Statkraft, SCA to build 2.8TWh of wind

Statkraft, the second largest producer of renewable power in Europe, made its first step into wind outside of Norway on Friday. And it was a big step.

The Norwegian power producer announced a $2.4 billion joint venture with Swedish package and paper products company Svenska Cellulosa.

The two companies plan to pump out 2.8 terawatt hours per year of wind power under the new venture, almost three times the current production of wind power in Sweden today.

The turbines will cover 7 sites across northern Sweden.

"This is just the starting point," Ragnvald Nærø, Exec. VP of communications at Statkraft, told the Cleantech Group.

"We have three windmill parks in Norway, and we have pinpointed two countries to look for building more wind parks, that's the U.K. and Sweden," he said. "That's mainly because of the green certificate market they have there."

Nærø said there were no announcements yet on the U.K. front, but said the company is focused on onshore sites.

Statkraft's current wind farms in Norway have the capacity to produce 750 gigawatt hours per year.

Last month, Germany's E.ON (NYSE: EON) also made a move in wind, buying an Iberian wind farm operator as part of its plans to invest $4.1 billion in renewable energy by 2010 (see E.ON going big with wind).

Hydro is also on the table in Sweden, where Statkraft already operates 19 hydro plants. The bulk of Statkraft's current production is based on hydro, with 133 hydro plants in Norway and four in Finland.

Statkraft and Svenska Cellulosa, or SCA, plan to look at hydropower under a separate joint venture. The two companies are looking into producing 630 gigawatt hours per year of new hydropower at four sites in Sweden, but said they are sensitive to today's concerns over the use of hydro.

"We would like to underline that this is just an investigation. It's been part of a process to look at whether it's possible to achieve something which is acceptable for the municipalities in that area, and for the environment, and the economic side," Jørgen Kildahl, Exec. VP of Statkraft, said in a news conference.

Nærø said the companies are not planning to build any dams, but are looking at run of river projects, where the natural flow and elevation drop of a river are used to generate electricity.

The wind and hydro joint ventures, yet to be named, will be 60 percent owned by Statkraft, which is funding the capital costs of the projects. SCA is putting up the land and water rights and will hold 40 percent stakes.

Kenneth Eriksson, president of SCA Forest Products, said in the news conference, "This large scale investment in wind power is the result of the fact that we have 2.6 million hectares of forest. That's a very large area. It's basically 60 percent of The Netherlands, if you want to compare."

The seven wind farm sites range range from 200 to 900 hectares each.

Take a look at Statkraft's turbines >> 

In addition to the joint ventures, Statkraft also made a deal on Friday to supply SCA with 500 gigawatts annually for 10 years, Statkraft's largest industrial contract outside of Norway.

"It's really great now to be able to reach an agreement with Statkraft, which for us is competitive, and which gives us the possibility to develop the operations that we have in the future," said SCA's Eriksson.

And develop it will, with SCA announcing on Friday that it will invest $119.5 million in the expansion of its Ortviken paper mill.

Eriksson said the venture and power supply agreements with Statkraft will go into effect when the mill expansion is complete in May 2009.

While some of the power under the supply agreement will end up coming from the new windmills, Statkraft's Nærø said not to expect any turbines to go up until 2010 or 2011 at the earliest.

The venture works out pretty well for SCA, which could end up getting all of its power from the new project.

"Our needs are roughly three terawatts. So we're going to get pretty close to that, in terms of wind production, from our own land," said SCA's Eriksson.

But Eriksson said there are a few hurdles to go through before the turbines can get up and running.

"First of all, we have to go through the environmental assessment, and here we hope we're going to get pretty rapid, pretty straightforward treatment. We hope we're going to get good support from local authorities and the county boards on these issues."

While the number of turbines could change with the introduction of more powerful generators, the project could consist of around 400 windmills, with 1,100 megawatts of installed effect.