Statkraft has developed and managed Norwegian hydropower since the business was established in 1895. When the company was established as a state-owned enterprise in 1992, its power production in Norway was 32 TWh. More than 20 years later, the Group is Europe’s largest renewable energy producer, with an annual production of 56 TWh in 2014.
The Group has more than 3300 employees in 19 countries. Statkraft’s position is a result of growth based on Norwegian and international resources and expertise over many years. Statkraft’s ambition is to strengthen its position as a leading international supplier of pure energy.
Statkraft’s number-one priority is sound management of hydropower resources. Norwegian and other Nordic hydropower represent 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 competitive advantage
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 additional return in relation to other companies. Statkraft’s competitive advantage is primarily in related to:
- Unique assets and hydropower expertise
- Integrated business model and market expertise
- 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 plants with low variable costs, long lifespans and low carbon emissions. The hydropower plants are highly flexible and have a total reservoir capacity of about 40 TWh in the Nordic region, which represents a substantial 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.
Statkraft is a major hydropower player and has sound 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’s high level of activity, extensive experience and expertise within upgrades of hydropower plants affords the Group a position where it can cooperate with suppliers to optimise production plants.
Integrated business model and market expertise
Statkraft has extensive experience from a deregulated European power market and has acquired cutting-edge expertise withinmarket analysis, production optimising of flexible power plants and energy trading. Statkraft has a comprehensive system for collection and processing of hydrological and other market data in 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 expertise and assets through an integrated business model where the market analyses form the basis for maintenance planning, power optimisation and market behaviour, both in the short and the long term. The purpose of the business model is to exploit Statkraft’s market expertise in combination with the flexibility of the power plants to produce when power prices are high. Statkraft’s market presence outside of 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
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. The combination of an adaptable and business-oriented organisation, extensive knowledge about the power market, as well as utilisation of interactions across the Group, allows Statkraft to develop new business opportunities. Examples of this include the activities within energy trading and services, which have developed in scope, products and geography.
Attractive positions have been established in emerging markets
Statkraft has succeeded in establishing positions in several emerging markets with high growth in power consumption and good opportunities for hydropower development. Statkraft was an early investor in hydropower in emerging markets. More than 20 years have passed since Statkraft started planning hydropower investments abroad. The goal 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 Group can strengthen its competitive position in emerging markets by using the competitive advantages it has amassed in Europe to an even greater extent.
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, Sweden and the UK. Statkraft has also established a position within offshore wind power in the UK, where the objective is to develop into assuming operatorship for all project phases.
Statkraft will strengthen and utilise the Group’s core expertise, utilise synergies across areas and develop a more international Group 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.
Good project execution is a precondition for sustainable growth in emerging markets. A dedicated unit for projects and development has been established within hydropower in emerging markets. The unit will be a preferred supplier of project and development services to all international hydropower projects in Statkraft and in the reorganised SN Power. This will facilitate more efficient use of expertise across a common project portfolio.
Strategic focus areas
The Group is well-positioned to participate in Europe’s conversion to cleaner power production and to contribute renewable energy 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
European flexible power production consists of hydropower 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 plants through sound operation, upgrades and investments in new capacity within hydropower.
The European power market is undergoing major changes. New players in the power market and more decentralised power production increase the need for expertise-based services as a link between power production and markets. Statkraft will gradually increase the company’s activities within energy trading and services to create new business opportunities in a changing market. In addition, Statkraft aims to develop market operations in selected international markets, such as Brazil and India, where Statkraft owns shares in power production assets.
Over the last few years, Statkraft, SN Power and Agua Imara have established activities within hydropower in emerging markets in selected countries with substantial hydropower potential, and the goal is to strengthen the position in these markets. The Group has ongoing hydropower development projects in Turkey, Albania and Peru.
Statkraft has an extensive portfolio of onshore wind power projects. Statkraft will prioritise completing the projects under construction in Sweden, as well as developing projects at Fosen and in the Snillfjord area in Norway. The development of onshore wind power will continue in the UK. Statkraft is participating in the development of the Dudgeon offshore wind farm along with Statoil and will continue to further develop expertise to assume operator responsibility in the development phase as well.
Within 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 sound development in the partly owned regional companies in Norway within environment-friendly energy. Statkraft will continue its focus on innovation.