Growth and investments: Hafslund Vekst
A word from the Managing Director
2023 was a good year for Hafslund Vekst, which produced solid results, good value development in the portfolio, a host of initiatives and high speed. At the same time, 2023 presented challenges to the profitability of several projects. We organised the business in line with the strategic focus areas of investments – offshore wind, solar and onshore wind, and green cities and technology – and laid the groundwork for targeted initiatives in these areas.
Since ending 2022 with around 30 employees, we have grown to become an outstanding group of almost 50 people who possess extensive expertise and experience – and a great deal of energy. I am proud of everything we achieved in 2023. It has been particularly rewarding to see how we work together across specialist fields and departments – something that highlights our strong culture of collaboration and innovation and ability to get the best out of each other.
We made great strides in our focus areas and have very much started to observe the results of the work on new renewable power generation and green and smart urban development. In 2023, we accelerated our work on solar and onshore wind. Our solar activities involve large-scale parks and solar panels on roofs and we ended 2023 with over 1,000 MW in our portfolio, including seven projects in Southern Sweden that we purchased from Helios Nordic Energy in the summer of 2023. In the area of onshore wind, we have started a partnership with Eidsiva Energi to develop new onshore wind projects with a primary focus on Eastern Norway. We have also established exciting positions in secure and energy-efficient data centres, charging stations for heavy transport, zero-emissions construction sites and flexibility/storage.
The portfolio of ownership and investments developed well during the year. The annual valuation of Eidsiva Energi at the end of 2023 was around NOK 60 billion, which was an increase of almost NOK 15 billion from the previous year. In addition, Eidsiva Energi paid solid dividends throughout the year. Fredrikstad Energi also demonstrated solid performance development in 2023 and Norgesnett is entering 2024 as Norway’s most efficient grid company. Magnora, a company in which Hafslund Vekst invested NOK 100 million in 2022, increased its share price by 56 per cent in 2023.
2023 was also a demanding year. A complex macroeconomic situation with high inflation, increased global unrest and growing uncertainty challenged the profitability of some projects, particularly those within offshore wind. Ørsted made the decision to withdraw from offshore wind in Norway and thereby also withdraw from the Blåvinge partnership. However, while we may be experiencing challenging times, Hafslund has a long-term focus and can stand firm even through turbulent periods.
2024 is certain to offer many new opportunities, more challenges and a great deal of enjoyment. We will do our part to develop solid and profitable projects and companies that all contribute to a world in balance, with renewables. I look forward to the year ahead!
Martin Sleire Lundby
Important events for Growth and investments in 2023
Description of the business area
Hafslund Vekst works with active industrial ownership, company building and new growth initiatives within the renewable value chain. The company has an important task in managing many of the ownership interests in which Hafslund is not the majority shareholder, including ownership in Eidsiva Energi AS and Fredrikstad Energi AS, Hafslund Vekst has a dedicated group for investments and active ownership follow-up. Hafslund Vekst is also working on company building and new business opportunities related to new renewable production, smart, green urban development, and flexibility and storage. Hafslund Vekst has, within a short period of time, become a medium-sized growth company with an extensive portfolio that includes offshore wind, solar power, onshore wind, electric vehicle charging, zero-emissions construction sites, energy storage, business development, consulting and venture capital. Hafslund Vekst’s various initiatives are described below:
Ownership in Eidsiva Energi and Fredrikstad Energi
Hafslund Vekst has a significant ownership interest in grid operations, district heating and broadband as the largest owner of Eidsiva Energi with a 50 per cent stake. Eidsiva Energi owns 100 per cent of Elvia, which is Norway’s largest grid company with about 985,000 customers. Elvia builds, operates, maintains and renews the power grid in Innlandet, Akershus, Østfold and Oslo. Eidsiva Energi also owns Eidsiva Bioenergi, which is Norway’s third largest supplier of district heating and supplies approximately 520 GWh of district heating via its own infrastructure to the private and corporate markets in Innlandet. The Eidsivas portfolio also incudes Eidsiva Bredbånd, which supplies fibre and broadband to 90,000 customers, primarily in Innlandet. Hafslund Vekst also has a 49 per cent ownership interest in Fredrikstad Energi, which owns Norgesnett. Norgesnett builds, operates, maintains and renews the power grid for more than 100,000 customers in seven municipalities in Eastern and Western Norway. At the start of 2024, Norgesnett is Norway’s most efficient grid company.
