Hydro Annual Report 2011b

Operations
Hydro is a global energy player, purchasing and consuming substantial
quantities of energy for its smelters, rolling mills and
alumina refinery operations. We are the largest privately owned
power producer in Norway, operating 17 hydroelectric power
plants with a total installed capacity of approximately 1,850
MW and annual normal production of 9.4 TWh. 1) We also purchase
around 7 TWh annually under long-term contracts,
mainly with the Norwegian state-owned company, Statkraft.
Cost and revenue drivers
Production volumes and market prices are strongly influenced
by hydrological conditions. Seasonal factors affect both supply
and demand. We have a relatively stable cost base and annual
contribution to underlying EBIT, but with the potential for
large quarterly variations due to volatile spot volumes and prices.
Ownership percent
Rated capacity
(MW) (100%)
Sogn (100 %)
Tyin 374
Skagen 252
Fivlemyr 2
Herva 40
Total Sogn 3.1
Røldal-Suldal Kraft (95.2%)
Middyr 1
Svandalsflona 18
Novle 48
Røldal 160
Suldal I 170
Suldal II 148
Kvanndal 45
Total Røldal-Suldal Kraft 2.8
Telemark (100%) 1)
Frøystul 47
Vemork 2) 204
Såheim 2) 187
Moflåt 29
Mæl 38
Svelgfoss 92
Total Telemark 3.4
Skafså (33%)
Åmdal 2) 21
Osen 2) 15
Skree 2) 7
Gausbu 2) 7
Total Skafså 0.1
BusIness DesCrIptIon
Energy
45
There is potential for optimization of our total power portfolio
in the market and in cooperation with smelters.
Competitive strengths
• Substantial power coverage until 2020
• Substantial captive power 2) through equity hydro power in
Norway and natural gas fired power in Qatar
• High share of renewable energy
• Strong earnings with stable and solid cash generation
Norwegian power assets
Our power plants are located in three main areas – Telemark,
Sogn and Røldal-Suldal – and managed from a common operations
center at Rjukan in Telemark. We also have a 33 percent
interest in Skafså Kraftverk ANS in Telemark.
1) Annual hydro power production can vary by as much as 20 percent in either direction, depending on variations in hydrological conditions.
2) Our captive power covers about two thirds of the energy needs of our smelter operations, including Qatalum and the newly acquired Albras smelter in Brazil.
Total 9.4
1) All plants in Telemark are wholly owned except for Svelgfoss, in which Hydro owns 70.22 percent.
2) No reversion.
Normal annual
production (TWh)
(Hydro share) Key characteristics / concession period
• Total catchment area 761 km 2
• New Tyin power station opened 2004
• Concession expiration Tyin 2051 and Fortun 2057
• Total catchment area 793 km 2
• Concession expiration 2022
• Total catchment area 4 108 km 2
• No reversion except for Frøystul 50% 2044,
Moflåt and Mæl 2049