Statkraft boss on customer acceptance and PPA success

When can you have too much of a good thing? When that ‘thing’ is cheap, clean energy and your population is used to it being plentiful.

That is the problem that Norway is facing and which was highlighted by the chief executive of Oslo-headquartered utility Statkraft, Birgitte Ringstad Vartdal.

In terms of problems, many would argue it’s a pretty good one to have, as it means you have done a lot right to get that the point of abundant green energy, which is very much the case in Norway.

It has the highest electric vehicle adoption rate in Europe – it rarely sells any other type of car – and it has 100% renewable electricity, thanks in significant part to its huge hydropower capacity.

“We heat with electricity: we don’t use gas for anything,” said Vartdal at the Eurelectric Power Summit in Helsinki.

Price sensitivity

But she added this had created new challenges in Norway around customer acceptance and sensitivity to price increase, despite being an extremely wealthy economy.

“One of the challenges that we see now is that we almost take the electricity system for granted and we take the low prices for granted.

“And the fact that we have such a strong system has delayed permitting and delays acceptance for renewables. It’s a bit dangerous to be happy with what you have.

“So now I’m using the rest of Europe as an example to Norwegians of how fast Europe is moving, albeit from a different starting point.”

In case you missed it:
Statkraft plans $7bn investment in Norwegian hydropower

However, an example to the rest of Europe from Norway is the way it utilises power purchase agreements for large energy users.

Vartdal explained: “We do a lot of contacts with industry. We have a market with industry where PPAs work: where we secure long-term contracts – ten to fifteen years – which is a competitive advantage for industry in Norway, where energy cost is a big, big part of their bill.

“So our PPA market works really well, and I think that is something that we need to advocate in Europe: that those who experience volatile prices can have security with PPAs.”

Industrial competitiveness

Last week Statkraft revealed a PPA with Norwegian company Elkem to lock-in electricity supply for a plant in Bjølvefossen which makes foundry alloys.

Elkem’s Inge Grubben-Strømnes said that “access to long-term, competitive power agreements is essential to maintain industrial production and jobs in Norway”.

He added that the deal with Statkraft “strengthens the competitiveness of our Bjølvefossen plant and reflects the close link between energy and industrial development in Norway”.

In April, Statkraft signed two long-term power PPAs with Hydro Energi for a total delivery of 0.9 TWh per year in 2029 and 2030, and 1.3 TWh per year between 2031 and 2038.

Hydro President and CEO, Eivind Kallevik, said the pact “underlines how power and industrial development are closely linked in Norway”.

“Together with Statkraft we are strengthening the long-term competitiveness of our aluminium operations. Aluminium is critical across the economy and access to power at competitive prices is essential to deliver future low-carbon solutions for our customers.”

I visited one of Hydro’s aluminium recycling plants in May in Høyanger, as part of a series of films Enlit filmed in Vestland county to highlight the energy transition in action in Norway.

Hydro is piloting the use of green hydrogen instead of natural gas at the plant and project leader Randi Torkildsen walked me through the process.

To catch that film when it drops, watch this space.