REPORT OF THE
BOARD OF DIRECTORS
AND FINANCIAL
STATEMENTS
Contents
REPORT OF THE BOARD OF DIRECTORS AND FINANCIAL STATEMENTS 2022
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Report of the Board of Directors of Teollisuuden Voima Oyj
Main events in 2022
The role of low-carbon energy, such as renewable
energy and nuclear power, is crucial in the mitigation
of climate change. In 2022, the share of nuclear
power was approximately 35 percent of all electricity
produced in Finland. During its over 50-year history,
Teollisuuden Voima Oyj (TVO) has produced more
than 550 terawatt hours (billion kilowatt hours) of
climate-friendly electricity in total.
The electricity generation at TVO’s Olkiluoto nuclear
power plant totalled 16.35 terawatt hours in 2022,
consumed and about 24 percent of all electricity
produced in Finland. The combined load factor of
the Olkiluoto 1 (OL1) and Olkiluoto 2 (OL2) plant
units was 93.0 percent. The Olkiluoto 3 (OL3) plant
unit’s load factor during test production was 16.9
percent. The consolidated turnover was EUR 358.2
(298.7) million.
Finland was produced at the Olkiluoto nuclear power
plant during all of 2022. The OL1 plant unit produced
6.9 (7.4) TWh of electricity, and its load factor was
89.1 (95.1) percent. The OL2 plant unit reached a
record production result, as electricity production
rose to 7.5 (7.0) TWh, and the load factor was 96.8
(90.4) percent. The OL3 plant unit was connected to
the national grid on 12 March 2022 and reached its
2022. During the test production in 2022, OL3
produced 1.9 TWh of electricity.
The OL1 plant unit underwent a maintenance
outage of 33 days, which was longer than usual, and
therefore had an impact on the amount of electricity
production. A refuelling outage lasting nine days
took place at the OL2 plant unit. The annual outages
were carried out successfully together with a broad
network of partners. Both plant units have been
modernised throughout their history, and annual
investments amounting to tens of millions of euros
continue to this day. An I&C modernisation project
part of the plant units’ reactor and operating I&C
will be updated. In addition to TVO’s own personnel,
approximately 490 external resources participated in
the refuelling outage and approximately 830 external
resources worked in the maintenance outage.
Around 190 specialists arrived from abroad for the
annual outages.
During 2022, the OL3 plant unit’s test production
gradually proceeded to tests at full reactor capacity.
OL3’s regular electricity production starts in March
2023.
ONKALO site during 2022. The excavation of the
in June. Civil works at the encapsulation plant were
completed at the end of May. Thereafter, work has
continued with different equipment and system
is to start in Olkiluoto in the mid-2020s.
At the end of the year, the total number of personnel in
the Group was 1,007 (984). The number of personnel
Oy was 90 (93). A total of 95 (71) new staff members
were recruited at the TVO Group during 2022.
Operating environment
During 2022, nuclear power was included in the
Commission’s proposal included technical screening
criteria for existing nuclear power plants as well as
new nuclear power plants. The application of the
taxonomy criteria enters into force on 1 January 2023.
plan after Russia’s attack on Ukraine. The plan aimed
at cutting the use of Russian natural gas by two
thirds by the end of 2022, as well as discontinuing
imports completely by 2027. As a result of the
attack, the prices of different energy sources rose.
measures, such as a revenue cap on so-called infra
-
marginal electricity production methods (including
nuclear power). The energy crisis is also leading to
changes in the EU’s electricity market rules – the
Commission’s aim is to accept a legislation proposal
The TVO Group closely follows the situation in
Ukraine and its impact on the Group’s operations. The
TVO Group condemns Russia’s attack on Ukraine.
During the accounting period, the Ukrainian situation
has not had an immediate or direct effect on the
Group’s operations or the production of electricity.
However, cost increases are being prepared for in
the TVO Group. Market interest rates have strongly
central banks.
The processing of the Commission’s Fit for 55
package, unveiled in July 2021, is nearing an end.
The objective of the package is to update the instru
-
ments of the EU’s energy and climate policies, so that
they correspond with the goal to cut the EU’s green
-
house gas emissions by 55 percent compared to the
plan, the Commission published updates to proposals
in the package, including an increase to the goal
suggested that the goal could also be reached by
using hydrogen produced with low-emission elec
-
tricity, including nuclear power.
