Report from the Board of Directors 2022

Hafslund in 2022

2022 was a demanding and transformative year for both Hafslund and the rest of the energy industry. The war in Ukraine, a halt in gas supplies to Europe, operational failures at vital nuclear power plants in Europe, and low wind levels combined with drought resulted in historically high energy prices in Europe. The same price development was experienced in Southern Norway, which also had very dry weather until October. Concerns about security of supply during a continued dry year meant that the Group produced at less than normal production during the first three quarters of the year, while the final quarter was characterised by more precipitation, higher power production and reservoir filling. The high prices for the year contributed to a good financial result and extraordinarily high tax expenses. However, Hafslund does not consider the price levels and the burden on private individuals and the business sector to be sustainable, and the Group is actively in dialogue with the government authorities to develop framework conditions that can help to resolve the crisis.

The energy crisis in Europe in 2022 has highlighted a strong need for more energy. In order to improve security of supply without destroying the possibilities for achieving targeted emission cuts, there is no doubt that much of the energy growth should come from renewable sources. Hafslund wants to make a strong contribution to increased production of renewable energy – both by upgrading and expanding hydropower plants and through new renewable energy, particularly from wind power.

In October 2022, the Norwegian Government announced significant tax increases for the renewables industry. The Board recognises that the government authorities have a need for financing, and agrees that the high energy prices constitute grounds for higher tax. However, Hafslund considers the design of these new taxes to be unfortunate, because they restrict the ability of the companies to bring new power into a strained market, because they will lead to higher prices for long-term power contracts for customers, and because they greatly complicate appropriate risk management and price hedging in an industry in which this is of vital importance. The company has therefore been heavily involved in proposing changes that mitigate the negative impact of the tax package.

In 2022, Hafslund expanded its portfolio through the acquisition of Hafslund Oslo Celsio and investments in offshore wind, solar and digital solutions for power sales to the business sector. It is clearer than ever before that Hafslund is an energy and infrastructure group that has an active role in the development of both a green and smart Oslo and a renewable Norway and Europe.

The most important single event of the year was the acquisition of 60 per cent of Fortum Oslo Varme, in which Hafslund acquired 10 per cent of the company for NOK 2 billion (NOK 1.6 billion for 10 per cent of the shares and NOK 0.4 billion to take over shareholder loan) and took over the City of Oslo’s 50 per cent share. As a result, district heating production has now become Hafslund’s second largest business area. Reuse of heat from waste incineration and other sources enables society to achieve circular resource utilisation. This relieves the pressure on the electrical energy system and CO₂ is extracted from the cycle by incinerating biological material. Hafslund Oslo Celsio also has major plans for the development of district cooling in Oslo, which will produce significant benefits in terms of energy efficiency and better land use in the city. The company also owns Hafslund Fiber, which is developing the city’s fibre network. The world’s first climate-positive waste incineration plant is being created through the project for the development of carbon capture and storage (CCS) at the Klemetsrud waste facility.

The Hafslund Oslo Celsio transaction increased Hafslund’s turnover by approximately NOK 1.5 billion in 2022. The district heating business has historically had good profitability and more stable revenues than hydropower, and the Board is of the opinion that this acquisition will reduce risk for the Group as a whole. Financing of NOK 9.1 billion for the CCS project was secured through an agreement between the Norwegian State, the City of Oslo and Hafslund Oslo Celsio in June 2022. It is positive for the business sector’s ability to take risks through the early introduction of new climate technology that projects such as this can be realised through cooperation between the public and private sectors.

Important steps were taken in 2022 towards developing Norway as an offshore wind nation. Major ambitions relating to the awarding of licences by the government authorities make it more attractive to allocate resources and capital to offshore wind projects. This is a positive step, but there are still a very large number of issues that will need to be clarified to determine how attractive the licences will be. Hafslund is making preparations together with the Blåvinge partnership (which includes Fred. Olsen and Ørsted) to compete for offshore wind licences in 2023. The potential of solar power in Norway has also become a reality, and Hafslund has assumed positions within both large-scale solar and solar for buildings. The Norwegian Energy Commission stated that it is realistic to develop in the range of 5-10 TWh of solar power by 2030. In the autumn of 2022, Hafslund entered into a partnership with Magnora ASA and Helios AB for the development of solar parks in Norway and established a joint initiative with OBOS for solar for buildings, with the ambition of delivering solar panels to 10,000 apartments and business buildings every year.

During 2022, Hafslund carried out a Group strategy process, which focussed on, among other things, access to expertise, organisational efficiency and good leadership in Hafslund’s diverse and geographically extensive activities. The Board considers this to be crucial for the Group’s future competitiveness. Hafslund has increased its efforts to highlight and ensure that the Group also remains an attractive employer in the future. In 2022, Hafslund established a clearer Group structure around three companies and business areas: Hafslund Eco Vannkraft with its hydropower business, Hafslund Oslo Celsio with district heating and cooling, and Hafslund Vekst, which brings together ownership of Eidsiva and the other growth initiatives, including the development of offshore wind and solar.

The Board also wishes to pay special tribute to the Group’s employees through 2022. Structural changes and adaptations to volatile market conditions and changed framework conditions have been handled very well, while at the same time the Group has maintained good operations, improved safety results and made improvements in strategy and organisation.

2022 was characterised by many new strategic initiatives for Hafslund. In 2023, the Group looks forward to further developing a larger and more extensive portfolio and continuing to work towards realising its vision: “For a world in balance, with renewables.”

Hafslund's business areas in 2022

Hafslund Eco Vannkraft

Hafslund Eco Vannkraft operates and has full or partial ownership of 81 hydropower plants that produce approximately 21 TWh of power. The power plants are located in Vestland, Oslo, Viken and Innlandet, and consist of both reservoir and run-of-river power plants. The production of 13.8 TWh in 2022 was 22 per cent lower than production in a normal year.

