For more than 100 years, Statkraft has been developing and managing Norwegian hydropower and has grown to become Europe's largest producer of renewable energy. The company has about 3500 employees in more than 20 countries. Statkraft's international position is a result of growth based on Norwegian resources and expertise over many years.
Statkraft's primary priority is sound management of Norwegian hydropower resources. Norwegian and Nordic hydropower represents the majority of Statkraft's revenues and assets. Statkraft's most important competitive advantage is in connection with the business model for Nordic hydropower where comprehensive market analyses form the basis for maintenance planning, power optimisation and market behaviour, both in the short and long term.
Statkraft's ambition is to strengthen its position as a leading international supplier of pure energy. Statkraft is well positioned to participate in Europe's transition to cleaner power production and to contribute with new, clean production in emerging markets.
The European power market has been through major changes in recent years, with falling power prices and difficult conditions for European power companies. Statkraft expects that the EU will continue its development towards a low-carbon energy system, but with increased focus on security of supply and energy costs. This transition entails challenges for the established energy companies, but will also create new business opportunities in renewable power production and sale of services and products to small-scale power producers. Continued economic growth in emerging markets is expected to result in higher demand for power. Several countries have a good basis for development of new hydropower.
Statkraft's competitive advantages
Over several years, Statkraft has emphasised developing the Group's strategic resources. These are resources which can give Statkraft a competitive advantage and therefore a basis for excess return in relation to other companies. Statkraft's competitive advantage is primarily in relation to:
- Unique assets and hydropower competence
- Integrated business model and market competence
- Market-oriented and adaptable organisation
Furthermore, Statkraft has established attractive market positions in emerging markets and wind power, areas which will play key roles in future value creation.
Unique assets and hydropower expertise
Statkraft has production assets with low marginal costs, long lifespans and low carbon emissions. The hydropower plants are highly flexible and have a total reservoir capacity of about 40 TWh, which is a substantial share of the total European reservoir capacity. Based on solid market knowledge and integrated business processes, the assets enable Statkraft to optimise power production in relation to short, medium and long-term price fluctuations in the power market.
Statkraft is a major hydropower player and has solid technical expertise within operation and maintenance. Statkraft is one of the largest buyers of electro-mechanical hydropower equipment in the world, giving potential economies of scale. Statkraft has considerable upgrading activities, and the company has broad experience and comprehensive competence in this area. Therefore Statkraft is in a position to cooperate well with suppliers to optimise equipment.
Integrated business model and market competence
Statkraft has extensive experience from a deregulated European power market and has acquired competence within market analysis, production optimisation of flexible power assets and energy trading. Statkraft has a comprehensive system for collecting and processing hydrological and other market data from the European power market. Efficient data collection, models, systems and processes to prepare forecasts and exploit market variations are important competitive advantages. Statkraft makes the most of its competence and assets through an integrated business model where the market analysis form the basis for maintenance planning, energy optimisation and market behaviour, both in the short and the long term. The purpose of the business model is to exploit Statkraft's market competence in combination with the flexibility of the power plants to produce when power prices are high.
Statkraft's market presence outside the Nordic countries provides valuable market information. This is important to manage the value of the Norwegian hydropower plants in the best possible manner.
Market-oriented and adaptable organisation
Statkraft has developed a market-oriented organisation with long experience from deregulated markets. Within energy trading and services, Statkraft has shown that the company is able to adapt to changing market conditions. The most important competitive advantages is the ability to combine a flexible and business-oriented organisation culture with comprehensive knowledge of the power market, utilising synergies across the Group.
Statkraft has created new business opportunities even in times when power prices have been under considerable pressure in Europe, and our activities within energy trading and origination have expanded in scope, products and geographic extent.
Attractive positions established in emerging markets
Statkraft has succeeded in establishing positions in several emerging markets with high growth in power consumption and a favourable and attractive potential for hydropower development. Statkraft was an early mover in investing into hydropower in emerging markets. 20 years have passed since Statkraft started planning hydropower investments abroad. The first countries were Laos and Nepal. The ambition was to apply Norwegian hydropower expertise internationally for profitable business development. Hydropower development has a long-term perspective and Statkraft's involvement is still in an early phase.
