
| EUR million unless otherwise specified | Q3/2024 | Q3/2023 | Change | Q1–Q3/2024 | Q1–Q3/2023 | Change | 2023 |
|---|---|---|---|---|---|---|---|
| Net sales | 200 | 246 | -19% | 1,103 | 1,299 | -15% | 1,826 |
| Operating profit before depreciations (EBITDA) | 43 | 74 | -42% | 210 | 264 | -20% | 308 |
| Operating profit (EBIT) | 12 | 22 | -45% | 92 | 101 | -9% | 93 |
| % of net sales | 6% | 9% | -33% | 8% | 8% | 0% | 5% |
| Profit before taxes | -2 | 29 | -108% | 84 | 104 | -20% | 75 |
| Gross capital expenditure | 146 | 150 | -3% | 388 | 350 | 11% | 408 |
| Equity ratio, % | 55% | 58% | -5% | 54% | |||
| Return on capital employed (ROCE) LTM, %* | 3% | 5% | -31% | 4% | |||
| Balance sheet total | 4,001 | 3,804 | 5% | 4,005 | |||
| Average number of employees | 783 | 746 | 5% | 757 |
* Return on capital employed reports the 12-month rolling return on capital. The figure for the third quarter of 2024 is negatively affected by impairment recognised on inventories in late 2023.
Financial performance
Helen’s net sales decreased by 15 per cent year-on-year, mainly due to the lower market price of electricity, and amounted to EUR 1,103 million (EUR 1,299 million). Operating profit came to EUR 92 million (EUR 101 million). Operating profit was reduced by a write-down of EUR 11 million recognised on fixed assets in relation to the closure of the Kellosaari reserve power plant, accelerated depreciation of fixed assets amounting to EUR 18 million (EUR 45 million) in relation to the discontinuation of coal-based production in Salmisaari, and a fault that occurred at the Olkiluoto 2 nuclear power plant unit during the third quarter.
Helen’s reported relative profitability remained unchanged and was 8 per cent (8 per cent), with profitability adjusted for non-recurring items remaining nearly unchanged at 11 per cent (12 per cent). Profitability in the previous year was reduced by non-recurring expenses and accelerated depreciation recognised in relation to the closure of the Hanasaari power plant. A key development with regard to the profitability of Helen’s business units was district heating becoming profitable after years of operating at a loss. The profitability of electricity production decreased significantly year-on-year due to the decreased market price of electricity. In 2023, when the market price situation was challenging, Helen introduced Helen Smart Electricity Guarantee contracts, which were affordable to the customers but loss-making for the company. When the impact of this contract type is eliminated, the electricity sales business will return to profitability in 2024.
Comments by CEO Olli Sirkka
In the third quarter, we continued our significant investments in carbon-neutral energy production by making an investment decision on a plant complex to be built in Hanasaari, consisting of four electric boilers and a heat storage. The electric boiler plant, which will be the largest of its kind in Europe, will support the green transition and electrification of Helen’s district heating, which is now happening at a rapid pace. A significant proportion of our investments this year are allocated to electric boilers and heat pumps that run on electricity and replace fossil-based heat production.
District heating that relies increasingly on electricity provides a good counterbalance to Helen’s growing renewable electricity production. All of the wind and solar farms we currently have under construction will start generating electricity by the end of 2025, at which time our wind power capacity will be almost 1 GW. The electrification of district heating helps Helen manage the price risk of electricity. When the price of electricity is low, we can use it in district heat production. Through the large-scale production of renewable electricity, we enable the green transition of district heating. When combined heat and power production is discontinued, there will be no more electricity production in Helsinki. Consequently, ensuring the transmission capacity of the electricity network is an essential precondition for the electrification of district heating.
We are committed to making our energy production carbon-neutral by 2030, and our aim is to phase out all combustion by 2040. We will discontinue the combustion of coal next spring and, according to our strategy, biomass combustion will be phased out by 2040. Achieving the goal of phasing out all combustion is contingent on regulatory progress to enable small-scale nuclear energy. To accelerate development in this area, we launched a nuclear energy programme in the autumn. The programme is aimed at the utilisation of nuclear energy in heat production in Helsinki.
