Despite the power surplus in the Nordic region, Statkraft is reinvesting NOK 12 billion upgrading the Nordic power plants. This seemingly strange investment plan has its reasons.
A behemoth of a machine is being assembled on the slopes overlooking the Korgen dispatch centre in Nordland County, Norway. A tunnel boring machine, or TBM, is being assembled to drill 12 kilometres of tunnels: a new influx tunnel for the new Nedre Røssåga power plant and a new parallel tailrace tunnel for the Øvre Røssåga power plant.
The TBM is seven metres in diameter, weighs in at 1600 tonnes and gobbles up 600 tonnes of rock per hour. This is the first time such a machine is used in Norway since the development of the Svartisen power plant.
When Statkraft decided to expand the Nedre Røssåga power plant in Hemnes Municipality, it was just one of many investments in Norway in recent years. Many of these have budgets of hundreds of millions. Nedre Røssåga alone will cost NOK 1.7 billion. The development of the brand new Kjensvatn power plant, also in Hemnes, is NOK 360 million.
Nedre Røssåga is the largest of a number of planned renovations of Norwegian power plants in coming years. For instance, the Eiriksdal and Makkoren power plant will be renovated at a cost of NOK 735 million, by replacing three ageing power plants in Høyanger with two new plants, which will increase production by 50-60 GWh annually.
The Øvre Røssåga power plant will undergo a complete overhaul at a cost of NOK 400 million, which the electro-technical facility at Tysso II will be renovated at a cost of NOK 115 million. In addition to these projects, there are numerous other major and minor renovations and maintenance projects planned.
Reinvestment costs in Norwegian and Swedish hydropower will increase significantly in the years ahead. In 2014 alone, Statkraft will be reinvesting about NOK 2 billion in Norway and Sweden, and the annual amount will increase towards NOK 2.8 billion in 2016. In total, around NOK 12 billion will be reinvested during the period from 2014 to 2018. In Norway, the annual maintenance budget, which includes projects with budget of less than NOK 300 million, will increase almost 40 per cent from 2014 to 2016. From 2016 to 2020, the costs will total around NOK 1.25 billion per year in Norway.
In other words, major renovations will come in addition to this, including dams, which carry a particularly large cost for Statkraft. Due to climate change and new safety requirements, several dams must be reinforced, such as the Tunhovd dam, which will be renovated at a cost of NOK 166 million in 2012 to 2013.
The era of major hydropower developments is over. Instead, Norway faces a time when many power plants are ageing. The vast sums now spent by Statkraft are not about creating something new, but keeping the existing plants running.
Both Nedre Røssåga and the other planned projects are carried out within the existing license framework. Many of Statkraft's hydropower facilities in Norway and Sweden are ageing, and their average age now is 45 years. When a hydropower plant turns 50, it is ready for retirement, from a technical viewpoint.
"We're entering a period where power plants from the 1960s are nearing their 50th anniversary. The 60s was the decade with the most hydropower developments in Norway. So when so many plants are ageing, we're entering a period of many major renovations," says Erik Høstmark, head of the Asset Ownership unit in Power Generation (PG) in Statkraft.
One example is the Aura power plant, which entered operation in 1953. Over the past 10 years, the dams and power facilities have been upgraded at a cost of almost NOK 600 million. Høstmark's unit is in charge of coordinating the priorities in PG's renovation portfolio. An ageing power plant portfolio does not only require extensive rehabilitation, but also several minor maintenance projects.
"We see that the reinvestment levels will increase in the time ahead from what we have experienced in the past few years," he says.
Text: Anders Berg-Hansen
Photo: Simon Skreddernes
The article is also published in Statkraft's magazine People & Power no. 3/2013
12. Dec. 2013
Statkraft's internal magazine People & Power brings interesting stories about the energy sector and the company's business activities. Some of the feature articles in the magazine are presented here on the Stories web page.
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