Statkraft believes that the company can strengthen its competitive position in emerging markets by using the competitive advantages it has developed in Europe to an even greater extent.
Attractive positions established in wind power
Over time, Statkraft has developed a strong position in onshore wind power. In 2003, the Group opened its first wind farm on Smøla, and has since developed solid expertise in all phases from project development to operations and maintenance.
Statkraft has particularly developed expertise associated with project execution and cost effective operations and maintenance. A large project portfolio has also been established in Norway and Sweden. Statkraft recently received a licence through the subsidiary SAE Vind for the development of new wind farms in the Fosen and Snillfjord area with a planned installed capacity of 600-700 MW.
Statkraft has established a position in offshore wind power in the UK. Statkraft aims to develop to a position where the company can take operatorship for all project phases. In January 2014, Statkraft assumed responsibility for operation and maintenance of the Sheringham Shoal wind farm, and the company has a solid project portfolio going forward through the positions in the Dudgeon and Doggerbank wind farms.
Strategic focus areas
Statkraft's ambition is to strengthen the position as a leading international provider of pure energy. Statkraft is well positioned to participate in Europe's transition to cleaner power production and to contribute with new, clean power production in emerging markets. The following five strategic areas will be prioritised:
- European flexible production
European flexible production consists of Statkraft's hydropower business in the Nordic region, in Continental Europe and the UK, as well as gas power plants. Statkraft will maximise the long-term value of the assets by excellent operations, upgrades and investments in new capacity in existing regulating areas.
- Market operations
The European power market is undergoing major changes. New players in the power market and an increase in decentralised power production increase the need for competence-based services as a connection between power production and markets. Statkraft has shown the ability to create value in this transition. In 2011, Statkraft started to provide services in connection with handling market access for small, decentralised producers of renewable energy. Statkraft will gradually increase the company’s energy trading activities to create new business opportunities in a changing European market. In addition, Statkraft aims to develop market operations in selected international markets where Statkraft owns assets.
- Hydropower in emerging markets
Statkraft, SN Power and Agua Imara have in recent years established businesses in several attractive emerging markets with major hydropower opportunities. Statkraft aims to strengthen its position in these emerging markets through profitable growth. Based on a continued partnership with Norfund, Statkraft aims to (1) establish integrated operations in Southeast Europe (Turkey, Albania), South America (Brazil, Chile, Peru) and South Asia (India, Nepal) by utilising the Group's internal expertise, (2) develop a diversified portfolio with profitable hydropower plants in Southeast Asia, Central America and Africa through a reorganised SN Power, and (3) strengthen project execution.
- Wind power
Statkraft will apply a focused strategy with a view towards realising the projects in the Fosen and Snillfjord area in Mid-Norway, complete projects under construction in Sweden, as well as developing the current market position within onshore and offshore wind power in the UK. Statkraft will continue to develop its expertise in offshore wind power to further develop its expertise to take on operatorship responsibility throughout the value chain.
- District heating
Statkraft will continue to develop the profitability of the existing portfolio and generate organic growth in connection with existing plants in Norway and Sweden.
In addition to the five focus areas, Statkraft will continue to support a sound development in the partly owned regional companies in Norway within environment-friendly power. Small-scale hydropower will continue to be developed through the industrial ownership of Småkraft AS. Furthermore, Statkraft aims to strengthen innovation activities to support its competitive advantages within the core activities and promote new business development.
Increased competitiveness - Strengthen and utilise core competence
Statkraft will strengthen and utilise the Group's core competence, utilise synergies across areas and develop a more international company which adapts to local conditions and cultures. This will strengthen competitiveness in emerging markets through transfer of expertise and simultaneously strengthen the Norwegian business through increased internationalisation.
Satisfying project execution is a precondition for growth in emerging markets, while also executing the projects in a responsible and sustainable manner within strict HSE requirements. A new unit for project execution will be established within hydropower in emerging markets. The unit will be a preferred supplier of project execution services to all international hydropower projects in Statkraft and in the reorganised SN Power. This will facilitate more efficient use of competence across a common project portfolio.