The Statnett Group's underlying profit after tax amounted to NOK 1 230 million in the first half of 2020 (NOK 1 194 million in the corresponding period of 2019).
The Group's operating revenues for the first half of 2020 amounted to NOK 4 776 million, slightly higher than last years' NOK 4 764 million. At the same time, the operating cost increased from NOK 3 036 million to 3 173 million.
"Statnett's revenues are predictable, since the Norwegian Energy Regulatory Authority (RME) sets the upper limit for our permitted revenue," states Statnett Executive Vice President and CFO, Knut Hundhammer.
The increase in the underlying profit is mainly due to higher permitted income, as a result of growth in the Group's asset base, as well as an improved result in net financial items caused by a restructuring of the NordPool group.
Safety is main priority
The Covid-19 pandemic, which has impacted our entire society throughout the year, has also affected Statnett. Most of our staff have been working from home and there has been an enforced focused on HSE throughout the organization.
"We have carried out strict measures in order for us to ensure maintenance of a stable power grid, support the national infection control measures and keep operations running. Statnett has, throughout the period monitored and adjusted our measures, based on these principles, current risk assessments and the guidance of the Norwegian authorities," states Hundhammer.
On Monday July 13, an employee at one of Statnett's main contractors died following an accident involving an all-terrain vehicle. The accident occurred in connection with work on the Lyse–Fagrafjell power line. As a consequence of this incident, Statnett will review all safety routines applicable for employees in connection with the usage of such vehicles.
Major construction projects ongoing as planned
In the first half of 2020, Statnett's investments totaled NOK 3 351 million, compared to NOK 4 288 million during the first six months of 2019. The investments are related to commissioned grid projects, projects under construction, IT and other investments, as well as acquisitions of grid infrastructure from other grid owners. Total investments for 2020 are expected to account for approximately NOK 8.2 billion.
Mild temperatures and high precipitation during the first 6 months of 2020
During the pandemic, operations have been deemed satisfactory throughout the period with a stable system and infrastructure situation in Norway. Trading capacity was lower than normal for the period, mainly due to capacity reductions arising from several unrelated long-term faults, which have reduced capacity on the international connectors and the Oslo Fjord connector.
Despite limitations in trading capacity, Statnett's income from the international connectors has been very high. This was caused by the period's high precipitation and mild temperatures, which have strengthened the hydrological balance. These revenues contribute to lower tariffs for Norwegian consumers.
Reduction in tariffs for next year
Statnett has applied to the Norwegian Energy Regulatory Authority (RME) to reduce its share of the grid tariffs for 2021 by 20–25 % versus 2020 due to the economic impact of the COVID-19 pandemic on Norwegian consumers and industry.
"We are faced with a challenging economic situation around the country. Therefore, we believe it is necessary to acknowledge the difficult situation many of our end customers are facing. We wish to make a contribution towards lower grid tariffs for all end customers in 2021. This will be a gain for businesses and consumers alike," states Hundhammer.
Fast paced electrification increases the demands on power supply going forward
Extensive electrification and more renewable power production to achieve adopted climate goals are the most important drivers of the development of the power system, both in Norway and in its neighboring countries. At the same time, Norway is becoming ever-more closely linked to the European energy system, through joint climate pledges, increased exchange capacity and joint regulations and market solutions.
"We expect both consumption and production of electricity in Norway to increase significantly in the next decades," says Hundhammer. "Electrification is increasing at a rapid rate – even faster than predicted just a few years ago. Our challenge is to ensure sufficient transfer capacity. There are many indications that the 2020's will be the decade of electrification."