The development of approximatively 1 TWh in new renewable power production was completed from 2018 to 2022. Mork power plant in Lærdal municipality was the last of six power plants constructed during this period and was officially opened in August. The hydropower business continuously works to upgrade and expand power plants, and the increase in power production from this work is equivalent to 20-40 GWh per year. In addition, the company is continually on the look out for new and profitable projects. Hafslund Eco Vannkraft currently has more than ten different projects under development. These projects collectively have the potential to contribute 700 GWh of increased energy production and 600 MW in increased output.

Hafslund Eco Vannkraft had 400 employees at the end of 2022.

Hafslund Oslo Celsio

Hafslund Oslo Celsio owns and operates plants in the value chain from final treatment of waste to production, sale and distribution of district heating. In addition, Hafslund Oslo Celsio establishes operations within district cooling, and has 100 per cent ownership in the fibre company Hafslund Fiber. In 2022, the company generated 1.8 TWh of district heating, which is equivalent to heating and hot water for about 160,000 households in Oslo.

Hafslund Oslo Celsio operates two waste incineration plants in the Oslo boroughs of Klemetsrud and Haraldrud, and waste heat from incineration is fed into the district heating grid. District heating production is also based on other sources of waste heat, such as excess heat from data centres, and other energy carriers are also used for peak load periods. In August of 2022, construction work commenced on the development of the carbon capture and storage facility at the Klemetsrud waste incineration plant. Carbon capture can eliminate up to 17 per cent of Oslo’s annual CO₂ emissions when it comes online in 2026.

Hafslund Oslo Celsio had 213 employees at the end of 2022.

Hafslund Vekst

Hafslund Vekst was established as a separate company in 2022 and brings together the Hafslund Group’s industrial ownership and growth initiatives. Offshore wind, business development, investment activities and follow-up of the Group’s larger ownership interests, including Hafslund’s important ownership interest in Eidsiva, are part of this company. Hafslund Vekst works with both established and new growth initiatives within the renewable value chain and has a clear partnership strategy. Hafslund Vekst collaborates with companies with complementary expertise and financial strength in order to make new opportunities a reality.

Hafslund formed the Blåvinge offshore wind partnership together with two partners, and is now preparing applications for licences for offshore wind development in the North Sea. Within solar, the company has been involved in establishing companies for the development of both large-scale solar and solar for buildings.

The ownership in Eidsiva Energi is followed up by Hafslund Vekst, which is the largest owner with a 50 per cent ownership interest. Eidsiva Energi owns 100 per cent of Norway’s largest grid company Elvia, and also has business activities within district heating and broadband. Elvia had around 970,000 customers at the end of 2022 and builds, operates, maintains and renews the power grid in Innlandet, Viken and Oslo. Eidsiva Bioenergi is Norway’s third largest supplier of district heating and supplies about 460 GWh of district heating in Innlandet, and Eidsiva Bredbånd supplies fibre and broadband to 90,000 customers.

Hafslund Vekst had 31 employees at the end of 2022.

Hafslund Eco Vannkraft

Vision, strategy and sustainability

In 2022, a new and larger Group looked further ahead in its strategy work and worked with a time horizon towards 2035. As a producer of renewable energy with operations along the entire renewable value chain, it is particularly important for Hafslund to look far into the future when planning growth initiatives. With long licensing and development processes and exponential patterns of change within energy production and the green transition, it is essential for Hafslund to work with strategy that has a 10-15 year perspective.

In 2022, a bigger and broader Hafslund also established a new vision for the entire Group. Moving forward, Hafslund will work “for a world in balance, with renewables”. A new vision was realised both as a result of the Group having a more extensive portfolio and due to the Group constantly facing issues in which ‘balance’ is an important keyword. Balancing energy supply and demand, daily balancing of the power system, and the balancing act between the development of new renewable energy and encroachment on nature are examples of balancing actions in which Hafslund plays a role. The balance in the energy system needs be maintained, and it is more important than ever that this takes place in a sustainable manner.

The Group’s strategy is based on five strategic focus areas that set out the direction Hafslund will work towards up until 2035. Hafslund shall become climate and nature positive, contribute to strong renewable growth, balance the energy system of the future, contribute to green and smart urban development, and attract and retain the best minds.

Hafslund’s focus areas and goals for sustainability, circular economy and focus on future-oriented regenerative ecosystems are fully integrated with the Group strategy. The Group has carried out a materiality analysis that assesses Hafslund’s impact on people and the environment, ESG risks and opportunities, and the topics identified as being important for sustainability are linked to the five strategic focus areas. Strategy 2035 describes in detail how Hafslund works with strategy and sustainability. This description includes the obligation to report on corporate social responsibility efforts pursuant to Section 3-3c of the Norwegian Accounting Act.

Health, Safety and the Environment (HSE) and employees

Hafslund has an overall goal of zero injuries, for both its own employees and suppliers. Following the acquisition of Hafslund Oslo Celsio in May 2022, the Group’s HSE work includes 200 new employees, two waste incineration plants, new infrastructure connected to the district heating grid in Oslo, and ongoing construction work for the company’s major carbon capture project. Six injuries were registered in 2022, including injuries at suppliers and only two of these resulted in absence from work. The number of injuries per million working hours (H2) for 2022 was 2.9, compared with 6.9 in 2021. With regard to HSE in Eidsiva Energi, this is followed up by the board of Eidsiva Energi, and reported as part of Eidsiva Energi’s internal and external reporting procedures.

The Hafslund Group saw a strong improvement in HSE in 2022, and in recent years there has been an increased focus on preventive work and risk understanding. The Group sets clear HSE requirements for suppliers, which include close follow-up of safety and risk management during the process and evaluation. HSE is the first item on the agenda at management and operations meetings, and it is an important topic in the leadership development programmes for highlighting responsibility on the line. A separate work methodology has been established for sharing experiences, which involves undesirable incidents and observations being investigated and analysed to detect direct and/or underlying causes.

Sick leave

Hafslund’s goal is that total sick leave shall not exceed 3.5 per cent. Sick leave was 3.6 per cent in 2022, compared to 2.8 per cent in 2021. Targeted measures, and support and training of managers and employees are implemented to contribute to a low level of sick leave.

