The underlying result is based on the regulated permitted revenue, whereas the recorded result will depend on stipulated tariffs and congestion revenues. The difference, referred to as higher or lower revenue, will level out over time through adjustment of tariffs, ensuring that Statnett's accumulated revenue corresponds with the regulated permitted revenue. The recorded profit after tax for the Group was NOK 550 million in the first half of 2017 (NOK 463 million).
The Group's operating revenues for the first half of 2017 amounted to NOK 3 682 million, compared to NOK 3 225 million for the same period in 2016. The increase in operating revenues is mainly due to increased tariff revenues. Tariff revenues from fixed tariff components have increased as a consequence of a change in tariff rates for consumers based on an increase in Statnett's permitted revenue, whereas tariff revenues from energy components have remained the same.
The Group's operating costs totaled NOK 2 741 million in the first half of 2017 (NOK 2 423 million). The increase in the first half of 2017 was caused by increased depreciation as a result of the increased asset base and a reduction in estimates for residual values, as well as higher other operating costs due to the increased activity in the group.
The Statnett Group invested NOK 4 074 million in the first half of 2017, compared to NOK 3 123 million in the first half of 2016. The Statnett Group expects to invest a total of NOK 10 billion in 2017.
Statnett's higher/lower revenue
Statnett's operating revenues predominantly derive from grid operations regulated by the Norwegian Water Resources and Energy Directorate (NVE), which stipulates a cap (permitted revenue) for Statnett's revenues. Permitted revenue increased from NOK
3 448 million for the first half of 2016 to NOK 3 940 million for the first half of 2017. In the first half of 2017, revenues from grid operations were lower than the permitted revenue, resulting in a lower revenue for the period. Statnett's lower revenue amounted to NOK 407 million for the first half of 2017 (lower revenue of NOK 314 million for the first half of 2016). Remaining accumulated lower revenue including interest was NOK 63 million at the end of the first half of 2017. The reduction is in line with the plans to reduce accumulated higher revenue over time.
Statnett is currently in a period with a historically high investment level. This includes initiated major investments such as international interconnectors to Germany and the UK, which are important for development and integration of the power system in Northern Europe, the upgrade of the Western Corridor, a new power line northwards from Ofoten, and the wind power-driven development between Namsos and Surna.
Climate policy and declining costs for renewable power generation affects how power is produced and consumed throughout Europe. The development of efficient and automated system and market solutions, and increased Nordic cooperation to manage the balancing of the power system, are crucial initiatives. Therefore, Statnett has developed a new balancing model for the Nordic power system along with Svenska kraftnät.
In 2021, Statnett will have implemented large parts of the planned expansion of the transmission grid, and will enter a new phase. Over the next 10 to 15 years, increased utilisation of existing grids, along with a cost-effective implementation of necessary reinvestments, will be key. Statnett's goal is a levelling of the tariff level for end-users once the major investments have been implemented. Statnett is focusing on maintaining its position as one of the most cost-efficient TSOs in Europe. Technology development and digitalisation make it possible to develop new and more cost-effective solutions. In 2013, the enterprise established an objective to increase efficiency by 15 per cent-by the end of 2018. Based on the results so far, Statnett expects to achieve this goal.
Chief Financial Officer
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