Norwegian state-owned Statkraft will spend €700mn upgrading infrastructure to help it withstand heavier rains.
Europe’s biggest renewable energy producer Statkraft is spending €700mn upgrading its hydropower dams to help them withstand heavier rains, highlighting the risks posed by climate change to energy security and companies’ finances.
The Norwegian state-owned company said it plans to strengthen more than 70 dams over the next five to 10 years, describing the work as “climate change resilience and energy security in practice”.
“We have several projects to strengthen our dams so they can be resistant to extreme rain to an extent we have not had before,” chief executive Christian Rynning-Tønnesen told the Financial Times.
Dams set to be upgraded include the 130 megawatt Trollheim hydropower plant in southern Norway, the 106MW Høyanger plant in the west of the country, and the 500MW Rana plant in the north.
Hydropower is essential to Norway’s energy system, with almost 1,800 hydropower plants around the country accounting for almost 90 per cent of its electricity production.
The resource has helped Norway become an important exporter of electricity to Britain and Europe, with a 450-mile cable between Norway and England opened in October 2021.
But Statkraft said the company had observed an “increase in unexpected heavy rains and extreme weather due to climate change”, adding this was a “very serious development that [ . . .] we need to be especially aware of”.
In August, the dam at the Braskeriedfoss power plant, owned by Hafslund Eco in southern Norway, partially collapsed in heavy rains, while excess water also damaged the power plant.
Protecting dams from heavy rains is a growing focus for hydropower operators: several dams in France have been equipped with special systems to help them release water.
Statkraft said its work includes building “new spill-gates which are able to handle large amounts of water in a short amount of time”, while some dams will be replaced.
As global warming increases, each fraction of a degree of temperature rise causes more extreme and frequent weather events, exacerbating floods and droughts. The global temperature rise is already at least 1.1C since pre-industrial times.
Extreme rains are not the only climate change related threat to hydropower producers, last year the Norwegian government raised the prospect of curbing electricity exports after dry weather depleted reservoirs.
Statkraft said the €700mn of work to reinforce the dams was also driven by the “increased threat of terrorism related to critical infrastructure”, though it declined to give more details.
It comes as the company is working to expand its renewables portfolio and continue branching out from Norwegian hydropower. This accounts for the bulk of its 19GW of generation capacity although it also has wind, gas, biomass and solar plants in the UK, Europe and elsewhere in the world.
Statkraft is aiming to develop 2.5-3GW of new renewable energy capacity a year by 2025 and 4GW a year by 2030.
In a major deal in November, it agreed to buy the Spanish renewable energy company Enerfin, which has a portfolio of about 1.5GW of wind and solar power either up and running or being built for €1.8bn.
It has been a tough year for many renewables developers, with high interest rates and other rising costs derailing some high profile offshore wind projects.
However, Rynning-Tonnesen said Statkraft had “always assumed that interest rates would come up again” and did not factor long-term low rates into its projections.
“For us, what has happened over the past two years is that interest rates have come up to exactly our own assumptions,” he said.
“So we are not changing any calculations. But it makes us more competitive, because others have had to increase their return requirements.”
© The Financial Times Limited 2024.
All Rights Reserved. Not to be redistributed, copied or modified in anyway.
Money.it has hosting rights to certain limited Financial Times articles. This is not a live feed of Financial Times content.