Employees, equality and diversity

The Group had 686 (compared to 438 in 2021) employees in majority-owned companies at the end of 2022. The increase in the number of employees is the result of the acquisition of Hafslund Oslo Celsio and the need for greater capacity for growth initiatives at Hafslund Vekst. There were also new hires based on the expected high level of retirements in the coming years.

All work at Hafslund must be based on the Group’s values: Open, responsible and innovative. The cooperation between management and employee organisations works well and makes valuable contributions to the development of the Group.

Among other things, the core value of “transparency” means that value is placed on differences and diversity. Discrimination on the basis of gender, sexual orientation, ethnicity, religion or age must not occur under any circumstances.The Group work with diversity has a long-term focus, and in 2022 the Group worked to increase expertise and an interest in diversity across the Group. This will enable Hafslund to take active steps and work systematically on diversity in the coming years. The ambition is to develop an organisational culture that recognises differences as a strength. It is Hafslund’s desire to honour an organisation with a high degree of psychological safety that enables everyone to be themselves and realise their potential.

In 2022, 22 per cent of the Group’s employees were women, and this percentage has remained unchanged since 2021. The proportion of female employees is 24 per cent at Hafslund Eco Vannkraft, 18 per cent at Hafslund Oslo Celsio, and 48 per cent at Hafslund Vekst. The Board consists of four women and four men, and the same applies to the Group management team, which has been expanded by two members since the previous year.

New reporting requirements under the Activity and Reporting Obligation (ARP) will help to promote gender equality and prevent discrimination. Hafslund’s gender equality report, which has been prepared in accordance with Section 26 of the Norwegian Equality and Anti-Discrimination Act, is available at

Bonus schemes

Hafslund discontinued all individual bonus schemes for managers, and nearly all individual bonus schemes for employees in 2021. The administration can introduce bonus schemes for selected employees limited to 25 per cent of the annual salary.

At the start of 2022, Hafslund still had a collective bonus scheme, but this was decided to be discontinued in March 2022. In Hafslund Oslo Celsio, bonus schemes still existed in 2022 which were established under the ownership of Fortum. It has been decided that bonus schemes in Hafslund Oslo Celsio will be discontinued from and including 2023.

Obligation to report pursuant to the Norwegian Transparency Act

Hafslund has started work on due diligence in accordance with the Norwegian Transparency Act, and a report will be published on by the deadline of 30 June 2023. More information about the Group’s work with the Transparency Act can be found here.

Market and framework conditions

The power market in 2022

The historically high power prices from 2021 continued in 2022, and the power system was under considerable pressure. Most importantly, the war in Ukraine and the subsequent sanctions against Russia led to a sharp cut in imports of Russian gas into Europe. At the same time, France experienced problems with nuclear power production, Germany followed political resolutions to phase out nuclear power, and severe drought in Europe resulted in low hydropower production, low water levels in some European rivers, and subsequent challenges in transporting and producing coal. This collectively contributed to an extensive energy crisis in Europe, record-high prices for European power, gas and coal, and an acknowledgement that Europe needs to make itself independent of gas imports from Russia.

Southern Norway experienced extreme hydrology in 2022, with a very dry summer and very wet autumn. For the year as a whole, precipitation and inflow were close to normal levels in Southern Norway and in Norway. A tight reservoir situation in Southern Norway during parts of the year contributed to increased exposure to power prices on the continent. The areas in the north were not as impacted by the price drivers on the continent, due to capacity constraints in the main grid and improved reservoir balance. Pressure exerted from fundamental drivers means that power prices are also expected to remain above historical levels in the period ahead.

The trend from 2021, with persistent price differences between Northern and Southern Norway, and historically high power prices in the south, further intensified in 2022. The average prices for the southern price areas were 193 øre/kWh for NO1 and NO5 (Eastern and Western Norway) and 213 øre/kWh for NO2 (Southern Norway), while NO3 and NO4 (Central and Northern Norway) delivered 43 øre/kWh and 25 øre/kWh respectively. The price in Eastern Norway, for example, varied from 822 øre/kWh for a single hour at the end of September to 1 øre/kWh for a single hour at the beginning of October.

At the start of 2022, the reservoir level in Southern Norway was 48 per cent of the maximum capacity of 57 TWh, which was an entire 21 percentage points below the median for the last 20 years. Less snow than normal and little precipitation in Southern Norway from March to September resulted in continued low reservoir levels throughout the year, despite reduced production. The reservoir level in Southern Norway at the end of the first half of the year was 51 per cent, which was historically low. A mild and rainy fourth quarter lifted the reservoir levels to 65 per cent at the end of year, which was 6 percentage points below the median. Total inflow in Southern Norway ended at 88 TWh, which was 2 per cent lower than the average for the past 20 years.

For the northern price areas, the reservoir situation in 2022 was relatively normal, with a reservoir level at the median at the start of 2022, and 1 per cent higher than the median at the end of the year. Total inflow in Central and Northern Norway ended at 47 TWh, which was 8 per cent above the average for the past 20 years. Large amounts of snow, water and wind, combined with limited southwards transmission capacity, resulted in decoupling towards the high prices in the south and stable, low prices in the north.

Developments in power production and power consumption

Periods with little precipitation and low inflow into the reservoirs led to reduced power production in Southern Norway of 85 TWh in 2022, which was 15 per cent lower than average production over the past seven years. Total power production for Norway was therefore around 144 TWh, which was below the average of 147 TWh for the past seven years, and well below the current normal production level of 155 TWh. In comparison, production in 2021 was 157 TWh, which was historically high.

The high power prices impacted consumption in Southern Norway, which ended at 84 TWh in 2022, 9 per cent lower than the average consumption over the past seven years.

On a national basis, power consumption was closer to normal, with 131 TWh in total consumption in 2022, one per cent lower than the average for the past seven years. This resulted in a power surplus for Norway of 13 TWh. Power-intensive industry had somewhat lower consumption in the second half of the year, but overall consumption ended at the same level as the record of 39 TWh, which occurred in 2021.

