Statkraft AS logo. (Photo Illustration: Pavlo Gonchar)
Europe’s largest renewable energy producer — Statkraft — has been forced to pare back capacity targets as part of a “sharpened strategy” in a more “challenging” energy market.
With its hand forced by rising energy costs and lower electricity prices, the company which is a Norwegian state-owned entity, now plans to install 2 to 2.5 gigawatts of onshore wind, solar and battery storage annually from 2026 onward.
Its previous onshore wind target was slated to be in the range of 2.5GW to 3GW annually from 2025, and 4GW annually from 2030. For offshore wind, Statkraft now plans to develop 6GW to 8GW in total by 2040, down from a previous target of 10GW.
Its hydrogen target has also been cut down to 1GW to 2GW by 2035 from 2GW by 2030. The cuts were revealed on Thursday, following the company’s first annual strategic review with Birgitte Ringstad Vartdal as President and Chief Executive Officer.
Speaking after the revised targets were published, Vartdal, who was appointed as Statkraft’s boss in March, sounded sanguine about the cuts and her company’s wider operating environment, citing a challenging mix of complicated market regulations, delays to support policies and geopolitical uncertainty. All of it at a time of higher technology costs, high interest rates and lower pan-European electricity prices.
“The transition from fossil [fuels] to renewable energy is happening at an increasing pace in Europe and the rest of the world. We have strong competitive advantages and have delivered great value creation over time. Statkraft has in recent years built a strong position and an attractive portfolio of profitable renewable projects,” Vartdal said.
Challenging conditions
“However, the market conditions for the entire renewable energy industry have become more challenging. We are therefore sharpening our strategy to allocate the capital to the most value-creating opportunities with the best strategic fit,” she added.
“Statkraft has a unique and strategic position in flexible production, experience with weather-based systems, and strong analysis and market competencies. Together with a capable and motivated organisation, this makes the company well prepared to grow, build scale and compete in a rapidly growing renewable market.”
The company is not alone in making headline renewable energy target cuts. Denmark’s Ørsted, the world’s largest developer of offshore wind, announced target and investment cuts of its own in February citing similar operating constraints.
In March, French state utility Engie pushed back its target to develop 4GW of hydrogen projects from 2030 to 2035 citing “slow” industry progress. Spain’s Iberdrola declared it would take a more “selective” stance on renewable energy, and increase its focus on electricity grids instead that same month. It also cut its 2030 hydrogen targets by two-thirds.
Iberdrola also clarified that it no longer had an 80GW renewables target for 2030, albeit its current project pipeline of 100GW still stands. Portugal’s EDP then followed suit in May with lower electricity prices across the continent hitting its revenues and capacity targets.
More European renewable energy companies may likely follow suit as a harsher climate continues to clobber the industry across the continent.