Green energy producer invests R$3.7 billion in dams – 12/29/2023 – Market

Statkraft, Europe’s largest producer of renewable energy, is spending 700 million euros (R$3.76 billion) to upgrade its hydroelectric dams, with the aim of helping them withstand more intense rains, highlighting the risks that the climate change poses to energy security and company finances.

The Norwegian state-owned company plans to strengthen more than 70 dams over the next five to ten years, describing the work as “climate change resilience and energy security in practice.”

“We have a number of projects to strengthen our dams so they can withstand extreme rainfall at a level we haven’t had before,” CEO Christian Rynning-Tonnesen told the Financial Times newspaper.

The dams that will be upgraded include the 130-megawatt (MW) Trollheim hydropower plant in southern Norway; the 106 MW Hoyanger plant in the west of the country; and the 500 MW Rana plant in the north.

Hydropower is essential to Norway’s energy system, with almost 1,800 plants across the country accounting for almost 90% of its electricity production.

The feature has helped Norway become a major exporter of electricity to the UK and Europe, with a 450-mile cable between Norway and England opening in October 2021.

But Statkraft said the company has observed an “increase in unexpected heavy rainfall and extreme weather conditions due to climate change,” adding that this is a “very serious development that [..] we need to be especially aware.”

In August, the dam at the Braskeriedfoss hydroelectric plant, owned by Hafslund Eco, in southern Norway, partially collapsed due to heavy rains, which also damaged the plant.

Protecting dams from heavy rainfall is a growing concern 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 overflow gates capable of handling large quantities of water in a short time”, while some dams will be replaced.

As global warming increases, every fraction of temperature increase causes more extreme and frequent weather events, triggering more and more floods and droughts. The increase in global temperature is already at least 1.1°C since pre-industrial times.

Heavy rains are not the only climate change-related threat to hydropower producers. Last year, the Norwegian government raised the possibility of restricting electricity exports after reservoirs dried up due to a lack of rainfall.

Statkraft said the 700 million euros to reinforce the dams was also motivated by “the increased threat of terrorism related to essential infrastructure”, although it declined to provide further details.

The move comes as the company works to expand its renewable energy portfolio and continues to strengthen beyond Norwegian hydropower. This represents the majority of its 19 GW generating capacity, although it also has wind, gas, biomass and solar plants in the UK, Europe and elsewhere around the world.

Statkraft aims to develop 2.5 to 3 GW of new renewable energy capacity per year by 2025, and 4 GW per year by 2030.

In a major deal in November, it agreed to buy Spanish renewable energy company Enerfin, which has a portfolio of around 1.5 GW of wind and solar power in operation or under construction, for 1.8 billion euros.

It’s been a difficult year for many renewable energy developers, with high interest rates and other rising costs derailing some high-profile offshore wind projects.

However, Rynning-Tonnesen stated that Statkraft “always assumed that interest rates would rise again” and did not factor long-term low rates into its projections.

“For us, what has happened over the last two years is that interest rates have risen exactly according to our own assumptions,” he said.

“So we’re not changing any calculations. But it does make us more competitive because others have had to increase their return requirements.”