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 4200 employees in more than 20 countries. Statkraft's international position is a result of growth over many years based on Norwegian resources and expertise.
Statkraft's primary priority is sound management of Norwegian and Nordic hydropower which represent the majority of Statkraft's revenues and assets. Statkraft's most important competitive advantage is related to the business model for Nordic hydropower where comprehensive market analyses form the basis for maintenance planning, power optimisation and market operations, both in the short and in the 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 undergone major changes in recent years, with flat demand, increased production from intermittent new renewable generation and low prices. Rapid deployment and reduced costs of new technologies such as onshore wind and solar, driven by direct and indirect subsidies has reduced the profitability of conventional generation capacity. 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 both to consumers and small-scale power producers. In emerging markets, economic growth is expected to result in higher power demand, and several countries have a good basis for developing new renewables, including hydropower.
Statkraft's competitive advantages
Over several years, Statkraft has emphasised developing the Group's strategic resources. These are resources which provide Statkraft with a competitive advantage and therefore form a basis for excess value creation compared to other companies. Statkraft's competitive advantage is primarily 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 the 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, 23% of the total European reservoir capacity. Based on solid market knowledge and integrated business processes, the plants 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 sound expertise in key technical disciplines, especially within operation and maintenance. Statkraft is one of the largest buyers of electro-mechanical hydropower equipment in the world, providing opportunities for economies of scale. Statkraft has considerable upgrading activities, where the company has broad experience and comprehensive expertise.
Integrated business model and market expertise
Statkraft has extensive experience from a deregulated European power market and has acquired cutting-edge expertise within market analysis, production optimisation 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 operations, both in the short and the long term. The purpose of the business model is to utilise 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 to understand the future price formation in the Nordics. This is important to manage the Norwegian hydropower plants in the best possible manner.
Market-oriented and adaptable organisation
Statkraft has developed a market-oriented organisation with broad experience from deregulated markets. Within market operations, Statkraft has shown that the company is able to adapt to changes in market conditions. In 2011, Statkraft started to provide services in connection with handling market access for decentralised producers of renewable energy. The combination of an adaptable and business-oriented organisation, extensive knowledge of the power market as well as utilisation of synergies across the group has generated value.
New business opportuinities has been created even though power prices have been under considerable pressure in Europe, and our market operations activities have expanded in scope, products and geographic extent.
Attractive positions established in emerging markets
The company 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 twenty years have passed since Statkraft started planning hydropower investments abroad. The first countries were Laos and Nepal. 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.
The competitive position in emerging markets by using the competitive advantages it has accumulated in Europe to an even greater extent.
Attractive positions established in wind power
Over time, Statkraft has developed a strong position within onshore wind power and has a substantial project portfolio in Norway, Sweden and the UK. In 2002, 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.
A position within offshore wind power has been established in the UK and Statkraft has been responsible for operation and maintenance for the Sheringham Shoal wind farm since 2014. The Dudgeon offshore wind farm (approximately 400 MW) off the UK coast is under construction in partnership with Statoil and Masdar. Due to changes in the dividend policy for the coming three years, the investment plan has been adjusted and there will be no new investments in offshore wind power. Statkraft will participate in the Triton Knoll project and the development of the Dogger Bank projects, but will not invest in these.
Strategic focus areas
Statkraft's ambition is to strengthen its 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 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 operate, maintain and develop its existing hydropower portfolio to maximise the long-term value of the assets.
- Market operations
The European power market is undergoing major changes. In addition, new specialised companies are entering other parts of the value chain with new value propositions to the customer. Going forward, Statkraft expects to see changes in the value chain and increasing requirements to remain competitive. Statkraft has shown the ability to create value in this transition. 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 markets with expected long-term economic growth, increased need for environmentally friendly energy and substantial hydropower potential. Statkraft aims to strengthen its position in these emerging markets through profitable growth. Statkraft has restructured the group's international hydropower activities and established integrated operations for the activities in South Eastern Europe, South America and South Asia in order to exploit the Group's competitive advantage in connection with operations, maintenance, power optimisation and energy trading. Furthermore, through the company SN Power, Statkraft will develop a portfolio of profitable hydropower plants in Southeast Asia, Central America and Africa.
- Wind power
Statkraft has an extensive portfolio of land-based wind power projects. In the Nordics, the focus is on developing the projects in Fosen and Snillfjord area. Statkraft is currently working with partners in order to increase the profitability of the projects. Within offshore wind power, Statkraft will priorities the Dudgeon construction. The Triton Knoll project will be developed, but Statkraft will not invest in this project or any further offshore wind capacity.
- 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 these five focus areas; Statkraft will continue to support sound development in the partly owned regional companies in Norway within environment-friendly power. Furthermore, Statkraft wants to strengthen innovation activities to bolster its competitive advantages within the core activities and promote new business development.
Increased competitiveness - Strengthen and utilise core expertise
Statkraft will strengthen and utilise the Group's core expertise, exploit 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.
Good project execution is a precondition for growth in emerging markets, while also executing the projects in a responsible and sustainable manner within the framework of strict HSE requirements. 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.