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In spring 2022, the International Energy Agency
Energy Transitions”, in which it examines the role of
nuclear power as a solution to climate and energy
crises. The report repeated the estimate in the IEA’s
“Net Zero 2050” report, in which nuclear energy
capacity needs to almost double from 400 GW
e
to 800
GW
e
by 2050 in order to achieve carbon neutrality.
The harmonisation of the nuclear industry has
progressed during the year. The International Atomic
Energy Agency (IAEA) started its Nuclear Harmoni
-
which aims at accelerating the safe and widescale
deployment of advanced reactor types, especially
partnership programme.
The construction of nuclear power is speeding up in
Europe. For example, France declared in February
2022 that it will build six new large reactors as of
2028, with an option to build eight more by 2050.
decided in its government programme to request
Vattenfall to analyse additional construction of
nuclear power.
In an energy attitude survey published by Finnish
Energy twice a year, the total support for nuclear power
was 83 percent in December 2022, as 65 percent of
Finns want to increase nuclear power and 18 percent
think that the current amount is suitable. The support
for nuclear power has risen in all citizen groups regard-
less of gender, municipality, age, or political views.
Finland is preparing for the parliamentary election in
spring 2023 and the work of the new government.
started by the current government will be carried out
TVO as a company
TVO is a non-listed public limited-liability company
owned by Finnish industrial and energy companies.
According to TVO’s Articles of Association, the
transmission system construction and acquisition
as well as in the generation, relay, and transfer of
electricity primarily to the Company’s shareholders
in accordance with the terms set in the Articles of
Association.
TVO operates on a cost-price principle (Mankala prin
-
ciple). The shareholders are charged incurred costs in
circumstances dictate otherwise. According to the
Articles of Association, the shareholders pay variable
costs based on the volumes of energy supplied and
-
less of whether they have made any use of their
share of the output or not. Due to the Company’s
performance will not be presented (see chapter: The
cost-price principle in the Notes to the consolidated
like TVO, operate based on the Mankala principle.
Electricity generated by TVO serves the needs of
numerous Finnish industry and energy companies,
some of which were owned by 131 Finnish munici
-
palities in 2022. TVO generates about 20 percent of
all electricity consumed in Finland.
TVO’s operations are founded on a strong safety
culture and securing the safety of production. TVO’s
activity-based management system covers produc
-
tion activities at the Olkiluoto nuclear power plant,
maintaining and developing production capacity,
additional construction of production capacity, and
functions required to control and resource these
activities. The system meets the requirements of
international quality control, environmental, occu
-
pational health and occupational safety standards,
Finland Oy Ab. The general part of the activity-based
management system also acts as the licensee’s
quality control system approved by the Radiation
activity-based management system is regularly moni
-
tored with internal audits and management reviews.
TVO’s corporate governance system is described in
a separate report. TVO’s principles of responsible
operating practices are described in the TVO Group’s
Code of Conduct (see chapter: Responsibility).
The objectives of TVO’s strategy include a strong
safety brand, the competitive and predictable price
goal is to maintain a competitive average electricity
production cost and to ensure that the operability of
culture is maintained at a high level, and safety is
systematically upheld and developed at all stages of
the nuclear power lifecycle.
Financial performance
The Group’s consolidated turnover for 2022 was EUR
358.2 (298.7) million.
The amount of electricity delivered to the shareholders
was 16,316 (14,414) GWh. The higher delivery
volume of electricity compared to the previous year is
due to the OL3 plant unit’s test production.
million. Updated cost estimates based on a new
nuclear waste management technical plan and
schedule and the changes of the provision regarding
the nuclear waste management obligation had an
chapter: Nuclear waste management).
Financing and liquidity
TVO’s liabilities (non-current and current) at the
end of the year, excluding the loan from the Finnish
shareholders, totalled EUR 5,727.1 (5,206.0) million,
of which EUR 929.3 (929.3) million were subordi
-
nated shareholder loans. During 2022, TVO raised a
total of EUR 1,050.0 (800.0) million in non-current
liabilities, of which none were subordinated share
-
holder loans (no subordinated shareholder loans).
Repayments during the year amounted to EUR 457.5
(566.5) million.
year bond with an annual coupon of 2.625 percent.
