Financial results hit by lower power generation and prices

In 2019, Agder Energi made an underlying profit of NOK 340 million, down from NOK 874 million in 2018.

In order to make the grid in the Setesdal valley more robust, Agder Energi Nett has upgraded the roughly 30 km-long power line between Evje and Bygland. New utility poles have been put up, and new crossarms and lines have been installed. To reduce the risk of trees falling on power lines, the line clearing corridor has been widened from 10 to 16 metres. In addition, around 3.5 km of the line has been laid underground.

“The main reasons why our profit fell were significantly lower hydroelectric power generation and lower achieved prices than in 2018. Agder Energi’s hedging strategy is designed to make dividend payments more stable and predictable over the long term. In 2019, our hedging activities resulted in achieved prices that were lower than spot prices”, says CEO Steffen Syvertsen.

Grid upgrades

The contribution from the Group’s electricity transmission business was once again weak in 2019.

“This was partly due to lower revenues and high line clearing expenses to reduce the risk of trees falling on power lines and causing outages. In 2019 we spent NOK 114 million on extra line clearing”, says Syvertsen.

In addition to its extensive regular maintenance programme, in 2019 Agder Energi Nett took various extra steps to reduce the risk of power cuts. These include an extensive programme of clearing trees along high voltage power lines. Mapping and cutting down trees outside the normal line clearing corridor reduces the risk of power outages. In order to maintain a safe distance between trees and live power lines, a helicopter with a big saw is used to cut down branches that may get too close to the power lines. Drones and laser scanning are also used to identify where repairs are needed to the electricity network, and where there are trees that may constitute a risk to the grid.

Lower electricity generation

In 2019, we produced less clean, renewable hydroelectric power than usual. The amount generated was 7,288 gigawatt hours (GWh), 16 percent less than the 8,686 GWh generated in 2018. This was partly because the year started with lower than normal amounts of water in our reservoirs and drainage basins, as well as less snow in the mountains. The amount of water and snow has since increased, and by the end of the year levels were higher than normal.

“They have continued to increase over the course of the winter, and they are now significantly higher than normal. Assuming normal precipitation levels over the coming months, we expect hydroelectric power generation and turnover from energy sales to be higher this year than last year”, says Syvertsen.

Lower electricity prices

The average spot price in Agder Energi’s region was 38.7 øre per kilowatt hour (kWh), compared with 41.5 øre per kWh in 2018. That constitutes a seven percent fall.

“The mild and wet start to the winter has led to lower forward prices in electricity markets, suggesting that electricity prices will be significantly lower in 2020 than in 2019. However, the Group’s hedging activities mean that its realised electricity prices shouldn’t fall as much”, says Syvertsen.

Record low sickness absence

Agder Energi’s sickness absence rate has remained steady at low levels in recent years. In 2019 it fell to 2.6 percent, the lowest on record for the Group. The sickness absence rate in 2018 was 3.6 percent.

“We take a proactive approach to health and safety throughout the Group and focus on risk-reduction and encouraging everyone to work as safely as possible”, says Syvertsen.

Increasing focus on sustainability

The 17 UN Sustainable Development Goals represent the world’s joint roadmap for eliminating poverty, combating inequality and halting climate change by 2030. Agder Energi has identified six of the goals as being particularly relevant to its operations.

Agder Energi manages natural resources sustainably in its core business, which is generating clean, renewable hydroelectric power. Implementing our chosen sustainability goals throughout the Agder Energi Group is a high priority. More sustainable purchasing and improving our travel guidelines are two examples of measures that should help to reduce the greenhouse gas emissions from our operations.

Link to our quarterly report in English.

Link to our quarterly report in Norwegian.

Contact people:

CEO Steffen Syvertsen, tel. +47 90 92 84 15

CFO Pernille K. Gulowsen, tel. +47 99 15 79 75