Price hedging

Hafslund has a power hedging strategy which has the objective of stabilising income and cash flow, and exploiting market opportunities. The Group conducts ongoing analyses to hedge the sale of power, primarily within the Nordic power market. In order to reduce risk, the Group hedges production revenues through financial power contracts and through direct long-term agreements with industrial companies for the physical supply of power. The hedged share of production is regulated by the Group’s guidelines for risk management and power hedging and will vary in accordance with the expectations for production volume, assessment of the company’s risk and market opportunities.

Historically high prices and volatility in the financiel power market in 2022 led some members on the Nasdaq power exchange to publicly disclose in August the challenges of providing sufficient liquidity for their financial positions. An important step in reducing positions in the financial marketplace, and thereby helping to reduce risk, is to transfer positions to bilateral agreements with other power and energy companies. Hafslund preventively took such steps in the second quarter and increasingly through the third quarter of 2022.

The increase in the resource rent tax from 37 to 45 per cent and the introduction of the high-price contribution have produced a marginal tax rate of 90 per cent for power prices exceeding 70 øre/kWh. Earnings from hedging with financial contracts entered into prior to the tax changes being announced on 27 September 2022 will be charged a 22 per cent corporate tax and can be taken into consideration in the calculation of the high-price contribution. The tax changes mean that, in the event of rising prices, hydropower companies will be charged a marginal tax of up to 90 per cent on the physical spot delivery, but will only be able to deduct 22 per cent of the losses on financial contracts entered into after 27 September 2022. This asymmetry involves considerable risk, and under these conditions Hafslund can only use contractual forms for hedging in which the result is included in the basis for resource rent tax. This applies to contracts over seven years with power-intensive industries and fixed-price contracts for other industries in accordance with a new scheme applicable from 1 January 2023 of three, five or seven years. The company’s options for risk management and price hedging have been weakened considerably since the tax changes were introduced in December 2022.

Work with framework conditions

Developments in 2022 have demonstrated that Norway and Europe have a major need for more renewable energy, and the strained power situation resulted in price records across national borders for the second year in a row. The scarcity of renewable energy places Norway and Europe in difficult situations that involve everything from national security and impact on climate and the environment to society’s overall economy.

Norway has an efficient power system with a relatively high degree of flexibility and good access to new renewable resources. However, recent analyses from Statnett show that Norway may have a power deficit as early as the second half of the 2020s due to the fact that the increase in consumption is exceeding new production. The framework conditions and the licencing system for new developments are of vital importance if Norway is to succeed in increasing power production and facilitating the emergence of green industry in the country. Historically high power prices and the market structure for power trading have also had a major impact on the financial basis for companies and private individuals. In 2022, Hafslund worked on framework conditions within the following topics:

Facilitating the development of hydropower and valuable regulation capacity

From 2018 to 2022, Hafslund participated in the development of a total of 1 TWh of new hydropower. The potential for larger hydropower projects is limited under the current framework conditions, and the new power taxes that were announced in autumn 2022 also increase the tax burden when power prices are low and will impact the rate of investment in new hydropower. Hafslund understands that the Norwegian State wants to impose more tax on the power industry during times of high profits, although the manner in which the new taxes have been arranged reduces the ability of the power industry to finance new renewable power development and has a major impact on the number and types of projects that will be profitable. The need for output capacity and regulatory capacity will only increase in the coming years because a larger proportion of the energy will come from non-adjustable sources such as solar and wind. Facilitating investments in hydropower and output today may be crucial for there being a good and well-functioning power system in the future. In 2023, Hafslund will continue its dialogue with decision-making bodies and other industry players on framework conditions that facilitate the development of the hydropower on which the energy system is dependent.

Facilitating large-scale industrial development of the offshore wind industry

Norway has enormous offshore wind resources, and the government’s increased ambitions for the awarding of offshore wind licences by 2040 are important for this potential to be realised. Clear ambitions and underlying framework conditions are crucial for large-scale, industrial development and profitable utilisation of offshore wind resources. Hafslund is part of the Blåvinge partnership and contributes input in consultation processes regarding how the awarding of licences for the first fields in the North Sea can be organised in a sound manner that contributes to the long-term and sustainable development of Norway’s offshore wind industry.

Facilitating further development of hydronic heating and cooling in Oslo

District heating can to a large degree cover heating and cooling needs in cities and towns and relieve the power system and power grid. Of particular importance are thermal energy systems that can exploit the large volume of excess heat generated in society, not least from new industries such as data centres and hydrogen production. Other examples of excess heat are waste heat from waste incineration and the use of heat from the sewage system, such as in Oslo.

A total of 1.9 TWh in district heating is produced in Oslo, and there is potential for developing significantly more. This will require the government authorities to establish key framework conditions. The energy labelling scheme must be changed so that it equates environmental grades for supplied energy (electricity and district heating) with so-called internal building solutions, such as heat pumps and solar energy. There is also a need for amendments to building regulations that have to set stricter requirements for the use of hydronic heating in buildings. This will facilitate flexible heating solutions over time.

In 2022, the NVE initiated work to assess new price controls for district heating. It is important that the price controls for district heating effectively safeguard customer needs while also providing incentives for both efficient operations and necessary investments in district heating that are linked to and relieve pressure on the rest of the energy system.

Facilitate more stable and predictable power agreements for end users

Electricity prices placed a strain on households and businesses in both 2021 and 2022. Hafslund has worked to ensure that the resource rent tax on fixed-price agreements is calculated based on a fixed price in accordance with the agreement and not the spot price. Acceptance of this has made it possible for Hafslund to introduce fixed-price agreements that will provide predictable power prices to a wider range of companies. The scheme will apply from 2023 onwards.

Ensure balanced assessment of environmental considerations

Hafslund is committed to ensuring that encroachment on nature takes place with the least possible impact. Hydropower is subject to licence conditions which stipulate requirements for water flows in rivers and water levels in reservoirs. The revision of these conditions is a process regulated by the government authorities with the objective of assessing whether the conditions should be adjusted. When such adjustments are necessary, Hafslund proposes knowledge-based environmental improvements that have the least possible negative impact on power production.

