Earnings from wind power at Statkraft were rising rapidly in the third quarter of 2018, albeit from a low level, as Europe’s hydropower giant advances its diversification into wind and solar.

The Norwegian utility has grid-connected all 71 turbines at the 256MW Roan debut project at its 1GW Fosen onshore complex in central Norway – Europe’s largest wind development on land.

Statkraft plans to complete the other projects at Fosen – Hitra II, Storheia, Geitfjellet, Harbaksfjellet, and Kvenndalsfjellet – between the third quarter of 2019 and the third quarter of 2020. The state-owned utility owns 52% of Fosen, with TrønderEnergi and European investor consortium Nordic Wind Power holding the remaining interest.

The Fosen projects are being built with 3.6MW turbines from Danish OEM Vestas.

Fosen is likely to significantly boost Statkraft’s earnings from wind power, in particular as Nordic power prices have been rising steeply, making wind a lot less dependent on the relatively low prices for green certificates in the Norwegian-Swedish power system.

Nordic power prices have risen 77% to an average of €50.50 ($57.60) per megawatt hour in the third quarter of 2018 from a year earlier, Statkraft says. When the utility announced its plans for Fosen in 2016, Nordic power prices were languishing at €18-20/MWh.

But already, with only 0.6 terawatt hours produced from wind power during the third quarter (compared to 12TWh from hydro), Statkraft’s earnings from wind are on the increase.

Gross operating revenues and other income from wind rose to NKr322m ($38.64m) in the third quarter of 2018 from NKr131m a year earlier. Underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) from wind power came in at NKr166m in the period, compared to a NKr7m loss a year earlier.

Investments in new wind capacity stayed high at NKr596m in the third quarter, up from NKr96m in the year-earlier period, mainly due to costs related to the Fosen project.

Statkraft is also expanding wind power outside Norway. The company earlier this month announced its acquisition of a 1.55GW onshore wind portfolio in Ireland and the UK from developer Element Power.

The move is part of Statkraft’s ambition to expand its onshore wind power generation base to 6GW by 2025, while aiming to reach 2GW in solar until then as well. The utility plans to spend NKr10bn ($1.2bn) per year in renewables in the 2019-25 period.

“The acquisitions of hydro and wind projects fit well into Statkraft's growth strategy and strengthen our position as a leading developer of renewable energy,” said chief executive Christian Rynning-Tønnesen.

Statkraft’s overall underlying earnings before interest and taxes (Ebit) rose to NKr2.68bn in the third quarter from NKr1.44bn a year earlier, pushed higher by higher Nordic power prices. Net profit in the period fell to NKr1.27bn from NKr1.78bn a year earlier, affected by unrealised value changes from energy derivatives.

Wind

Statkraft wind profits rise as first Fosen project connected