Statkraft: Is Norway's renewables giant close to joining the wind power major league?

Statkraft is already Europe’s largest renewable energy producer, thanks in great part to vast hydroelectric power output in its Norwegian home market, but an investment plan now in motion suggests the utility is en route to becoming the next wind power major, on a par with Iberian titans Iberdrola and EDP, or Danish and German offshore wind giants Orsted or RWE .

The state-owned company — a literal translation of its name is ‘state power’ — has been beefing up its muscle in alternative renewable technologies, both through greenfield development and more recently several gigawatt-scale acquisitions, especially in the wind power sector.

The company’s UK and Ireland chief, Kevin O’Donovan, said he won’t argue “that we’re as big as Iberdrola or RWE.”

“But let's not forget, Statkraft has built the largest onshore operating wind farm in Europe in the not-too-distant past, the 1,056MW Fosen wind farm in Norway,” he pointed out, in a recent interview.

Birgitte Ringstad Vartdal, EVP for the Nordic region, added that the company already is the “largest wind power producer in Norway”.

“If you look at our longer time horizon, our ambition is to also increase the investments in wind beyond this,” Ringstad Vartdal said.

O’Donovan added: “We have almost 450MW of operating wind in Sweden. We have 700MW of operating wind through the various acquisitions we did in Germany with those older operating projects. We just completed the Enerfin acquisition, which includes a large operating portfolio of wind in Spain and Brazil.”

Statkraft will not only acquire the turbine for deployment on a Brazilian repowering project, but will also participate in its development, the company revealed in January.

The target involves annual additions of onshore wind, solar and battery storage capacity to hit 2.5GW in 2025 and 4GW by 2030.

Soaring ambitions

Statkraft hasn’t put out a dedicated target for offshore wind but recently has upped its ambition massively, at least in a select number of countries.

Statkraft also plans to participate in the later auction of the 1.5GW Utsira Nord floating wind zone off the nation’s west coast.

Ringstad Vartdal acknowledged, however, that both pipelines are early stage.

“Most of this will come after 2030,” she commented on the Swedish onshore pipeline – with the exception of the 600MW Hästliden project in northern Sweden, “which is in the consenting process with the Swedish government.”

The offshore projects are in various stages of the development process, she said, adding that “there are some projects that are maturing. But this is again, an investment for the 2030s and a bit more long-term.”

First offshore in Ireland

Statkraft’s most advanced projects in offshore wind are further from home.

The partners previously had revealed plans to develop 2.2GW off the Irish coast at a cost of more than €4bn by 2030.

Statkraft is also gearing up to take part in Ireland’s next 900MW offshore wind tendering round, which will be held under a new 'plan-led' system of designated sites.

The company hopes that its 500MW Bore project, which it has been developing off Ireland’s southeast in the Celtic Sea, will fall within a larger government-designated zone to be auctioned off at the next tender dubbed ORESS 2.1.

"We believe that a lot of our sites that we were developing in the past will fall within those government-designated areas, and then we'll participate in those competitions to secure the development rates in those areas," O'Donavan said.

So far, Statkraft has been cautious with its entry into offshore wind markets. The company, for example, didn’t bid in the UK’s massive ScotWind tender, but O’Donavan said Statkraft remains interested in looking at offshore in the UK as well and will be considering participating in upcoming auctions.

That could include the tender for the UK part of the Celtic Sea.

“We’ll be looking at that very closely to see if we can participate,” he said, adding that “Statkraft is in a very strong position from a balance sheet perspective.”

Statkraft at the end of September last year, also had either built or taken investment decisions for 3.9GW of new capacity, but executives do not hide their desire for more.

“It can be a little bit frustrating because we do want to move quite fast in building out our portfolio and it's other aspects that are actually the thing that slows us down,” O'Donavan said.

Challenges to the proposed development of onshore wind in the UK and Ireland include those posed by “quite slow” planning systems where it can take a few years of environmental assessments and other processes before final approvals, O'Donavan added.

From the start of development until the completion of construction, it often takes five years, but the timeline can also extend to “seven-plus years if there are major planning issues or legal challenges,” he noted.

Despite those headwinds, Statkraft across the UK and Ireland simultaneously has around six to eight onshore projects in construction a year that can range from 20 to 200MW.

Different starting point when compared to Iberdrola

Despite all of Statkraft’s efforts, including the acquisitions of Enerfin, Svevind Nordic and Njordr Offshore, it could take a while before its wind power fleet matches that of its larger peers, experts think.

“But I don’t believe that Statkraft by 2030 will have a similar size in onshore wind as Iberdrola.”

Both companies have similar growth ambitions, he said, pointing to Statkraft’s goal to grow 4GW per year from 2025 on, while Iberdrola said it plans to add 12GW in the 2023 to 2025 period. Both come down to a “4GW run rate”, Hamer said.

“However, the starting point is fundamentally different. As of 2023, Iberdrola has approximately 21GW of operational onshore assets, Statkraft has approximately 2.3GW (including Enerfin assets).

“Under a simplified assumption that Iberdrola continues the tech mix in growth 2023-25, they are adding 1GW per year onshore [wind]. Then it would be around 28GW onshore in 2030.”

Even if Statkraft were to realise half of its planned growth in onshore wind, the company would not be at the size of Iberdrola today by 2030, Hamer reckoned, adding that the Norwegians are strongly focused on northern Europe and Latin America in onshore wind, where growth rates will decline in his opinion.

“Sweden and Finland [in onshore wind] are strong at the moment, but growth rates are expected to decline - probably due to both [market] saturation and resistance” by local communities, he said, while “Brazil is difficult at the moment” as low PPA values there are confronted with rising capex costs and interest rates.

Iberdrola by contrast has the great advantage of being very active in the US, which Hamer called the “greatest growth market in onshore.”

New turbine supplier in Brazil

The announcement of the partnership with WEG is bringing a new spin to Statkraft’s onshore wind expansion, however.

“The step to go deeper into onshore value creation shows a lot about Statkraft's ambitions in the onshore sector,” Hamer said.

“The geographical footprint could also change significantly as a result. But it also shows that people are worried about the limited supplier base and geo risks and want to protect themselves accordingly.”

Shashi Barla, head of renewables research at Danish analyst Brinckmann, agrees.

Statkraft so far has been partnering mostly with Nordex in Latin America, while its pipeline has grown substantially.

“If they were to secure the supply chain and yet lower the costs, they need to harness alternative suppliers beyond the ones available,” Barla said.

“In Brazil, as an example, a market with local content policies, players like Enercon abandoned the market four years ago. Recently Siemens Gamesa and GE have paused or shut down commercial activities in the market.

“So, they are left with Vestas and Nordex. As Vestas is usually expensive, they are partnering with Nordex and in the future with WEG for turbine sourcing.”

WEG’s international ambitions could also prove to be a “win-win” for both it and Statkraft if the Norwegians were to utilise WEG turbines in other markets as well.

Barla thinks that Statkraft has been very Scandinavian-centric, but through its recent market diversification and acquisitions of ‘ready-to-build’ (RtB) assets in Latin America has strengthened its position.

“The RtB assets will also lower the development and financial risks for the company,” Barla said.

Those assets also grant a certain protection against the risk of venturing into smaller economies, markets with unstable policies, and potential retrospective regulatory changes, he reckoned.

In offshore wind, however, it may be very difficult to compete with the established incumbents, Barla thinks. He predicted that the company will target Norway to establish some commercial scale experience and then expand elsewhere Scandinavia, "and then eventually in the next decade build projects outside Europe”.