Framework conditions

Statkraft's existing activities in Norway are influenced by framework conditions such as tax regulations, changes in the grid tariff regime, revisions of minimum waterflow provisions and other decrees from the Norwegian Water Resources and Energy Directorate, in addition to limitations in the transmission grid, general support schemes and regulations for the industry. The framework conditions can influence Statkraft's production, income and profitability. Correspondingly, Statkraft is exposed to framework conditions and regulations through its activities in the EU and emerging markets internationally.

The EU's renewables directive will have a great impact on Statkraft in the coming years. The directive sets binding goals for 20 per cent of total energy consumption to come from renewable energy by 2020. The European power prices alone cannot make new renewable technologies profitable. Most countries have therefore introduced subsidy systems to ensure growth for these technologies. The subsidy systems are national and vary significantly in both design and subsidy levels. There are two main subsidy systems: power transport tariffs and green certificates. Statkraft is exposed to subsidy schemes for the development of clean energy in a series of markets. Both known technologies such as land-based wind power and new technologies such as offshore wind, wave and tidal power are dependent upon financial support for realisation. Uncertainty related to the future scope and size of the various national subsidy systems is greatly emphasised when making investment decisions and will in the longer term be decisive for the development of new technologies.

The development of Europe's climate and energy policy makes Statkraft's advantages in environmentally friendly and flexible power production increasingly more profitable. This applies to the further development of an integrated European energy market, the European CO2 quota trading system and the goal of achieving 20 per cent renewable energy consumption. More wind power and other non-flexible power production increases the need for flexible production capacity. Outside of Europe, long-term prosperity development and climate challenges will drive demand for more clean energy.