Green energy giant looks beyond Norway for growth

Nora Buli, Reuters

Norwegian state-owned utility Statkraft, which has quietly become Europe’s largest renewable energy producer, faces the challenge under its new CEO of balancing ambitions for global growth with financial restraint and calls to go public. On Monday, Statkraft’s board announced Birgitte Ringstad Vartdal, its head of Nordic operations, would take on the top job from April 1. The unlisted company she will head had a market value of 388 billion crowns ($36 billion) at the end of last year, according to the company’s calculations based on standard market metrics.

That makes it Norway’s second-biggest company. Only oil major Equinor, with a market capitalisation of 843 billion crowns, according to LSEG data, is bigger.

Ringstad Vartdal’s takes charge after a fall in energy prices lowered profits that had reached record highs, and as the expansion of renewable output has encountered obstacles, including supply chain problems and political resistance to efforts to tackle climate change. She said she would continue the company’s “solid strategy” to develop more hydropower, wind and solar. Statkraft “has an important mandate to develop more renewable energy,” she said, saying more was needed in Norway and in the rest of the world.

The company has a goal to develop by 2025 2.5-3 gigawatts (GW) of new capacity, including battery storage annually, rising to 4 GW in 2030. Its predominantly renewables-based power plant portfolio at the end of 2023 had capacity of 20.7 GW, of which 13.3 GW was in Norway. Statkraft dates back to 1895, when Norway began harnessing its hydropower resources, making it prosperous long before the country found oil and gas in the late 1960s. Since 1992, Statkraft has operated in its current form and its renewable capacity is still dominated by hydropower. It has, however, increased its presence in other markets and expanded into wind and solar power.

Ringstad Vartdal succeeds Christian Rynning-Toennesen, who oversaw Statkraft’s expansion abroad during his 14 years in charge. He announced he would step down last year, and while not seeking another CEO role, said he did not plan to retire.

Under his leadership, Statkraft’s reach has grown to India and South America. Brazil, Chile and Peru rank as core markets alongside Norway.

Rynning-Toennesen told Reuters a highlight for him was the purchase of UK-based Solarcentury for 117.7 million pounds ($149.41 million) in 2020, which made Statkraft a major solar developer overnight.

“We also earned the whole investment back in one and a half years by selling off projects that were under development when we acquired the company,” he said.

In another standout deal, Statkraft bought Spanish renewable energy company Enerfin for 1.8 billion euros ($1.95 billion), strengthening its position in Spain and Brazil, while planning to sell assets in non-core markets.

The pressure to streamline the portfolio has intensified after a faster than expected fall in energy prices that hit record highs in 2022 as a result of the disruption caused by Russia’s war on Ukraine. The likelihood is that any expansion will be outside Norway, where the obvious opportunities have largely been taken. In January, it announced it was investing in Norway, but that mostly covers upgrades to existing facilities. The bulk of the new capacity in its 400 projects worldwide is outside its homebase. Ringstad Vartdal told Reuters the focus abroad is on building at scale, which should improve profitability, aided by a drop in the cost of solar power and an expectation that wind power costs will also retreat.

Brazil, where Statkraft is among the top onshore wind developers, is a particular focus. Together with India, another market Statkraft is committed to, it has a growing population and economy as well as a substantial supply chain to serve the renewable industry. “There is also the aspect of that if you want to succeed with the Paris climate agreement, both India and Brazil are completely instrumental for succeeding with the energy transition,” Ingeborg Daarflot, who oversees Statkraft’s international business, said.

As the company’s focus becomes more international, in Norway politicians are among those calling for a possible break-up. “This company is so big and so valuable that how we navigate for the future, maybe we need to look at other options than what we have seen in the past,” said Nikolai Astrup, a lawmaker for the opposition Conservatives who heads up its energy policy. Opinion polls have put the Conservatives in the lead ahead of elections scheduled for 18 months’ time.

Astrup’s proposal would see domestic hydropower resources retained under full state ownership, while all other business would be open to outside investors and eventually listed. Norway’s industry ministry opposes the idea, however, saying the returns from Statkraft’s Norwegian hydropower resources are essential to funding domestic and international growth.

“Today’s model, where there is a high dividend share from the Norwegian hydropower business and a relatively low dividend share from the rest of the business, takes care of this in a good way,” Deputy Economy Minister Tore O. Sandvik told Reuters.