Important events
On 31 December 2008, Statkraft took possesion of assets in hydropower, gas power and district heating through an asset swap with E.ON AG. Substantial resources were allocated to the integration of these new power plants in 2009. In total, the transaction increased the Group's production capacity by 2433 MW, or about 20 per cent. In January, Statkraft increased its shareholding in SN Power from 50 to 60 per cent through a combination of a purchase of shares from Norfund and a private placement in SN Power in the amount of NOK 2 billion. The transaction increased the Statkraft Group's production capacity by 621 MW, primarily hydropower.
Hydropower
In June, Statkraft acquired 95 per cent of the shares in Yesil Enerji from the Turkish company Global Investment Holdings. The acquisition gives Statkraft the rights to six hydropower projects in Turkey with the potential to generate a total of about 2 TWh annually.
Three new hydropower plants came online in 2009, Rødberg, Sylsjø and Håvardsvatn, with an annual total mean production of 44 GWh.
Småkraft commissioned seven new power plants in 2009, with a total annual mean production of 106 GWh.
In October, Tata Power and SN Power signed a cooperation agreement with the aim of developing new or buying existing hydropower plants totalling 4000 MW in India and Nepal by 2020. Of this, 2000 MW is expected to be realised by 2015.
In the second quarter, Statkraft established an office in Lyon in France to prepare for many of the French hydropower licenses coming up for tender in the years up to 2030.
Wind power
The Forewind consortium, consisting of the partners Statkraft, Statoil, RWE npower and Scottish and Southern Energy plc., was awarded the Dogger Bank zone by the UK authorities in January 2010. The zone is located in the North Sea, between 125 and 195 kilometres off the coast of Yorkshire, and is the largest zone awarded in the third licensing round for development of offshore wind farms in the UK. The development potential is 9 GW. Statkraft owns 25 per cent of the consortium.
In March, Statkraft purchased 50 per cent of the shares in Statoil's’s project for the construction of the Sheringham Shoal Offshore Wind Farm off the Norfolk coast in the UK. The wind farm, which will be completed in 2011, will comprise 88 turbines and have a total installed capacity of 315 MW. The expected annual production for the project is 1.1 TWh.
Alltwalis Wind Farm in the UK came online in December. The wind farm in Wales has a total of ten turbines and an installed capacity of 23 MW.
The Totoral wind farm in Chile, where SN Power owns 80 per cent, was officially opened in January 2010. The wind farm consists of 23 wind turbines with a total installed capacity of 46 MW.
Two partially-owned companies in the UK, where Statkraft owns 50 and 33.9 per cent respectively, received their licenses in January 2010. The projects have an installed capacity of 18 and 52.5 MW. The licenses are valid and in force.
Statkraft Agder Energi Vind DA in Norway, where Statkraft owns 62 per cent, was granted a license for a wind farm in Rogaland in December. The project has an installed capacity of up to 150 MW. The license has been appealed.
In the fourth quarter, Statkraft SCA Vind AB in northern Sweden was granted licenses for the construction of six wind farms with a total installed capacity of 1140 MW. The licenses have been appealed.
In August, Statkraft and the Swedish forest industry company Södra signed a letter of intent relating to renewable energy. In October, the companies entered into a cooperation agreement, which includes Statkraft buying 90.1 per cent of Södra’s wind power development company in southern Sweden. The portfolio contains projects in various stages of development, with an overall potential of about 634 MW of installed capacity. The first project was granted a license in October, but the license has been appealed.
Gas power
As a result of the merger between Essent and RWE, the power purchase agreement between Knapsack Power GmbH and Essent was terminated on 11 November with effect from 31 December 2009. The intra-group power purchase agreement was also terminated. The terminations will result in streamlining of the operations.
The investment in Naturkraft has been written down by NOK 213 million in total in 2009, and by NOK 610 million since the power plant started production. The write-downs are due to the significantly diminished expectations for future spark spread, the margin between gas and energy prices, and the EUR becoming weaker vis-à-vis NOK. This has partially been offset by the power plant proving to be more flexible than assumed, so that more marginal periods with positive spark spread can be exploited.
German gas power had some downtime in 2009, both scheduled and unscheduled, resulting in relatively low production compared with total capacity. In addition, the low spark spread has contributed to relatively low production from the German gas power plants.
Other technologies
Energy production at Statkraft's first solar park, Casale, started in December. The park, which lies south of Rome, has an installed capacity of 3.3 MW, and can produce 4.5 GWh.
In September, Statkraft and the Italian company Solar Utility SpA signed an agreement relating to the acquisition of eight ready-to-build solar power projects in the Puglia region in south-eastern Italy. The projects, scheduled for realisation in 2010, have a total capacity of almost 20 MW.
The osmotic power prototype at Tofte was officially opened in November. The construction of the prototype demonstrates that the technology works in an industrial plant.
Power agreements
Statkraft and Boliden Odda have entered into a comprehensive agreement that was finalised in the second quarter and became effective as of 1 July. As part of this agreement, Statkraft and Boliden Odda signed two long-term industrial power agreements for the period 2009-2030. The agreement for delivery of around 20 TWh is the largest industrial power agreement Statkraft has entered into since 1998. Statkraft SF owns the power facilities in Tyssedal, but the waterfall rights and power plants are leased out to AS Tyssefaldene on terms set by the authorities. In line with the agreement, Statkraft acquired Boliden’s 39.88 per cent shareholding in Tyssefaldene, which increased Statkraft’s shareholding to 60.17 per cent. The remaining shares are owned by Eramet through the company DNN Industrier AS.
In 2007, Statkraft and the Swedish paper producer SCA entered into an agreement which includes a ten-year power delivery of 500 GWh per year to the paper mill Ortviken Pappersbruk. This power delivery started in June 2009.
The financial crisis in the autumn of 2008 put the negotiations with the power-intensive industry relating to long-term power agreements on hold. With the exception of the agreement with Boliden Odda, no major long-term power agreements were entered into in 2009. However, the demand to cover the demand for short-term trading solutions has been substantial. Statkraft offers a solution to the power-intensive industry to cover this need, called energy service. This solution entails that Statkraft handles the companies’ delivery of spot power quoted on Nord Pool, handling of the companies imbalances vis-à-vis Statnett as well as the need for short-term financial or physical hedging transactions. In Statkraft's total short-term industrial portfolio, eleven power-intensive companies, owning a total of 16 plants, have entered into energy service agreements. The total annual consumption of these companies is about 9 TWh.
In December, the Peruvian authorities and SN Power signed a power sales agreement relating to the delivery of about 9 TWh over 15 years from 1 July 2014. The agreement is contingent upon the Cheves power plant being built and completed by that date. An investment decision is expected by the fourth quarter of 2010.
Other
In September, Trondheim Energi AS and TrønderEnergi AS agreed on the principles for a grid merger in Sør-Trøndelag County. The companies have started commercial negotiations with a shared intention of merging the grid companies Trondheim Energi Nett and TrønderEnergi Nett. The negotiations will continue in 2010.
At the end of 2009, Fjordkraft AS bought 100 per cent of the shares in Trondheim Energi Kraftsalg AS from Trondheim Energi AS.
In November, Christian Rynning-Tønnesen was appointed Statkraft's new President and CEO, to replace Bård Mikkelsen, who will resign in accordance with his employment contract. Rynning-Tønnesen has previously worked in Statkraft and comes from the position of chief executive in Norske Skog. He will become President and CEO of Statkraft on 1 May 2010.