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- Lyse and Hydro will merge their power production assets in the south-west
region of Norway through the establishment of a new company, to include
Hydro’s hydropower assets Røldal-Suldal Kraft (RSK) and the majority of
Lyse’s power production portfolio
- The new company will be called Lyse Kraft DA and have a normal annual power
production capacity of 9.5 TWh, of which Hydro will own 25.6 percent and
Lyse 74.4 percent
- The agreement is expected to bring synergies of approximately NOK 500
million in net present value
As a consequence of the transaction, the RSK assets will not revert to state
ownership at the end of 2022, meaning Hydro can use its share of the power
produced by the new company for aluminum production in Norway.
“This is a great day for the future of Norwegian renewable-based industry. The
agreement is strategically important for Hydro, as it secures the value of our
RSK hydropower assets and contributes to predictability for further industrial
development in Norway,” says Hydro President & CEO Hilde Merete Aasheim.
Hydro will become a larger renewable operator
Based on the agreement, Hydro will remain the operator of the RSK assets and
assume operatorship for Lyse’s fully owned hydropower plants. Consequently,
Hydro will larger power operator and remain the Norway’s third-largest provider
of renewable power, with a combined renewables production of 13.6 TWh in a
normal year. Hydro’s annual production, based on equity shares, will be 9.4 TWh
in a normal year.
Aasheim says the transaction is in line with the company’s strategy to
strengthen its position in low-carbon aluminium and grow in the renewable energy
sector.
“The agreement supports both objectives, as we secure long-term access to
renewable power, and Hydro will become a larger hydropower operator. At the same
time, we secure the value that RSK represents for Hydro,” she says.
Future-proof solution
Lyse will become responsible for the water management and market activities with
a portfolio of 9.5 TWh. The CEO of Lyse, Eimund Nygaard, says the agreement
creates value in several areas.
“The agreement makes Lyse the third-largest power market entity in Norway and
gives us a chance to build an even more competent and robust power management
organization in Stavanger,” he says, adding that the operator agreement with
Hydro will also give economies of scale, increased professionalism and new
development opportunities for the power plants and the employees who will get a
new employer.
“The power sector is changing, and we would eventually risk becoming too small
to run these plants efficiently on our own. When we now join forces, we can make
better use of our combined competences, including in digitalization in a larger
system,” says Nygaard.
Long-term industrial access to power
34 employees will be transferred from Lyse to Hydro, and Lyse’s fully owned
hydropower plants will become part of Hydro’s operator portfolio.
“We look forward to welcoming new colleagues to the Hydro team, and we look
forward to becoming an even larger entity on the southwest region of Norway,
where we already have invested in the world’s most climate and energy-efficient
aluminum production at the Karmøy Technology Pilot,” says Aasheim.
RSK was established in 1963 to supply power to Hydro’s aluminum plant at Karmøy.
In line with the Norwegian rules on license reversion of waterfalls and
hydropower installations, private entities can normally only own up to one-third
of the shares of a company that owns larger waterfalls. In 2016, the Norwegian
government opened for private entities to extract physical power from power
companies to ensure predictability for industrial operations.
“The agreement with Lyse builds on this solution, and I would like to give
credit to Norwegian authorities for providing this possibility, enabling the
agreement with Lyse,” says Aasheim.
Facts about the transaction
- Hydro and Lyse establish Lyse Kraft DA, which will have a normal annual
power production capacity of 9.5 TWh
- Hydro transfers the hydropower assets Røldal-Suldal Kraft (RSK) and receives
25.6% ownership in Lyse Kraft DA
- Lyse transfers its total power production portfolio (except shares in
Jørpeland Kraft) and receives 74.4% ownership of Lyse Kraft DA
- Hydro remains operator of the RSK assets and resumes operator responsibility
for Lyse’s fully owned hydropower plants. Consequently, Hydro will increase
its total operator responsibility of Norwegian hydropower and wind power to
13.6 TWh in a normal year
- Lyse becomes Norway’s third-largest power market entity, with a market
portfolio of 9.5 TWh in a normal year
- 34 employees are transferred from Lyse Produksjon AS to Hydro Energi AS as a
result of Hydro becoming the operator
- The agreement is expected to bring savings totalling a present value of
approximately NOK 500 million in Lyse Kraft DA. These will be realized
through economies of scale and more efficient operations, as well as new
ways of working through digitalization and collaborative solutions in daily
operations and investment projects
- Total savings and synergies for Hydro are expected to amount to a yearly
EBITDA effect of approximately NOK 40-50 million after a few years
- The transaction is expected to close in the fourth quarter of 2020, pending
approval by the Norwegian Competition Authorities
About Hydro:
Hydro is a fully integrated aluminium company with 35,000 employees in 40
countries on all continents, combining local expertise, worldwide reach and
unmatched capabilities in R&D.
In addition to production of primary aluminium, rolled and extruded products and
recycling, Hydro also extracts bauxite, refines alumina and generates energy to
be the only 360° company of the global aluminium industry. Hydro is present
within all market segments for aluminium, with sales and trading activities
throughout the value chain serving more than 30,000 customers.
Based in Norway and rooted in more than a century of experience in renewable
energy, technology and innovation, Hydro is committed to strengthening the
viability of its customers and communities, shaping a sustainable future through
innovative aluminium solutions.
About Lyse:
Lyse is a Norwegian industrial group operating within the business areas of
energy, telecommunications and power grid. Lyse is a substantial national
operator within renewable energy and a national leader within fibre-optic
broadband business.
Lyse has built the country’s most varied and complete infrastructure for
electricity, bio- and natural gas, district heating and fibre-optic broadband. A
high degree of availability and distribution stability is a priority.
The company’s shareholders are 14 municipalities from Southern Rogaland. The
shareholders have a long-term industrial perspective on their investment and
expect that the company has a positive impact on its local community with a
strategic focus for the region and satisfactory profitability.
Investor contact:
Line Haugetraa,
Head of Investor Relations,
+47 41406376
line.haugetraa@hydro.com
Press contact:
Halvor Molland,
Senior vice president, Media Relations
+47 92979797
Halvor.molland@hydro.com
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
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