Unusually snowy winter and warm spring
The first half of 2018 was characterised by a snowy winter and a dry, warm spring. Security of supply and availability of flexible consumption were reduced in some parts of Norway during particularly cold periods in the beginning of the year. The heavy snow also resulted in a high number of interruptions for local system operators. A precipitation decline on 24 TWh in the last part of the period and a mean temperature several degrees Celsius above normal in May resulted in reservoir levels at 61.7 percent, 6.4 percent below median, at the end of the period.
Despite this Statnett assessed the power situation as normal and the operation conditions as satisfactory first half year as a whole. There were many planned outages and disconnections, especially during the last part of the period. Among other things, there have been many disconnections due to construction work in the southern part of Western Norway (Western Corridor) and in Eastern Norway.
Solid progress in construction projects
While high levels of snow in the winter also delayed the start of the construction season, the Group still made good progress on its construction and maintenance projects and expects to catch up on the delays in the second half of the year. In the first half of 2018, Statnett invested a total of NOK 6,259 million, compared with NOK 4,074 million in the first six months of 2017. Total investments for 2018 are expected to come in at around NOK 12.5 billion.
Activity levels were high in the Western Corridor, and the company has started to commission new infrastructure and power lines. In Central Norway, more than 60 per cent of the line between Namsos and Surna has been completed. In the Northern Region, several substations for the power line between Ofoten and Balsfjord have been completed. Cable-laying between Filtvedt and Brenntangen in the Inner Oslo Fjord was completed before summer, and in Oslo, tunnel works between Smestad and Sogn have started.
Solid financial performance in the first half
Statnett had an underlying profit after tax of NOK 1,063 million for the first half of 2018 (NOK 859 million in the corresponding period in 2017). The increase in the underlying result is mainly attributable to higher permitted revenue in 2018, primarily as a result of a higher asset base in the Group. The underlying result is based on regulated permitted revenue, while the reported result will vary depending on established tariffs and congestion revenues.
The consolidated reported profit after tax for the first half of 2018 came in at NOK 1,033 million (NOK 550 million). The increase in the reported profit is mainly attributable to higher tariff revenue. However, this increase was partly offset by higher system operating costs and an increase in transmission losses. The increases are due to rising power prices as a result of the unusual climate. In addition, operating costs increased due to higher activity levels throughout the Group, however depreciation and amortisation were lower compared with the previous year, which featured an extraordinary charge.
Zero tolerance for accidents
The Group has a zero tolerance for accidents and has set itself the ambitious target of becoming a leader in HSE among European TSOs. For the past two years, Statnett has implemented a strategic initiative to prevent serious HSE incidents. The "SAFE Programme" have involved all employees with the purpose of establishing a common safety culture in the company. K4 was concluded in the first half of 2018 and has achieved the targets that were adopted when the action plan was established. A number of processes and work procedures have been established or improved. This have made permanent changes to significant improve the personal security in the group.
Measures for increased efficiency
Statnett has an extensive efficiency-improvement programme and has set a target of increasing efficiency by 15 per cent between 2013 and 2018. Results are being realised on an ongoing basis, and cost forecasts have been adjusted downwards in several construction projects thanks to efficiency improvements. So far, the programme mainly have given results in accordance with the expectations. The company is carrying out further work to establish new efficiency-improvement targets and measures. This includes efficiency indicators that will contain more comparisons with other companies.
Download the interim report here
Contact person at Statnett:
Knut Hundhammer, Chief Financial Officer
Mobile: +47 901 65 299