Increased electrification and reindustrialisation of society

With new developments of hydropower, wind and solar, a continued high power surplus will lay the groundwork for increased electrification of society. Electrification of transport, oil and gas, building and construction, and existing and new industry will be, in addition to more efficient energy use, essential if Norway is to succeed with the green transition. Hafslund works actively to ensure that government authorities set conditions for value-creating electrification and is involved in wide-ranging industrial policy cooperation.

Report from the Board of Directors

Income statement, cash flow, balance sheet and equity – Group

Unless otherwise stated, figures for 2021 are in brackets.


Hafslund had earnings before interest, taxes, depreciation and amortisation (EBITDA) of NOK 20,087 million (NOK 8,979 million) and an operating profit of NOK 19,340 million (NOK 8,463 million) in 2022. The increased operating profit compared to the previous year was primarily the result of a significant increase in power prices despite lower production and a negative contribution from hedging trades. The achieved power price of 150 øre per kWh in 2022 was an increase of 88 øre per kWh from the previous year, which contributed to increasing the operating profit by NOK 12,414 million. The achieved power price was 18 per cent lower than the spot prices in the hydropower business’ production areas, and in addition to the sale of concessionary power at prices determined by the government, must be viewed in connection with the hedging activity, through the sale of power to the industry at fixed prices and realised losses from financial power hedging. The operating profit includes a change in value of NOK -443 million (NOK -866 million) related to financial power and currency positions, as well as compensatory power appraised at market value, with changes through ordinary profit or loss.

Operating expenses, including depreciation, of NOK 3,404 million (NOK 2,398 million) were an increase on the previous year, and were primarily the result of the acquisition of Hafslund Oslo Celsio in May 2022. The share of profits of associates and joint ventures totalled NOK 716 million (NOK 14 million) in 2022, of which NOK 520 million (NOK -15 million) relates to the profit from the ownership interest in Eidsiva Energi. The increase in the share of the profit from the ownership in Eidsiva Energi when compared to 2021 was primarily due to the increased grid costs being mitigated by grid companies in high-price areas having received a share of Statnett’s bottleneck revenues in the grid business (Elvia) as a result of significantly higher power prices.

Net financial items were NOK -462 million (NOK -562 million) in 2022. The change compared to the previous year was primarily the result of currency positions and somewhat lower interest-bearing debt, despite rising interest rates during the year.

The tax expense of NOK 14,535 million (NOK 5,291 million) corresponds to an effective tax rate of 80 per cent of the profit before tax. The very high tax expense must be viewed in connection with the special taxation of the hydropower business, which includes resource rent tax of NOK 9,476 million and the high-price contribution of NOK 1,030 million for the period from 28 September until 31 December 2022. The increase in the resource rent tax from 37 per cent to 45 per cent that entered into force from 1 January 2022 and the tax introduced through the high-price contribution resulted in a total increase in the tax expense of NOK 3,589 million for 2022, including a change in deferred tax liability of NOK 1,064 million. The high effective tax rate must also be seen in connection with the fact that losses from financial power hedging do not result in deductions from resource rent tax.

The profit after tax of NOK 4,344 million (NOK 2,611 million) in 2022 is an increase of NOK 1,733 million from 2021. The return on equity was 12.5 per cent (9.9 per cent) in 2022. The underlying profit after tax for the year (profit after tax, excluding changes in value and other non-recurring items) was NOK 4,817 million (NOK 3,554 million).

Cash flow

Hafslund had a net cash flow from operations of NOK 11,773 million (NOK 8,951 million) in 2022, following payment of tax in arrears for 2021 of NOK 4,701 million (NOK 273 million). In comparison, tax of NOK 13,482 million for 2022 will be paid in 2023.

Net cash flow to investment activities of NOK 2,447 million (NOK -124 million) in 2022 includes NOK 2,008 million relating to the Hafslund Oslo Celsio and Stange Energi transactions, and dividends from associated companies, including Eidsiva Energi, of NOK 450 million (NOK 513 million). Dividends paid to the City of Oslo and minority owners amounted to NOK 3,033 million (NOK 1,240 million). Despite the financing of Hafslund Oslo Celsio, which included taking over NOK 4.0 billion in debt on the acquisition date, the high cash flow from operations in 2022 contributed to a reduction in net interest-bearing debt for the Group of NOK 1.8 billion (NOK 7.3 billion) in 2022.

Balance sheet, financing and equity

As of the end of 2022, Hafslund had total assets of NOK 97 billion (NOK 64 billion) and capital employed of NOK 66 billion (NOK 43 billion). The Group had net interest-bearing debt, including subordinated loans of NOK 9.5 billion (NOK 11.3 billion), at the end of 2022. The average coupon rate for the loan portfolio, excluding subordinated loans, was 3.8 per cent and the average time to maturity is 5 years. Outstanding subordinated loans amounted to NOK 7.3 billion (NOK 5.3 billion) at the end of 2022.

The key credit figures of net interest-bearing debt/EBITDA and FFO/net interest-bearing debt were 0.5x and 141 per cent respectively for 2022, compared with 1.7x and 54 per cent respectively for 2021. The improvements in the key figures must be viewed in connection with the high cash flow and profit resulting from higher power prices.

Hafslund has a robust financing structure with long-term, committed credit facilities and liquidity to cover a minimum of 12 months’ loan maturity. At year-end 2022, the Group had unused credit facilities of NOK 3.5 billion (including overdraft facility of NOK 1 billion). Hafslund also has an overdraft facility of EUR 50 million to cover daily market settlement for futures contracts on Nasdaq OMX, which was unused at the end of 2022. The Group has no loan agreements that impose requirements for financial key figures (covenants).

