OSLO May 15 Nordic spot power prices were
expected to fall this year as water reservoir levels remained
high, Norway's Statkraft, the biggest hydropower producer in
Europe, said on Thursday.
Nordic electricity spot prices fell by 28 percent to average
30.2 euros a megawatt-hours (MWh) in the first quarter from the
same period a year ago, driven down by warmer weather denting
consumption and leaving hydro reservoirs above normal levels.
Lower power prices and lower production resulted in
Statkraft's underlying operations (EBITDA) falling by 0.3
billion Norwegian crowns ($50.66 million) to 3.8 billion, 8.2
percent lower than in the first quarter of 2013.
"We expect Nordic short-term prices to be lower than 2013
but... we have Europe's largest reservoir capacity which gives
us a high-level flexibility," said Jens Bjoern Staff,
Statkraft's chief financial officer, when presenting the first
Meanwhile, higher inflows have pushed Nordic forward power
prices lower. The contract for power delivery in 2014 hit a
record low of 28.85 euros a MWh on April 4, and were trading at
29.95 euros on Thursday.
Nordic reservoirs had enough water to generate 45.1
terawatt-hours (TWh) by the end of March or 109 percent of
long-term medium, Statkraft said in its presentation.
Despite robust water reservoir levels, Statkraft's hydro
power production fell by 10 percent in the first quarter,
putting its total output down by 11 percent to 15.4 TWh, equal
to 13 percent of Nordic total consumption in the first quarter.
Asked whether lower production was a deliberate choice in
anticipation for prices to rise later Staff said: "Our huge
reservoir capacity makes us to store water for a long period of
time and then we can produce when prices are better for us."
The fall in hydropower production was partly offset by wind
power generation, which rose by more than 60 percent to 0.5 TWh,
mainly due to an output from Sheringham Shoal offshore wind farm
In April, Statkraft signed a preliminary agreement to
develop 600 MW of wind power in central Norway, and it plans to
make the final investment decision in the second half of this
year on the planned 350-400 MW offshore wind farm Dudgeon, where
Statkraft owns 30 percent and Statoil 70 percent.
"Our wind power projects are on track and our strategy is to
increase wind power production both in the UK and Norway," Staff
WILL KEEP GAS PLANTS
Statkraft's gas-fired generation fell by over 80 percent in
the first quarter to just 0.1 TWh due to competition from cheap
coal. The company said it intended to keep its remaining
gas-fired assets in Germany.
"Our gas-fired power plants are not in cold reserve. They
are amongst one of the most effective in Europe, and they are
ready to run again when the things pick up again... There is a
possible upside here," Staff said.
Statkraft has already closed the 430 megawatts (MW) Emden
and the 510 MW Robert Frank gas-fired plants in the last two
years because German subsidies bolstered low-carbon wind and
solar energy generation, boosting supply and lowering prices.
It is now left with the 800 MW Knapsack I, the 400 MW
Knapsack II, which it only opened last year, and a 200 MW plant
Average spot price in Germany market declined by 21 percent
to 33.5 euros a MWh in the first-quarter, mainly due to warmer
temperatures reducing consumption.
Statkraft's other biggest investment projects include
building two hydro power plants in Turkey with at total capacity
of more than 600 MW and an onshore wind farm in Sweden of 270 MW
($1 = 5.9221 Norwegian crowns)
(Reporting by Nerijus Adomaitis; Editing by Sophie Walker)