Statkraft Revised strategy and reduced investment plan - December 2015
Statkraft Revised strategy and reduced investment plan - December 2015
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Statkraft overview
Peru
295 MW
Chile
140 MW
Turkey
122 MW
(+ project)
Nepal 23 MW
Philippines
146 MW
Brazil
172 MW
Panama
Zambia
6 MW
Norway
12 988 MW
Sweden
1 511 MW
(+ project)
UK
243 MW
(+ project)
Laos 50 MW
Germany
2 692 MW
India
91 MW
Albania
100 %
owned by the
Norwegian state
A- / Baa1 from S&P and
Moody’s
Installed capacity
18 480 MW1
Power production
56 TWh2
99% renewable
energy
SN POWER/
AGUA IMARA
STATKRAFT
1Statkraft’s direct and indirect ownership in power plants. Excl. 714 MW of district heating capacity. 2Actual production 2014.
Key credit strengths
Strong market position
- A low-cost and flexible generator of renewable
electricity
Stable cash flow
- Long-term industrial contracts stabilize cash flow
Capex flexibility
- Adapt investment program to financial capacity
Owned by the Norwegian state (AAA/Aaa)
- Historically strong support from owner with equity
contributions in 2010 and 2014
4
The “Sysen reservoir” above is part of the Sima power
plant system with an annual output of 2.7 TWh.
Installed capacity is 1120 MW.
Key strategic changes
5
Statkraft will no longer
invest in new offshore
wind projects
Some international
hydropower projects
may be postponed
The investment ambition for 2016-2020 is adapted in
order to maintain Statkraft’s financial solidity
Industry-leading Northern-European hydropower producer with international growth opportunities
6
Production assets with
low marginal cost, high
flexibility
Unique optimizations
skills leading to
premium price capture
Strategy for long-term
contracts
Refurbishments and
upgrades
1
Northern European
hydro generation
player with unique
asset base and
optimization skills
Strong value creation
track record
Low capital intensive
business model to
exploit new
opportunities in a
transforming European
energy market
Value adding position
in European Market
Operations
2
Consolidation focus in
the short term to build
platform for further
value creation
Ongoing capacity
expansions
Attractive platform to
build a sustainable
competitive position in
Emerging markets
3
Consolidation and
ambition to develop
wind power in Central
Norway
xx
4
Utility scale onshore wind power business
Strong O&M
performance
Limited expansions
related to existing
assets
5
Stable cash flow from
district heating in Norway and Sweden
European Flexible Generation
Market operations Hydropower in emerging markets
Wind power District heating
Northern European hydro generation player with unique asset base and optimization skills
7
Low-cost European hydropower production
- Total cash cost in 2014: 6.7 EUR/MWh
- Full cost incl. depreciation: 9.3 EUR/MWh1
Energy management optimised through a unique information base and power market modelling
- Production optimised relative to power prices and water inflows
- Water can be stored for up to three years in some reservoirs
Peak supplier with high degree of flexibility
- 80% of installed capacity within highly flexible hydropower
- Europe’s largest reservoir capacity (~40 TWh)
1 Annual Report 2014: 78 NOK/MWh. Incl. property tax and depreciations, excl. sales costs, overhead, net financial items and tax.
Based on normal production from power plants under own management in Norway, Sweden, Germany and the UK.
Currency conversion is based on 2014 average annual exchange rate.
1
~ 20 TWh sold on long-term contracts
with power-intensive Nordic industry
Corresponding to ~ 40% of Statkraft’s
annual mean power production for
Nordic hydropower
8
0
5 000
10 000
15 000
20 000
25 000
30 000
2015 2017 2019 2021 2023
GWh
Statutory priced lease agreements Statkraft's share of leasing agreements
Long-term market contracts
1
Long-term contracts stabilize earnings
Strong track-record within physical and
financial power trading and origination
Expanding market activities in Europe,
as well as in Brazil and India
Market access for small renewable
producers
9
Value adding position in European Market Operations: Strong results and leveraging competence in new markets
2
Established positions in several promising
emerging markets
- long-term economic growth
- rising energy demand
- increased demand for renewables
Majority of volumes locked-in on PPA’s
Nepal India
Brazil
Chile
Peru
Attractive platform to build a sustainable
competitive position in emerging markets
Industrial approach based on leveraging
strategic core competencies
Consolidation and integration of new assets in
the short term. Economic benefits to be realized
in the medium term.
Some projects may be postponed. Significant
growth opportunities in wind and solar power
generation as well as within hydropower
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3
Utility scale onshore wind power business
Major player in the Nordic wind power market
- 488 MW in operation
- 76 MW under construction
- Major wind farm planned on Fosen and Snillfjord
Business model with low capital requirements in the UK
- 142 MW in operation
- 36 MW under construction onshore Offshore:
- 317 MW in operating (40% share)
- 402 MW under construction (30 % share)
Existing
Under construction
Solid track-record in delivering onshore projects
on cost and time. Assessing profitability of the
Fosen/Snillfjord-project in Mid-Norway
Opportunity to leverage core competences in
emerging markets
Planned Statkraft will no longer invest in new offshore
wind projects. Alternatives for the offshore
assets will be assessed.
4
Stable cash flow from district heating in Norway and Sweden
12
5
Ambition to become among the most profitable
Nordic players
Ongoing construction projects. Limited
expansions related to existing assets going
forward.
1.1 TWh in operation
70 GWh under construction
In operation
Under construction
Investment ambition 2016 - 2020
13
11 10 10 10
Full flexibillity
41 billion
Maintenance and reinvestments
Reserved Decided investments
Investment ambition 2016 - 2020: NOK 41 bn*
Subject to financial capacity and maintaining current ratings
* The investment ambition for 2016-2020 is reduced by NOK 7 bn from previous communicated ambitions.
Norway 42 %
Europe ex Norway
18 %
Emerging markets
40 %
Allocation of investments 2016-2020 Ambition
Hydropower 72 %
Offshore WP
14 %
Onshore WP
11 %
Trading & Origination
2 %
District Heating
1 %
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Technology allocation Geographical allocation
Predominantly Nordic hydropower but increased diversification
Solid base in the Nordic region Estimated annual contribution after committed capex in 2020
Norway 63 %
Nordic outside Norway 11 %
Europe outside Nordic
15 %
Outside Europe 11 %
EBITDA + share of profits
Norway 75 %
Nordic outside Norway 10 %
Europe outside Nordic
7 %
Outside Europe
8 %
Power generation (71 TWh)
15
Strengthening of financial solidity
Divestments in 2014:
- Divested Finnish hydropower
- Reduced ownership in UK onshore wind
- Reduced ownership in UK offshore wind
Equity increase of NOK 5 bn in 2014
Divestment in 2015:
- Sale of small-scale hydropower with booked EV ~1.9 bn (sales premium not disclosed)
Investment plan 2016-2020 adapted to maintain financial solidity
Further measures to be considered in 2016
16
NOK ~4.7 bn
Strong credit ratings
Rating target: Maintain current ratings
Flexible CAPEX-ambition
Equity strengthened in 2014
Divestments completed
Rating impact assessment completed prior to new investment decisions
Historically strong support from owner
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A- / Stable Baa1 / Stable
Summary
A competitive generator of low-cost electricity
- Dominated by flexible hydro power with large reservoir capacity
Strong position in the Nordics
Consolidation and targeted growth for the next two years - European renewable energy production
- Hydropower outside Europe
Balanced investment plan to maintain credit strength
Proven support from Norwegian government through its 100% ownership
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