Investment |
Investments and acquisitions
The hydropower industry has seen a number of acquisitions and investments this year as countries look for more sustainable ways to generate electricity
THE GLOBAL SHIFT TOWARDS sustainable energy sources is driving a surge in acquisitions and investments in the hydropower industry. With governments and corporations increasingly focusing on reducing carbon emissions and meeting climate goals, hydropower has the opportunity to emerge as a key player in the energy transition. This has been recognised by a number of companies as they increase investments in their hydro portfolio. In Scotland for example, the planned 150MW Coire
Above: Emrgy has secured $18 million in funding to deploy distributed hydropower projects and launch US manufacturing
Glas scheme is to receive a £100 million investment boost from developer SSE. Located on the shores of Loch Lochy, between Fort William and Inverness, the project is expected to require a capital investment of over £1.5 billion to construct and, if approved, would be the first pumped hydro storage scheme to be built in the UK in 40 years. It would also more than double Britain’s total current electricity storage capacity – providing vital back up to an increasingly renewables-led system and bolstering energy security. SSE hopes to make a final investment decision on
Coire Glas in 2024, subject to positive development progress and the prevailing policy environment, and to fully construct and commission the pumped storage scheme by 2031. “[The] announcement is a significant and important
milestone on the journey towards delivering the Coire Glas project,” commented Scotland’s Cabinet Secretary for Net Zero, Michael Matheson. “The Scottish government has long been supportive of pumped hydro storage capacity, which we believe will play a key role in the energy transition and is a vital component of a more flexible, resilient and secure electricity supply. However it is critical that the UK Government puts in place the appropriate market and regulatory arrangements to support the industry’s development as a matter of urgency. Only with a supportive policy environment can this sector realise its full potential.” Gregor Alexander, SSE Finance Director, added: ““Our investment commitment
...also signals a significant down-payment by SSE to keep this critical project moving forwards. And our ability to reach a positive final investment decision will clearly depend on the prevailing policy environment for long duration electricity storage and long-term infrastructure projects more broadly. Whilst Coire Glas doesn’t need subsidy, it does require more certainty around its revenues and it is critically important the UK government urgently confirms its intention on exactly how they will help facilitate the deployment of such projects” The next phase of detailed project design and refinement, construction planning and procurement
36 | May 2023 |
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for the project will progress through 2023 and into early 2024. Around half of the £100 million development investment will now be allocated to the pre-construction refinement phase of the Coire Glas project, including a comprehensive package of site investigation works which have now commenced and will be completed later this year. These include the construction of a major exploratory tunnel to enable the team to fully assess the geological conditions that will be encountered in constructing the scheme. Over in Sweden, Vattenfall has recently announced
plans to construct new hydropower stations with a total capacity of 720MW in four locations across Sweden – the company’s first investment in new hydropower in the country in more than twelve years. The potential new hydropower stations could be built starting from 2026 and into the 2030s, with feasibility studies already underway to prepare future planned investment decisions. The aim of these new tations is to meet the increasing demand for fossil-free electricity, which is a prerequisite for achieving climate goals. The hydropower reservoirs are Sweden’s green batteries, and by building new flexibility and control capabilities, a greater share of wind and solar power in the electricity system is also made possible.” The four locations for the potential hydropower stations are in Lake Storjuktan adjacent to Umeälven, Västerbotten, Lule river in Porju’s power station and Harsprånget’s power station, and Lule river in the Messaure power station. Final investment decisions have not yet been made and are subject to positive results in the feasibility studies.
Acquisitions
Investment management company Downing LLP has announced the acquisition of Norwegian hydropower plant Kvævebekken Kraftverk for approximately £3m. The plant, located in the Sirdal region of South Norway, has an annual average production of approximately 5GWh. The deal was made through the renewable energy and infrastructure arm of the Downing Estate Planning Service, and is the second hydropower sector acquisition made by the company in 2022.
Henrik Dahlström, Investment Director at Downing, said the acquisition would help the firm to expand its investment allocations in hydropower and the Nordic region: “Financing newbuild hydropower in the Nordic region is an important part of our strategy as we look to continuously diversify our portfolio by both geography and technology. We look forward to adding further attractive projects to our portfolio in due course.” The Kvævebekken acquisition brings the renewable energy and infrastructure arm of DEPS’s total number
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