Hafslund established a green framework for financing in 2021. In 2022, the Group has adjusted the syndicated credit facility of NOK 2.5 billion by adding sustainability targets related to the reduction of greenhouse gases and increased biodiversity in a selected stretch of river. During the year, Scope Ratings confirmed Hafslund AS’ BBB+ credit rating, and increased the outlook from stable to positive.

Result Hydropower

Hydropower had operating revenues of NOK 20,534 million (NOK 10,835 million). The operating profit (EBIT) of NOK 18,743 million (NOK 8 601 million) is an increase of NOK 10,142 million from the previous year. The increase in operating revenues and operating profit was primarily due to high power prices in Southern Norway, despite low production and losses from hedging activity.

The achieved power price of 150 øre per kWh in 2022 was an increase of 88 øre per kWh from the previous year, which, in isolation, contributed to increasing the operating profit by NOK 12,414 million. The achieved power price was 18 per cent lower than the spot prices in the hydropower business’ production areas, and in addition to the sale of concessionary power at prices determined by the government, must also be viewed in connection with the hedging activity through the sale of power to the industry at fixed prices and realised losses from financial power hedging. The operating profit includes a change in value of NOK -439 million (NOK -866 million) related to financial power and currency positions and compensatory power appraised at market value with changes in value through ordinary profit or loss.

Power production was 13.8 TWh in 2022 (18.3 TWh). This was a decrease of 4.5 TWh from the previous year and 3.9 TWh lower than the annual mean production. In isolation, the decline in production contributed to a reduction in operating profit of NOK 3,106 million compared to 2021. Mork power plant was commissioned in June 2022 and has normal production for the year of 42 GWh. Good operations and resource allocation contributed to a high level of availability at the power plants. There were no incidents involving significant operational disruptions in 2022. Operation of the power plants has been continuously adapted to the coronavirus situation in early 2022, the power situation throughout the year and regulatory requirements.

Operating expenses including depreciation were NOK 1,903 million (NOK 2,280 million) in 2022. Lower transmission costs related to the energy component and a high actual change in value in 2021 for compensatory power that is recognised as fair value through profit or loss were the main reasons for reduced operating costs.

Result District heating and cooling

The section below includes results during the Group’s ownership period in 2022, i.e.19. May to 31. December 2022.

For 2022, Hafslund Oslo Celsio had total operating revenues of NOK 1,479 million. This primarily related to revenues from district heating. In order to retain existing district heating customers, and to strengthen competitiveness against alternative energy sources, Celsio introduced a discount scheme for district heating from 1 November 2022, in which the discount rates rise as prices increase. The scheme is scheduled to continue until the end of 2023. Energy costs amounted to NOK 647 million. Energy costs for the production of district heating rose sharply during the period in line with the general increase in European energy prices. The prices of all of the fuels Celsio uses, such as pellets, bio-oils, LNG and electricity, have increased in line with European energy prices. Celsio had an operating profit of NOK 162 million in 2022. Net financial items amounted to NOK -148 million, and primarily consisted of interest costs on long-term interest-bearing debt to the parent company and minority owners. Profit after tax was NOK 13 million.

Result Growth and investments

Hafslund Vekst’s total operating revenues for 2022 amounted to NOK 5 million (NOK 8 million), primarily related to the sale of advisory services at Hafslund Rådgivning. The operating profit (EBIT) of NOK 552 million (NOK -52 million) is an increase of NOK 620 million from the previous year. The increase was primarily linked to an increase in the share of the profit from Eidsiva Energi and Fredrikstad Energi, which added NOK 613 million (NOK -15 million) to Hafslund Vekst’s result. The results for both of these companies were largely characterised by high costs for network losses associated with grid operations in 2021, but the results improved in 2022 due to high bottleneck revenues towards the end of the year. Profit after tax was NOK 372 million (NOK – 215 million).

Results Other businesses

Other businesses consist of the parent company Hafslund AS, including the management of Hafslund Hovedgård and Group eliminations.

The operating profit (EBIT) from other businesses was NOK -117 million (NOK -87 million) in 2022.

Risk management

Hafslund is exposed to risk in a number of areas. The most important risks are of a financial, regulatory, political, operational and reputational nature. Risk management is an integral part of the Group’s business activities and is designed to ensure that strategic, operational and financial objectives are achieved. Guidelines and frameworks for managing risk have been established. The Group's overall risk is continually monitored and assessed by the Audit Committee and the Board of Directors as part of the annual cycle and in the event of major changes. The Group’s risk work is closely linked to the Group’s strategy work and financial structure. The purpose of risk management is to take the correct risk based on the Group’s appetite and capacity for risk, expertise, financial solvency, development plans and dividend targets. The Group's risk landscape changed significantly in 2022 as a result of the geopolitical situation and significant movements in markets and regulatory conditions that have a major impact on the Group's core business activities.

Financial risk - market risk

Due to the Group’s hydropower and district heating activities, Hafslund is exposed to movements in market prices. Among the steps the Group takes to manage risk is active participation in different markets. All power trading is governed by frameworks and followed up through reporting to Group management and the Board. Parts of future exposure are hedged within these frameworks. The Group’s power trading unit also actively takes positions in the market. The Group’s operations are adjusted in accordance with factors such as the perception of future prices, own production capacity and regulatory conditions.

Hafslund generates substantial revenues in euros through its ownership interest in Hafslund Eco Vannkraft AS, and the Group is an active participant in energy markets where trading takes place in different currencies. Earnings in foreign currencies are converted to Norwegian kroner on an ongoing basis. The Group’s costs are primarily in Norwegian kroner. Hafslund can enter into loan agreements and other agreements in a foreign currency. All loans in foreign currency and some of the power price-hedged volume are currency-hedged. The Group is exposed to interest rate risk on interest-bearing loans, and manages interest rate risk by exploiting the natural interest rate hedging between the interest rate element in the non-taxable income from the hydropower business and interest on the loan side.