The bond was issued under the Company’s EMTN
programme. TVO also announced that it has made an
invitation to holders of its outstanding EUR 311.77
million Notes due in January 2023 to tender their Notes
for purchase by TVO for cash. The tender offer results
were announced on 31 March 2022. The aggregate
principal amount validly offered for purchase by the
REPORT OF THE BOARD OF DIRECTORS AND FINANCIAL STATEMENTS 2022
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noteholders was EUR 106.1 million. TVO accepted all
valid instructions pursuant to the tender offer.
In June 2022, TVO signed a new three-year revolving
credit facility of EUR 1,000 million. The facility includes
TVO’s existing revolving credit facility signed in February
2016 and will be used for general corporate purposes.
A one-year extension was made to TVO’s shareholder
loan commitment of EUR 400 million agreed upon in
December 2020, when TVO’s shareholders signed the
extension in November 2022. The extended share
-
holder loan commitment is valid until the end of 2023.
At the end of the year, TVO agreed on new bilateral
bank loans totalling EUR 300 million.
long-term credit rating BBB- for TVO and changed
the outlook from negative to stable. In March 2022,
outlook. According to both credit rating agencies, the
changes to the credit ratings are mainly due to the
start of the OL3 plant unit’s electricity production in
March 2022. Japan Credit Rating Agency (JCR) kept
its existing A+ rating (Negative Outlook).
TVO uses its right to borrow funds back from the
within the framework of legal regulations. On 31
December 2022, the amount of the loan was EUR
651.3 (711.3) million, and it has been relent to the
Company’s A series shareholders. On 31 March
Management Fund decreased by EUR 59.9 (31
March 2021: decreased by EUR 5.1) million.
capitalised in the balance sheet.
Share capital
TVO’s share capital on 31 December 2022 was EUR
600.4 (600.4) million.
The Company has 1,360,000,000 (1,360,000,000)
shares, of which 680,000,000 belong to the A series
and 680,000,000 to the B series. The A series shares
entitle to electricity generated at OL1 and OL2, and
the B series shares to the electricity generated at OL3.
Administrative principles
Because TVO is a non-listed public company
applying the cost-price principle, it observes the
Corporate Governance Code for listed companies
where applicable. TVO is not obligated to observe
the Corporate Governance Code nor therefore its
-
ment in its Annual Report or separately. TVO has
-
ment, which is published on the Company’s website
() at the same time
as this Report of the Board of Directors.
Administrative bodies
TVO’s administrative bodies and their operations in
2022 have been described in a separate Corporate
-
ny’s website .
Regulatory environment
The basic principle of nuclear energy legislation is
that the use of nuclear energy must be in line with
the overall good of society. The key regulations
governing the use of nuclear energy, the monitoring
of its use, and nuclear safety are included in the
Nuclear Energy Act and the Nuclear Energy Decree,
as well as in subordinate regulations issued by
them, such as Regulatory Guides on nuclear safety
to these, regulations applied to the use of nuclear
energy are included e.g. in the Radiation Act.
Work on the comprehensive reform of the Nuclear
Energy Act, initiated by the Ministry of Economic
Affairs and Employment (MEAE), has continued during
2022. The objective is that the production of nuclear
energy is in line with the overall good of society,
legislation draft is supposed to enter the consulta
-
tion phase during 2024, followed by a government
-
toral term, after which the new Nuclear Energy Act
would enter into force in 2028. TVO has participated
in the preparatory work of different working groups.
introduced at the OL1, OL2, and OL3 plant units.
The last updated guide (YVL E.6) will be introduced
during 2023.
regulations and guidelines, initiated in 2021, have
also continued during 2022. The aim is to lay down
the foundation and direction for the reform of regula
-
tions and guidelines, including the new YVL Guides.
TVO has participated in the preparatory work of
The Nuclear Liability Act concerns the liability the
operator of a nuclear power plant has in the event
of a nuclear incident. Amendments to the Nuclear
Liability Act entered into force with a Government
Decree as of the beginning of 2022. In the amend
-
in the Nuclear Liability Act) for a nuclear incident
outside of Finland was increased to EUR 1,200
million for nuclear plants used in energy production.
For nuclear incidents in Finland, the plant operator’s
liability remains unlimited, as it already has been
since 2012, when the Nuclear Liability Act was
temporarily amended as concerns this liability.
For nuclear plants used for purposes other than
energy production and for the transport of nuclear
substances, the liability is EUR 80–250 million.
The amendment to the Nuclear Energy Act
concerning the investment activities of the Finnish
into force on 1 January 2022. With the amendment,
the amount of relending available to a party with a
nuclear waste management obligation was limited
to 60 percent, and the investment activities were
expanded to also include other asset classes than
Finnish government bonds.
