A 77% year on year increase in Nordic power prices supported Statkraft's third-quarter earnings as the region's reservoir levels staged a mid-quarter recovery, the Norwegian state-owned power utility said Thursday.
Nordic system spot prices averaged Eur50.50/MWh through Q3, up Eur22 from Q3 2017, while Statkraft's own generation of 13.1 TWh was down 3%.
"Significantly higher Nordic power prices were partly offset by negative effects in energy contracts in market operations," Statkraft CEO Christian Rynning-Tonnesen said.
The quarter saw highly volatile movements in power price spreads due to the strong rise in EU CO2 prices. Costs in Statkraft's market operations increased mainly due to a NOK46-million ($5.5-million) payment to exchange NASDAQ's default fund. This was required after Norwegian power trader Einar Aas' Nordic-German price spread position moved heavily out of the money in September.
Total reservoir levels in the Nordic region were 87% of median at the end of Q3 2018, corresponding to 73.3% of total capacity.
A 200-GWh fall in Q3 hydro production to 12 TWh was partially offset by a 100-GWh increase in wind production to 600 GWh. Gas-fired output was down 300 GWh at 500 GWh.
Statkraft is lead developer of 1 GW of new Norwegian wind capacity across the Fosen cluster of wind farms, due online between Q4 2018 and Q3 2020.
"Statkraft is now entering into a new growth phase with an updated strategy," it said. "The target is to reach a portfolio of 8,000 MW onshore wind and solar power, triple the market access activities and develop district heating plus new businesses with international potential."
The utility plans annual investment of around NOK10 billion in renewables over 2019-25, it said.
The investments would be financed through earnings from existing operations, external financing and partial divestments of shares in completed solar and wind projects.
Net operating revenue for the quarter was up 22% year on year to NOK 5.656 billion. Net profit was down 29% to NOK 1.265 billion. Underlying Q3 operating profit of NOK2.679 billion was up 35% year on year.