At the heart of Helen’s strategy is flexibility, which refers to the seamless reconciliation of increasingly variable energy production and consumption. In addition to improving the balance of the energy system, it also presents new business opportunities. Turning flexibility into profitable business depends on many factors, including accurate forecasts of markets, weather conditions and the operating environment, as well as the ability to make quick decisions in the electricity markets. One good example of the business opportunities created by flexibility is HelenFlex, a technology platform developed by Helen that automates the operation of electricity storage systems and trading. We have operated Helen’s Lakiakangas electricity storage in the reserve market for electricity via the HelenFlex platform since November 2023 and achieved promising results with regard to trading performance.umppaneiden kanssa, arvioi laitostoimittajia sekä kartoittaa sijoituspaikkoja.
Significant events in July–September
- Helen made an investment decision on an electric boiler plant and a heat storage to be built in the Hanasaari energy block. Comprising four electric boiler units, the plant will have a capacity of 200 MW, making it the largest in Europe. The heat storage facility will have a capacity of 1,000 MWh. The plant complex is scheduled to be completed during the 2026–2027 heating season.
- Helen started a nuclear energy programme that is aimed at the utilisation of nuclear energy in heat production in Helsinki. In the first phase of the programme, the company will negotiate with potential partner shareholders, evaluate plant suppliers and determine potential locations.
Significant events after the review period
- The parent company started change negotiations in the Customers and services business unit. The change negotiations stem from the need to respond to changes in the operating environment and ensure profitability in line with the company’s strategy. The scope of the change negotiations covers approximately 62 people and they are expected to be completed at the end of November 2024.
- The parent company sold its 58 per cent shareholding in Geonova Oy, a provider of geothermal and heat pump solutions, to CBRE Investment Management. The transaction is part of the execution of the company’s strategy, according to which its Heating and cooling business will focus on district heating and cooling services.
- Helen Electricity Network Ltd made an investment decision on the construction of a 110 kV electricity cable between Suvilahti and Salmisaari. The decision stems from the parent company’s goal of phasing out fossil and combustion-based energy production and investing heavily in electric heat production solutions.
Future outlook
The continuing war in Ukraine and the Middle East is causing tensions in the markets as market participants assess the impacts of the conflicts on the global energy supply chains and seek to price in the related risks. At the same time, the good supply situation in the Central European natural gas market alleviates concerns, particularly with regard to high prices in Germany during the winter. The situation in Central Europe is reflected in Finland through the Nordic transmission connections. The conditions for hydropower production in the Nordic region are better than the long-term average for the season.
Significant volatility in the market prices of electricity has become a long-term phenomenon due to the changes in the production structure of electricity. This is at the core of Helen’s strategy, and the company aims to take advantage of the opportunities presented by price fluctuations in its business operations. By operating in accordance with its strategy, Helen will be increasingly able to balance fluctuations in prices in the future by increasing electricity consumption when supply is high, and reducing consumption when supply is low. Helen’s result for 2024 is expected to be better than the result for the previous year.
Helen’s investments in carbon-neutral electricity, heat and cooling production are becoming concrete as new wind and solar farms are built around Finland and existing power plant sites in Helsinki are transformed. The company’s production structure is shifting from combined heat and power generation to separate production, in which the main electricity production forms are wind, solar, hydro and nuclear power. Heat production is rapidly becoming increasingly electric. In the future, it will consist of heat pumps, electric boilers and sustainable bioenergy.
Green hydrogen will emerge as a new addition to Helen’s production palette. The preconditions for large-scale production will be investigated by means of a pilot plant. Assessments of the role of small-scale nuclear energy as part of a sustainable energy system are also moving forward.
Helen Group’s financial statements for 2024 will be published in March 2025.