The use of nuclear energy is subject to licence.
Applications for a decision-in-principle, construction
licence and operating licence, as well as a licence for
decommissioning a nuclear power plant, are made
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monitoring the safety of nuclear energy use, and it
also supervises safety and emergency arrangements
and nuclear material safeguards.
Risk management, major risks and
uncertainties
RISK MANAGEMENT
The objective of risk management is to support the
realisation of TVO’s strategy and business objectives,
and to ensure that TVO’s operational preconditions
are maintained. Risk management is carried out
comprehensively according to the strategic objectives
set by the Board of Directors, Group-level policies,
and good governance.
Risk management is supervised by the Company’s
Group’s risk management policy. The Board of
that the company’s risk management is in line with
the TVO Group’s risk management policy. The
Group, is in charge of risk management in accordance
with TVO’s objectives and strategy. A Risk Manage
-
ment Group operates under the Management Group
and is in charge of ensuring adequate risk treatment
of risk management measures.
-
cation, analysis, and treatment of risks connected to
its operations, as well as the follow-up of measures.
strategic and operational planning and follow-up, and
also as part of project management.
RISK MANAGEMENT PROCESS
TVO has a Group-wide risk management process,
used to ensure that risks facing the Company’s
risk is treated according to its severity. The objec
-
tive of the risk management process is to manage
risks to an appropriate level set by the risk appetite.
Risks can be managed by reducing, avoiding,
sharing, moving, or accepting the realisation of
the risk. The acknowledged risks are gathered to
company-level risk registers, where all the risks
with each risk’s consequence and likelihood. The
Management Group, Audit and Finance Committee,
and the Board of Directors in accordance with the
annual management programme. Other risks are
reported to the necessary parties according to the
risk management process.
The comprehensive development of risk manage
-
ment is evaluated annually with a pre-set evaluation
form. The results from the evaluation are used to set
the goals for the development of risk management.
Risk management evaluation is performed with a
model based on risk maturity levels.
In 2022, TVO’s management and operational plan
-
ning process continued to increase the level and
effectiveness of risk management. Risk management
is a part of the Group’s strategy and, as such, it
is continuously being developed to help meet the
Group’s objectives within the Company’s risk appe
-
tite. During 2022, the role of risk management was
strengthened in operations through continuous
communication and collaboration, as well as empha-
sising the importance of risk management in project
management procedures. The risk management
process has also been updated during the year to
better support the Group’s needs. In 2022, a new
chapter on risk appetite was added to the risk
management policy.
MAJOR RISKS AND UNCERTAINTIES
Risks related to safety and electricity production
are reduced by keeping the plant units in good
and high-quality planning and implementation of the
annual outages.
Uranium, which is the fuel used for electricity
production, is procured from global markets. Risks
connected with nuclear fuel have been reduced by
procuring the fuel from a variety of suppliers and by
making long-term contracts.
In the OL3 project, risk management has primarily
been a question of overseeing and guiding the
of the turnkey contract and the settlement agree
-
ment, as well as enhancing TVO’s preparedness.
The focus of risk management has shifted to
operation phase.
Indemnity and property risks are covered with
insurances. The aim of insurance management is
to keep the scope, cover, and cost of insurance at
a reasonable level. TVO is a member of European
liability insurance is in force for nuclear liability.
There are no major risks or uncertainties in view
concerning electricity production at the OL1 and OL2
plant units.
Financial risk management and fuel price risks are
statements, Note 27: Financial risk management.
RISKS RELATED TO OL3 PLANT UNIT
Schedule and planned completion
TVO’s major risks are related to the schedule of the
-
capacity of the plant unit. Under the plant contract,
electricity production was scheduled to start at the
end of April 2009. The completion of the project,
however, has been delayed. OL3’s regular electricity
production will commence in March 2023.
The risk related to the planned completion refers to a
situation in which commercial use cannot be started
as planned, which leads to additional costs.
During 2022, several risk management measures
related to the OL3 project have been executed to
improve TVO’s readiness to commission the plant unit
as well as to operate three nuclear power plant units.
TVO closely monitors the compliance of the conditions
set in the settlement agreement in March 2018 and
the amendments to the agreement in June 2021 and
ascertains that the commissioning of OL3 is executed
If OL3 fails to reach the projected output level, load
factor, or operating cost structure, or if the output
level is restricted by Finland’s main grid or it is not
to TVO from the system protection, there is a risk
that the production cost will rise in comparison to the
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objective. This risk has been analysed with the help
capacity. The risk has also been analysed as regards
the related costs resulting to TVO.