Financial, credit and counterparty risk

The Group is exposed to credit and counterparty risk, primarily through the sale of district heating, financial and physical power trading, and in connection with financing activities. A significant share of hydropower production is sold on an ongoing basis in the spot market. When entering into longer-term physical and financial contracts, counterparty risk is managed using clearing, guarantees and settlement mechanisms. For the district heating business, the majority of debtors are public institutions, companies and private companies that purchase district heating. Exposure related to contract counterparties is continually monitored and evaluated. Counterparty risk relating to trading with financial institutions is limited by defining lower limits for credit ratings of approved counterparties, and by diversifying exposure over multiple counterparties. The Group has historically experienced low losses on receivables.

Financial risk – liquidity risk

The Group’s cash flows vary in line with factors such as fluctuations in power prices, capital requirements for power hedging, seasonal fluctuations, investment levels and loan maturities. Liquidity risk is managed by maintaining sufficient liquid funds at all times to enable the Group to service all financial liabilities upon maturity, including for extraordinary events, without risking unacceptable loss or damaged reputation. There are continual analyses of ingoing and outgoing payments, and the liquidity risk is minimised by short and long-term borrowing. Hafslund has established long-term, committed credit facilities that ensure access to liquidity.

Regulatory and political risk

Hafslund is impacted by changes to framework conditions within a number of areas. Regulatory and statutory amendments can have a major impact on financial results and other goal attainment. Risks are closely monitored through continuous work on framework conditions. The Group places an emphasis on risk associated with long-term framework conditions in connection with all major investment decisions. The competitiveness of flexible hydropower is also dependent on market regulation in the physical and financial power markets. Changes to regulatory conditions could potentially limit power production.

Operational risk

Hafslund is exposed to operational risk along the entire value chain. The operational risk is greatest within ongoing operational activities and project execution. Line management is responsible for day-to-day risk management. The business areas manage operational risk through measures such as systematic maintenance, detailed procedures for activities, controls and emergency response plans. By adopting the use of artificial intelligence, machine learning and data from sensors, the ambition is to make better operational, maintenance and investment decisions. The Group has insurance contracts, which include damage to the Group’s own production facilities and other property. Liability insurance agreements have been entered into, including dam liability insurance, which covers damage to third parties and third party property. The Group also has insurance related to lost power production in the event of interruptions.

Risk relating to security of supply is of vital importance, and cybersecurity is a focus area that is closely monitored. The global security situation in Ukraine has given rise to an intensified cyber threat landscape, and the Group has been forced to adapt to the new geopolitical cyber situation. Hafslund participates in KraftCERT, which is a specialist community within the field of cybersecurity in the power industry that assists its members with advice and management of ICT incidents that are a potential threat to security. The Group did not experience any targeted attacks in 2022.

Hafslund has established systems for the registration and reporting of censurable conditions, undesirable incidents, injuries and improvement measures. Analyses are continually carried out with the aim of assessing risk, prevention and implementing measures when necessary.

Internal control

Internal control is a vital part of risk management at Hafslund. The Group has internal functions for monitoring risk and for compliance with laws and regulations. The Group also has an independent internal audit function, which will contribute to continual improvement and increased goal attainment by carrying out independent assessments and providing advice relating to internal control and risk management. All Group companies are governed by legislation, regulations, regulatory requirements and internal guidelines. The Group continually works to manage the risk of non-compliance with laws and regulations. Work is carried out in the line with the support of specialist functions. Internal awareness-raising programmes are used to improve knowledge and ensure compliance within focus areas.

The Group has established routines for the implementation of financial reporting across the Group. Controls are particularly targeted at areas that are considered to have the greatest risk of errors in the accounts. Hafslund endeavours to be a responsible actor in all parts of its business activities, and shall ensure compliance by identifying risk and implementing measures that reduce risk.

Agreements with related parties

Subordinated loans from CCS Finansiering AS

Hafslund AS has three subordinated loans with outstanding loan amounts of NOK 2,347 million, NOK 1,000 million and NOK 2,075 million from CCS Finansiering AS, a company that is 100 per cent owned by the City of Oslo. The latter-mentioned loan was established in connection with the Celsio transaction. The loans were transferred from the City of Oslo to CCS Finansiering AS on 15 December 2022. All of the loans are interest-only and have a clause stipulating that if the Group’s annual result shows a loss after interest that is charged, the interest rate shall be reduced by either the loss or to 0. The reduction is final and the interest amount will not be payable at a later date. For further information, see Note 9.1 to the consolidated accounts.

CCS Finansiering AS’ preference shares

As of 31 December 2022, CCS Finansering AS has contributed NOK 189.7 million as preference capital in Hafslund Oslo Celsio. The preference shares grant the right to a share of any excess return in the CCS project up to 2051, but do not confer voting rights, the right to ordinary dividends or other financial benefits.

CCS Finansiering AS will provide preference capital in line with the capital requirement in the CCS project, with a maximum limit of NOK 2.1 billion.

The Group has classified the preference shares as debt for accounting purposes and will classify future contributions of preference capital in the same manner. For further information, see Note 4.1 to the consolidated accounts.

Corporate governance

The City of Oslo owns 100 per cent of the shares in the parent company Hafslund AS. The Board has adopted principles for corporate governance in line with the Norwegian Code of Practice for Corporate Governance of 14 October 2021 (the “NCGB Recommendation”) and the City of Oslo’s principles for sound governance of limited companies. These principles are intended to support the owner’s profit goals and contribute to long-term value creation, as well as ensure that owners and other stakeholders have trust in the Board, management and the company. Hafslund’s principles for corporate governance and a declaration on corporate governance in accordance with Section 3-3b of the Norwegian Accounting Act are available at

The work of the Board of Directors

The Hafslund Board of Directors comprises eight members, three of whom are elected by the employees. There are currently four female and four male directors. There were no changes to the composition of the Board in 2022, although the employee-elected board members Håkon Rustad, Vegar Kjos Andersen and Ingvild Marie Rikke Solberg were appointed from 1 January 2022.

