International trade tariff turbulence may lead to slower growth in European energy demand as businesses halt investments in new manufacturing facilities, according to the chief executive of Swedish energy company Vattenfall.
Vattenfall Chief Executive Officer Anna Borg was quoted as saying in a Reuters report on Tuesday.
Slowing European energy demand
The company, a significant player with established operations spanning northern Europe, including key markets in Britain and Germany.
The company said its large industrial clients, heavily engaged and active within intricate global markets, were the initial segment to experience tangible negative repercussions stemming directly from the imposition of newly erected or heightened trade barriers.
These barriers, encompassing tariffs, quotas, and complex regulatory hurdles, disrupted established supply chains, increased operational costs, and introduced considerable uncertainty into their international business activities, thereby impacting their competitiveness and overall financial performance.
The company observed a direct correlation between the implementation of these trade restrictions and a discernible slowdown in orders and an increase in logistical challenges faced by its globally oriented clientele.
“I think we see a bit of hesitation when it comes to investments and the next steps, and that could possibly delay the increased (power) demand somewhat,” Borg said after Vattenfall reported its first-quarter earnings on Tuesday.
The state-owned company reported an underlying profit before interest and tax of 8.5 billion Swedish crowns ($886.4 million) for the first quarter, spanning January to March.
Financial performance
This figure represents a substantial decrease of 21% compared to the 10.7 billion crowns recorded during the corresponding period in the previous year.
Vattenfall explicitly stated that the underlying earnings in the previous year benefited from significant gains derived from the sale of its heating and offshore wind assets.
This one-time boost in the prior year’s earnings created a higher comparative base, contributing to the notable year-over-year decline in underlying profit for the current reporting period.
Borg added:
Although it’s a quarter with a lot of turbulence and uncertainty in the world around us, we are still delivering a stable result if you clear the result for these comparability items.
Given the current lower volume of investment projects compared to previous forecasts, there could be opportunities to negotiate with suppliers for the company’s own projects, she noted.
In March 2025, Swedish energy company Vattenfall finalised its investment in the Nordlicht 1 and 2 offshore wind farm projects located in the German North Sea.
Offshore wind investments and partnerships
This decision marked a significant step in Vattenfall’s commitment to expanding its renewable energy portfolio and contributing to Germany’s energy transition goals.
As part of this undertaking, Vattenfall had also executed an agreement to repurchase a 49% ownership stake in the wind farm projects from BASF, the German multinational chemical company.
This buyback consolidated Vattenfall’s ownership of the Nordlicht 1 and 2 projects. Simultaneously, Vattenfall and BASF established a long-term power purchase agreement (PPA).
Under the terms of this supply contract, BASF will secure a substantial portion of the electricity generated by the Nordlicht 1 and 2 wind farms over an extended period.
This arrangement provides BASF with a reliable source of renewable energy to power its chemical production processes, thereby reducing its carbon footprint and supporting its sustainability objectives.
The Nordlicht 1 and 2 wind farms are expected to have a substantial combined generation capacity, contributing significantly to the supply of clean electricity in Germany and the broader European energy market.
The projects will involve the installation and operation of numerous large-scale wind turbines in the designated offshore areas, requiring significant technological expertise and logistical coordination.
Borg said:
For us, the project is a fundamentally good project in the market where much more fossil-free electricity will be needed for all kinds of industry.
According to Vattenfall, there are currently no plans to seek a new co-investor for the project.
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