New renewable energy production
Hafslund Vekst is Hafslund’s most important tool for development of renewable power generation. While hydropower growth projects are naturally placed with Hafslund Eco Vannkraft, growth and development projects within all other technologies are placed with Hafslund Vekst.
In the solar energy segment, Hafslund has signed a major agreement with Helios Nordic Energy AB to acquire seven solar park projects in Southern Sweden, with an expected annual production of over 250 GWh. These projects represent an important step in strengthening Hafslund’s position as a leading producer of renewable energy in the region. The development of the solar parks, which is planned to take place between 2024 and 2028, will be strategically located in areas linked to Southern Norway, and is expected to play an important role in meeting increasing power demand in these areas with energy deficits.
Hafslund is working on developing new projects within onshore wind and is working together with Eidsiva Energi to develop projects with a primary focus in Eastern Norway that will be able to be realised closer to 2030.
Within offshore wind, Hafslund Vekst has been one of three partners in the Blåvinge partnership, together with Fred. Olsen Seawind and Ørsted. Ørsted withdrew from Norway during the fall of 2023 after making the decision to prioritise investments in the portfolio. However, Blåvinge is maintaining its strong ambitions for offshore wind on the Norwegian continental shelf. Following an extensive assessment, Blåvinge chose not to participate in the competitive tender for phase one of the offshore wind development in Sørlige Nordsjø II, and is now looking towards the competitive tender for Utsira Nord and future rounds of licensing.
Hafslund Vekst made the decision together with Cloudberry Clean Energy to consider alternatives to the Stenkalles Grund project in Vänern, Sweden, due to the project’s insufficient profitability.
Green urban development and flexibility
The business developers at Hafslund Vekst place emphasis on identifying and further developing innovative ideas for specific initiatives and projects. Examples of this are the charging company Elaway AS and the solar panel company Enny AS, both of which are the result of the focus on smart, green urban development. This segment also includes Hafslund Rådgivning, which is a specialised advisory group dedicated to emission-free transport and infrastructure, innovative energy systems, zero-emissions construction sites, power grids and strategies for the green transition. The customers are both private and public stakeholders, including Posten Norge and the City of Oslo’s Climate Agency, as well as several municipalities and ports.
During the year, Hafslund Vekst signed an agreement with Telenor, HitecVision and Analysys Mason to develop and build secure and sustainable data centres in Norway. The objective is to realise three data centres in the Oslo region and utilise the excess heat in the city’s district heating network.
Together with Obligo, Hafslund Vekst has also invested in the charging company Fastcharge AS, which focuses on the development of charging stations and infrastructure for heavy transport. The company has set the goal of establishing ten charging stations and one hundred charging points in Southern Norway by 2025.
Within flexibility, a team was also established in 2023 that is working on the development of a smart control system for energy loads. The aim is to be able to effectively manage both higher and lower consumption and production loads in order to optimise the functionality of the electricity grid and generate revenue from the flexibility markets. In connection with this, Enova has awarded Hafslund and Volte NOK 10 million to explore how small and medium-sized businesses can reduce electricity costs while also generating revenue by utilising grid capacity and contributing to balanced operation of the energy system.
Venture
During the second quarter of 2023, Hafslund Ny Energi AS changed its name to Hafslund Invest AS, marking the start of a new strategy focusing on venture investments. Hafslund Invest makes investments in innovative start-up and growth companies that develop climate and environmental technology and are strategically relevant to their ownership groups. (Hafslund Invest AS is owned 65 per cent by Hafslund Vekst AS and 35 per cent by Eidsiva Energi AS). The company’s goal is to be an active owner that creates value and assists its portfolio companies by providing both expertise and resources.
Hafslund Invest’s portfolio has developed positively and now consists of seven venture capital investments, in addition to an ownership interest in Elaway AS. During the year, Elaway carried out a major share issue and brought in the Swiss infrastructure fund SUSI Partners as a new owner. This strategic move opens the door for Elaway to expand its business internationally, especially in European markets. Several of Hafslund Invest’s portfolio companies have had success in winning relevant projects, which has contributed to the growth of both Hafslund and its owners. Examples include Heimdall Power AS, which has entered into a larger project with Elvia, and Over Easy Solar AS, which has installed its solar panel modules on several “green roofs” owned by the City of Oslo.