Hafslund’s Board of Directors works in accordance with the adopted rules of procedure. Hafslund has agreed not to establish a corporate assembly. The Board is therefore directly accountable to the General Meeting. The Board’s Compensation Committee prepares matters for review by the Board and resolutions on compensation and other associated matters concerning the company’s senior executives. In 2022, the Compensation Committee comprised Alexandra Bech Gjørv (Chair), Bente Sollid Storehaug, Bård Vegar Solhjell and Håkon Rustad. For more information regarding the remuneration of senior executives and directors, and the Board’s declaration and determination of salaries and other remuneration for senior executives, see Note 7.1 Remuneration of senior executives and directors. The Board’s Audit Committee assists the Board with the preparation of the financial statements and internal control. The Audit Committee comprises Bjørn Erik Næss (Chair) and Mari Thjømøe. The Audit Committee satisfies the requirement that at least one member must be independent of the Group’s operations and have an accounting or auditing qualification. The experience and qualifications of each of the directors are described in the section of the report on the Board of Directors.

The Board held eight regular board meetings in 2022, five extraordinary board meetings, and reviewed one item by email. During the previous year, the Board was particularly concerned with the strained power situation in Europe, the acquisition of Hafslund Oslo Celsio and the financing of the carbon capture project at Klemetsrud, capital management, framework conditions, further development of strategy, and opportunities for continued growth. Organisational work, risk and development of expertise were also important topics considered by the Board. The Board’s work is intended to ensure that the Group develops in the best interests of its owners, employees and other stakeholders.

As part of the Group’s insurance coverage, insurance has been taken out for the directors and the CEO for their potential liability to the company and third parties. The total insurance amount is NOK 200 million.

Parent company Hafslund AS

The parent company Hafslund AS (formerly Hafslund Eco AS) comprises the Group management team and Group and support functions. The Group’s debt is largely held by the parent company. The company’s income primarily consists of interest income and dividends received. Hafslund AS had an operating profit (EBIT) of NOK -89 million (NOK -85 million) and net financial items of NOK 2,089 million (NOK 1,690 million) in 2022. The annual profit for 2022 was NOK 2,072 million (NOK 1,668 million).

Dividend and allocation of profit for the year

The dividend is determined each year in consultation with the owner and in such a manner that the Group’s capital requirements and credit quality are maintained. The Board of Directors continually monitored the Group’s market and operating conditions, the equity and liquidity situation, and the dividend capacity. Based on this, the Board has proposed a dividend for the financial year of NOK 1,500 million to be considered at the Annual General Meeting. The dividend level reflects the Group’s equity situation, liquidity and future prospects. The Board proposes that Hafslund AS’ profit for the year be allocated as follows:

Profit for the year in Hafslund AS’ financial statements

Profit for the year in Hafslund AS’ financial statementsNOK 2,072 million
Dividend allocated from Hafslund AS to the City of OsloNOK 1,500 million
To/from other equityNOK 572 million

Going concern assumption

In accordance with the requirements of the Norwegian Accounting Act, the Board confirms that the annual financial statements have been prepared in accordance with the going concern assumption and that the conditions for this have been satisfied.

Events since the balance sheet date

On 16 March 2023, Hafslund Eco Vannkraft Innlandet AS and Eidsiva Energi AS agreed that the subordinated loan of NOK 1,917 million will be repaid to Eidsiva Energi in its entirety on 14 April 2023 by way of an extraordinary repayment.

Report from the Board of Directors 3


The last few years have been characterised by major changes and, to some extent, unforeseen challenges. However, Europe and Norway’s need for significant increases in renewable energy and greater self-sufficiency represent long-term challenges that will most certainly define the coming years. Hafslund is in a good position to make a significant contribution, and ensuring a stable supply of renewable energy is at the very heart of the Group’s activities.

Heightened geopolitical tension, a different threat landscape, increased volatility in the commodities markets and greater uncertainty are factors that Hafslund expects to have to contend with for many years to come. Hafslund considers the physical security of the Group’s facilities and emergency preparedness, as well as ICT and cyber security, to be key focus areas. The Group is also feeling the implications of high inflation and strained supply chains in the Group’s projects and development activities. The Board will place a strong focus on risk, preventive security measures and continuous assessment of future scenarios in the years ahead.

Moving forward, Hafslund will produce renewable energy from a broader portfolio – with energy from water, wind, solar, and hydronic heating and cooling. The Group’s extensive portfolio of significant ownership interests in hydropower, district heating, grid, fibre and renewable growth initiatives places Hafslund in a strong position to create opportunities across value chains. Partnerships are an important model for the Group, and Hafslund collaborates with actors that have complementary expertise in order to realise new initiatives. Following the acquisition of Hafslund Oslo Celsio, Hafslund has become an energy and infrastructure group, and the Group takes a role in developing a greener and smarter Oslo.

Energy and climate challenges dominate the public debate, and changes in framework conditions and tax rules continue to have implications for the Group’s operations. Hafslund will continue to use its deep insight into the power market and breadth of understanding through a large network of contacts and involvement in multiple sectors of society, to participate in the public debate with knowledge and perspectives on what is necessary to enable rapid and large-scale development of renewable energy and a stable power price level that maintains the attractiveness of Norway as a host country for green industry and new green jobs.

Over a longer time frame, we expect power prices to fall from the levels that were seen in 2022. However, there are fundamental factors which indicate that prices will remain at a higher level than what has historically been the case. Hafslund supports the steps taken by the government authorities to ease the cost burden of high power prices for both businesses and private individuals.

The Group started direct sales to the business sector on 1 January 2023 following changes to the resource rent tax on fixed-price agreements to the business sector.

However, the most durable solution to the energy crisis and the associated price crisis is more renewable energy and energy efficiency. Growth in the renewables industry is essential for making the green transition a reality, and smarter solutions that connect technology, infrastructure, energy and urban development are necessary for Norway and Europe to have a sustainable future. Hafslund’s goal is to be a growing renewable energy and infrastructure group that utilises its expertise in order to take an active role in overcoming some of society’s greatest challenges. At the same time, the Group must ensure that it has a good level of profitability and the ability to pay a substantial dividend to the owner, the City of Oslo.