Hydro and Lyse plan to merge part of their respective hydropower production to create a stronger joint hydropower company.
The agreement secures long-term access to renewable power for Hydro's industrial operations in
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% and Lyse 74.4%.
The agreement is expected to bring synergies of approximately
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
'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
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 become a larger power operator and remain the
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
'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
Thirty-four 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
RSK was established in 1963 to supply power to Hydro's aluminum plant at Karmoy. 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.
About
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 Roldal-Suldal Kraft (RSK) and receives 25.6% ownership in Lyse Kraft DA
Lyse transfers its total power production portfolio (except shares in Jorpeland 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
34 employees are transferred from
The agreement is expected to bring savings totalling a present value of approximately
Total savings and synergies for Hydro are expected to amount to a yearly EBITDA effect of approximately
The transaction is expected to close in the fourth quarter of 2020, pending approval by the Norwegian Competition Authorities
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
Contact:
Line Haugetraa
Tel: +47 41406376
Email: line.haugetraa@hydro.com
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