Hafslund Invest has also made follow-up investments in Smartwatt AS, which specialises in AI-based control of heating and ventilation in commercial buildings, and Over Easy Solar AS, which develops solar panel modules for green, flat roofs. In addition, the company has during 2023 invested in two new companies: Optimeering AS, which develops software for optimisation of power trading, and Utilifeed AB, which provides software and services to optimise resource and energy consumption in district heating networks. These investments underscore Hafslund Invest’s commitment to promoting sustainable and technologically advanced solutions in the energy sector.
Statement of value creation
Hafslund Vekst pursues an ambitious goal of long-term and sustainable value creation in renewable energy. Value creation will be achieved by managing the industrial ownership of the company and through company building and new growth initiatives. These opportunities include a range of initiatives, from direct investments in companies and projects, to partnerships that promote the development of solutions in support of a more sustainable energy system.
The common feature of all Hafslund Vekst’s initiatives is that the objective is to be necessary pieces in the energy system of the future and contribute to a world in balance, with renewable energy. In practical terms, this means that the company’s initiatives are, and must be, a contribution towards solving the climate problem in a financially viable manner, without significantly compromising other sustainability dimensions such as nature, biodiversity and society. In order to solve the challenges and create targeted growth, Hafslund Vekst invests in an extensive portfolio of initiatives with different business models and risks, and investments are made in several parts of the renewable value chain. This ensures there is a robust portfolio of investments with good diversification and a reasonable balance between capital and risk, and a goal of achieving solid value development over time.
Hafslund Vekst’s portfolio of companies and projects has different capital and knowledge requirements. Some investments in mature companies that are now generating sold results and dividends. An example of this is the ownership interest in Eidsiva Energi. The portfolio also consists of a number of companies and initiatives that are in an early phase, which entails that the costs and investments are initially higher than the earnings, and that positive results and cash flow will be somewhat deferred into the future. The goal is to develop a portfolio of ownership, investments and companies that contribute to value creation through value development and dividends. As a result of the portfolio primarily consisting of investments in associates, large parts of the profit contribution from Hafslund Vekst are in the line item “Profit/loss from equity-accounted investees” in the income statement.
| NOK million | 2023 | 2022 |
|---|---|---|
| Revenues and other income | 15 | 5 |
| Energy purchases and transmission | -2 | 0 |
| Salary and other personnel costs | -73 | -23 |
| Other operating costs | -69 | -18 |
| Profit/loss from equity-accounted investees | 599 | 588 |
| EBITDA | 470 | 552 |
| Depreciation and amortisation | 0 | 0 |
| Operating profit (EBIT) | 470 | 552 |
| Net financial items | -338 | -240 |
| Profit before tax | 131 | 312 |
| Income taxes | 87 | 60 |
| Profit after tax | 218 | 372 |
Hafslund Vekst had total operating revenues of NOK 15 million in 2023 (NOK 5 million). Factors such as increased sales from Hafslund Rådgiving resulted in an increase in revenues. Operating expenses ended at NOK 144 million (NOK 41 million). This increase was largely due to greater activity and the number of employees growing from about 30 to just over 50 during the year. The operating profit (EBIT) of NOK 470 million (NOK 552 million) was a decrease of NOK 82 million from the previous year. The increase in costs was offset by an increase in the profit contribution from associates. Results from associates totalled NOK 599 million (NOK 588 million), and were strongly influenced by the solid result delivered by Eidsiva Energi of NOK 692 million (NOK 520 million).
The improvement in the profit from Eidsiva Energi was principally due to reduced tariffs from Statnett, in addition to reduced grid losses as a result of lower power prices. Results from associates were negatively impacted by write-downs. Stenkalles Group owns a licence for the development of a wind farm on Lake Vänern in Sweden. Due to demanding project profitability and high costs, there were write-downs related to Stenkalles Group with a total accounting effect for the Group of NOK 97 million. Furthermore, growth expectations for Volte AS have been downgraded, and previously identified excess value has been written down in connection with this. Total financial expenses amounted to NOK 338 million (NOK 240 million) and primarily consist of interest on internal loans to Hafslund AS. This gives a total profit after tax for Hafslund Vekst of NOK 218 million in 2023 (NOK 372 million).