TVO implements several risk management meas
-
Examples of risk management measures include the
utilisation of the experiences from the Flamanville
and Taishan sister plants during the nuclear
commissioning of OL3.
MAJOR PLANT MODIFICATIONS AND THEIR
IMPLEMENTATION
Increase of production costs and deterioration of
-
and assign responsibility for requirements related to
nuclear safety and to ensure that the project parties
meet these requirements in advance to avoid unex
-
pected costs during the project.
In risk assessment, increased project costs are viewed
to arise either from inadequate preparation and require
-
challenges in the execution of the licensing process, or
As risk management measures, TVO has in 2022
continued to prioritise projects and measures that are
most vital in view of the schedule and costs in order
to secure adequate resourcing for them. Furthermore,
TVO aims to ensure that project suppliers have the
readiness and interests to complete the projects they
are involved in, especially considering the effects of
the war in Ukraine.
ORGANISATION’S CAPABILITIES
An organisation’s competence and ability to function
as a licensee may be compromised by dysfunctional
management, failed reaction to changes in the
operational environment, or a negative atmosphere
of the work community. In addition to the rise of
immediate costs, this may also lead to an increased
likelihood of other risks being realised.
In order to maintain its capability to function as a
licensee, TVO has prepared for the operation phase
of OL3 and for future retirements by recruiting 87
new staff members in 2022 and by maintaining
a comprehensive supplier chain. TVO’s sick leave
percentage was 3.8 and the outgoing turnover rate
was 6.7 percent. To support supervisors’ leadership
on safety leadership has been organised.
Furthermore, TVO has also executed a competence
survey, the results of which are used for personnel
planning. OL3 trainings have continued during 2022.
TVO has undertaken measures to further develop its
work community culture and to strengthen its safety
culture. TVO conducts a personnel survey approxi
-
mately every 18 months, and the next survey is to be
conducted in the beginning of 2023.
FINANCIAL AND LIQUIDITY RISKS
liquidity, market, and credit risks. By diversifying
-
reorganising bilateral bank loans and issuing a new
bond. TVO has reduced market risks by making use
of interest rate and currency derivatives. According
-
nated in foreign currencies will be hedged to the euro
until the maturity date by using derivatives.
Financing costs are impacted by the changes in TVO’s
credit rating and outlooks as well as market changes
to interest rates and corporate loan margins. There is a
This risk has been analysed through various scenarios
based on the changes in the average interest rate and
margin of TVO’s loan portfolio. If the risk is realised,
the consequences include an increased cost of
sources in diverse ways. In addition to the interna
-
tional capital market, the Company also acquires
institutions. Credit ratings play a major role in capital
Financing is used to secure TVO’s liquidity under
all circumstances. For this purpose, the Company
various revolving credit facilities and liquid assets.
It is TVO’s basic principle to acquire about three
market and one quarter from its shareholders. TVO
separate projects.
TVO’s operations has remained strong also in 2022.
-
of a new bond, and the extension of the shareholder
loan commitment during the year.
INCREASE IN THE COST OF FINAL DISPOSAL OF
SPENT NUCLEAR FUEL
-
mented according to plan, project costs rise, or
the completion of the project is delayed, the cost
management liability of spent fuel.
As risk management measures in 2022, the cost
and commenced, and contracts for the production
RISKS RELATED TO SOCIAL AND PERSONNEL
MATTERS, RESPECT OF HUMAN RIGHTS AND
RISKS RELATED TO CORRUPTION AND BRIBERY
Risks related to social and personnel matters and
the respect of human rights, as well as risks related
to corruption and bribery constitute one area of the
-
cant risks affecting the Company’s operations have
been detected in the aforementioned matters during
2022. The possible risks detected in these areas are
addressed according to the Company’s ordinary risk
management process.
Continuous risk management in these matters is
executed according to the TVO Group’s Code of
Conduct. The internal auditor supervises the imple
-
mentation of the Code of Conduct in the Company’s
operations. The TVO Group has a whistleblower
channel in place, through which incidents perceived
to be against the Code of Conduct can be reported
also completely anonymously. The possible risks are
evaluated in projects and investments where neces
-
sary. Furthermore, the matters are evaluated when
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