Statkraft's values, strategy and important events in 2013
For more than 100 years, Statkraft has been developing and managing Norwegian hydropower. When the company was established as an independent state owned company in 1992, its power production in Norway was 32 TWh. Twenty years or so later, the Group is now Europe's biggest producer of renewable energy with an annual production of 56 TWh in 2013, and around 3500 employees in more than 20 countries.
Statkraft's international position is a result of growth built on Norwegian resources and expertise development over many years. Statkraft's ambition is to strengthen its position as a leading international supplier of pure energy.
The group's core values govern the activities and the employees' behaviour:
Use knowledge and experience to reach ambitious goals and gain recognition as a leading player.
Create values while showing respect for our employees, customers, environment and local communities.
Think new thoughts, seek opportunities and develop and create good solutions.
The core values apply to all employees and anyone else who represent Statkraft.
Strategy and important events in 2013
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 expertise.
- Integrated business model and market expertise.
- Skilled organisation.
Statkraft has production plants with low variable costs, long lifespans and low carbon emissions. The plants have high flexibility and a make up a significant share of the total European reservoir capacity. Sound operations, maintenance and market knowledge, as well as integrated business processes make it possible to optimise power production in relation to short and long term price fluctuations in the power market. The Group has developed a market oriented organisation with extensive experience from deregulated markets. Within energy trading and services, Statkraft has shown that the company is able to adapt to changes in market conditions.
Furthermore, Statkraft has established attractive market positions in emerging markets and wind power, areas which will play key roles in future value creation.
The Group was an early investor in emerging markets, and is now positioned in a number of markets with high growth in power consumption and good opportunities for hydropower development. The commitments are still in an early phase, and the company wants to strengthen its position by utilising the competitive advantages it has established in Europe.
Over time, Statkraft has developed a strong position in onshore wind power. In 2003, the Group opened Norway's 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 has also established a position in offshore wind power in the UK.
The Group is well positioned to participate in Europe's conversion to cleaner power production and to contribute with new, clean production in emerging markets. The following five strategic areas will be prioritised:
- European flexible power production
- Energy trading and services
- Hydropower in emerging markets
- Wind power in Norway, Sweden and the UK
- District heating in Norway and Sweden
Statkraft's strategy is based on an evaluation of the market's attractiveness and Statkraft's ability to create value. The premises for the strategy are that business development, development and operation of power plants, as well as other activities, must be based on sustainable environmental targets and commitment to a safe and healthy working environment. High requirements as regards health, environment, safety and corporate responsibility are the main priorities throughout the organisation. Planned activities in emerging markets contribute to increased challenges in connection with health, environment and safety, as well as the safeguarding of Statkraft's corporate responsibility. These challenges must be handled well over time to create value. The Group works systematically to maintain a high ethical standard and has zero tolerance for corruption.
Statkraft works to strengthen the financial platform and considers new business opportunities that arise as a result of the energy conversion in Europe. The Group will continuously adapt the overall investment level to ensure the company maintains a strong financial position.
In addition to the five focus areas, Statkraft will continue to support sound development in the partly owned regional companies in Norway within environment friendly energy. Small scale power will continue to be developed through the industrial ownership of Småkraft AS. Furthermore, Statkraft wants to strengthen innovation activities to bolster its competitive advantages within the core activities and promote new business development.
European flexible power production
European flexible power production consists of hydropower in the Nordic region, in Continental Europe and the UK, as well as gas power plants. Nordic hydropower represents the majority of Statkraft's revenues and assets. Statkraft's main objective in European flexible power production is to maximise the long term value of the plants through sound operations, upgrades and investments in new capacity in existing hydropower regulating areas.
Important events in 2013 within European flexible power production
The 1960s was the decade with the most hydropower developments in Norway, and many of Statkraft's hydropower plants in Norway and Sweden are becoming old. Statkraft is therefore entering a period with many major rehabilitation projects, and is planning the investment of NOK 12 billion to upgrade Norwegian and Swedish hydropower plants from 2014 to 2018.
In 2013, power plants with a total installed capacity of 620 MW were transferred from Statkraft SF. The transfer will have no consequences for the lease agreements, the lessees or the municipalities in which the power plants are located. The value of the transaction was NOK 3.4 billion.
