Norwegian utility Statkraft halts new green hydrogen developments

Statkraft, Norway's largest utility and state-owned company, announced on Thursday that it had stopped developing green hydrogen projects due to higher costs and uncertainty in demand. Statkraft also reported a decline in earnings for the first quarter as a result of lower electricity prices.

The production of green hydrogen using renewable electricity is seen as a key component in the decarbonisation effort to limit global climate change. It is traditionally produced by using natural gas. It can be used as a feedstock for the chemical industry, fertiliser production and in power generation.

Statkraft reduced its ambitions for hydrogen last year. Since then, the uncertainty on the market has grown, and costs have increased, Birgitte Ringstad Vartdal, Statkraft's CEO, told reporters.

She added that there were also issues with regulatory clarity, and a lack in customer demand.

The CEO stated that "we have decided to stop this activity to give priority to our existing activities in mature renewable technology and market activity."

The company's main activities are hydropower, wind and solar projects, and investments in solar battery systems.

Statkraft has 13 green hydrogen project in six markets, at various stages of development. While some projects will be stopped, other may move to a more advanced stage to attract new investors, Vartdal explained.

Statkraft cancelled in April an order with Norwegian supplier NEL to build an electrolyser for a project located in the north of Norway, citing a lack of commercial viability.

Statkraft announced earlier Thursday that its earnings before interest, tax and other expenses had fallen to $9.0 billion crowns (869 million dollars) from $13.5 billion an year ago due to lower electricity prices.

Statkraft reported that the Nordic system price of power, which is the benchmark for the region, was 46.0 euros per Megawatt Hour (MWh) in the first quarter of this year. This compares to 58.3 euro/MWh one year earlier.

The price drop was partially offset by an increase of 2.3 terawatt-hours (TWh) in the power generation, which reached a record level of 21.7 TWh.

(source: Reuters)