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Norway’s Statkraft aims to increase electricity production in Chile

InvestChile - September,30,2020

The state power company has embarked on an active quest for projects in Chile, particularly wind and solar projects, in order to “gain scale”, says its general manager, María Teresa González.


Norwegian state power company Statkraft has recently defined its strategic plan for 2020-2026. It includes an ambitious plan for the company’s growth in Chile: a tenfold increase in energy production in order to gain scale and, in this way, improve its results.

The company entered the Chilean market six years ago. It currently operates a 52-megawatt run-of-river hydroelectric plant on the Pilmaiquén River and has a stake in two other plants under a joint venture with Pacific Hydro. It is also building a second hydroelectric plant, Los Lagos, on the Pilmaiquén River, with a capacity of just over 50 MW. This plant, which represents an investment of US$173 million, will start operation at the end of 2023. In addition, the company has environmental approval for three wind farms of which it expects to begin construction next year. Together, they total 100 MW and will imply an investment of US$180 million.

Two years ago, Statkraft embarked on a very aggressive process of international expansion, focusing on non-conventional renewable energies. The 125-year-old company operates in 17 countries and has an installed capacity of 19,000 MW, plus a virtual plant in Germany that represents a further 12,000 MW.

The company’s general manager in Chile, María Teresa González, took up her position in January, just before the pandemic. “It is a challenging context, but we have been functioning quite well. One of the challenges I set myself when I took up my position was to work on our strategic planning for 2020-2026, with a view to our growth plan, and that process has been very positive,” she says.

The strategic plan essentially involves increasing the company’s current power production tenfold to 2.5 terawatt hours (TWh) and, together with this, making the organizational adjustments required to give the company a more flexible structure. “We call this process ‘Tremün’ which, in Mapuche, means to grow, but in a very broad sense: obviously, to grow in installed capacity, but also as an organization and for the people who are part of it to grow too,” says the executive, who is a journalist by profession.

The company’s expansion already started last year, she says. Both its workforce and operations have doubled. “We are firmly convinced that renewable energies are the solution for combatting climate change and that moves us deeply. We also feel very privileged to be able to work in a company that continues to pursue its expansion plans, despite the current disruptive scenario,” she says.

- What kind of projects are you looking for? What is the aim?

- We want to gain scale in Chile, to become an important actor and, to that end, we are looking at initiatives in different stages of development, although with a preference for those that are not yet under construction and, especially, wind and solar projects. It may also be that we develop them from scratch. We are looking at different alternatives.

The goal is to increase our power production tenfold in the next six years. Of course, generators have different capacities so it is not a goal that is defined in terms of number of projects. What we do need is good projects. We want to reach 2.5 TWh.

- What level of investment are you estimating?

- We do not have a budget allocated. At Statkraft, the 17 countries compete for resources so we need to have good projects in order to seek financing from our headquarters.

- And in terms of results, what is the goal?

- Obviously, a strategic plan aims to create value for the organization. That is what we are looking for and is why we must gain scale. We do not set an investment target, we set a production target because that is what will give us the scale to generate the expected results. We are making a profit now, but not what we hoped for.

- What is the plan based on? What are the projections for energy demand in Chile?

- Chile is an attractive country because of its vocation for clean energies. It is one of the pioneers in declaring its aim of being carbon neutral by 2050 and we believe that this climate ambition is very much in line with who we are at Statkraft. We are convinced that renewable energies are the solution to climate change and that is at the core of the company; the idea is to advance not only in decarbonizing energy, but also in electrifying energy.

- Are you concerned about the economic and political situation? The outburst of social unrest and the upcoming constitutional change?

- Chile has had a tradition of regulatory stability and civility that sets it apart and that is one of the reasons why transnational companies invest here. Investment, especially in the energy industry, has not only not decreased, but is increasing significantly. Moreover, our business is long-term and that is very important. There is, indeed, concern, especially in the industry, that regulatory stability be maintained, but one episode does not change our compass. Of course, we do hope that all these processes take place in a context of peace and dialogue and we believe there is an opportunity for a good process.

- And do the regulatory changes seem appropriate to you?

- We are following the regulatory discussion carefully. This is an industry in a process of transition and adjustments are, therefore, required. However, we believe that, in Chile, in general, regulation is tremendously mature and we are not fearful that there will be negative changes for the industry.

- Does it promote renewable energy?

- Chile’s climate ambition, which is obviously linked to the development of renewable energies, is one of the elements that make this country such an attractive place to invest.

For more news about projects in Chile’s electricity sector, see this article.

Source: Diario Financiero



Topics: Energy



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