The German gas power plant Robert Frank was mothballed as a result of the market situation in Europe.
Statkraft bought the remaining shares in the German biomass plants Landesbergen and Emden from E.ON SE.
Energy trading and services
The European power market is undergoing major changes. New players in the power market and plenty of decentralised power production increase the need for expertise based services as a link between power production and markets. Statkraft has shown the ability to create value in this conversion. Statkraft offers services in relation to handling market access for decentralised producers of renewable energy, and 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 shares in power production assets.
Important events energy trading and services events in 2013
Statkraft strengthened its activities within market access for minor renewable energy producers by entering into new contracts in Norway and the UK. In Germany, the Group has retained a leading position in this market, and entered into contracts worth 8500 MW in total at the beginning of 2014.
Statkraft expanded its energy trading in Brazil, and started energy trading in Turkey and India.
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 continued cooperation with Norfund, Statkraft will establish integrated operations in Southeast Europe (Turkey and Albania), South America (Brazil, Chile and Peru) and South Asia (India and Nepal). This will be achieved by building on the Group's expertise, reorganising SN Power and strengthening project execution.
Important events in 2013 within hydropower in emerging markets
Statkraft and Norfund signed an agreement to restructure and extend their cooperation within renewable energy in order to strengthen investments in emerging markets where both the need and potential for developing environmentally friendly energy are great. The objective is to develop a leading international hydropower environment which contributes to development of renewable energy through profitable investments. There are two main elements in the new structure. SN Power’s existing portfolio in South Asia and South America will be concentrated and operationally integrated in Statkraft's portfolio, and Statkraft's shareholding will be increased from 60 to 67 per cent in this part of the portfolio. A reorganised SN Power will have a geographic focus on Southeast Asia, Africa and Central America. Initially, Statkraft and Norfund will own SN Power 50-50. Africa and Central America will be covered through Agua Imara, where BKK and TrønderEnergi are minority owners. A separate development unit is being established in Statkraft. The development unit will be a preferred supplier of project and development services to all international hydropower projects in both Statkraft and SN Power. The agreement also terminates Norfund's option to sell its shares in SN Power to Statkraft, and is replaced by a revised programme between Statkraft and Norfund with sales and purchase options for the shares in the international hydropower business in the period 2017-2023. The agreement is scheduled for implementation in 2014.
Statkraft bought Austrian company EVN’s 50% share in Devoll Hydropower Sh.A., and now owns 100% of the company, which develops hydropower projects in Albania.
Statkraft will apply a focused strategy with a view towards completing projects under construction, realising projects in the Fosen and Snillfjord area in Central Norway and 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 operator responsibility throughout the value chain.
Important wind power events in 2013
Three new onshore wind power plants came online in 2013, Stamåsen (60 MW) and Tollarpabjär (3 MW) in Sweden as well as Baillie (52.5 MW) in the UK. In addition, Statkraft is building another three onshore wind power plants in Sweden and one in the UK.
In Norway, SAE Vind received four wind power licenses totalling up to 660 MW in Sør-Trøndelag County in and one of up to 105 MW Norway in Sogn og Fjordane County from the Norwegian Water Resources and Energy Directorate.
Statkraft also has two projects within offshore wind power. For the Dudgeon project (400 MW), which is being developed in cooperation with Statoil, an investment decision is expected in the second half of 2014. An investment decision for the Doggerbank project, where Statkraft is one of four partners, lies some years into the future.
Statkraft will continue to develop the profitability of the existing portfolio and generate organic growth in connection with existing plants in Norway and Sweden.
Important district heating events in 2013
Statkraft opened a new district heating plant in Ås in Norway (24 MW).
The new bio-boiler in Kungsbacka, Sweden was completed (12 MW).
Alingsås Energi exercised an option to repurchase the production plant in Alingsås in Sweden (85 MW).
Other important events in 2013
In order to free up capital for own investments and pay down debt, Statkraft sold the 4.17% shareholding in E.ON SE for NOK 8.5 billion.
The letter of intent signed between Statkraft and BKK, Haugaland Kraft, Sunnhordland Kraftlag and Sognekraft to make changes in the BKK ownership structure and power plants in Western Norway was terminated in November, as the parties failed to agree.