A strategic hydropower bet from Hydro signals big industrial implications
With two decades in the decision-making process, Hydro has now finally made its decision to proceed with the investment decision for the most extensive hydropower development in 20 years. The Illvatn pumped storage power plant, located in Norway’s Lustre Municipality, will commence its construction in November and is expected to kick-start its operation by 2030.
When talking about investment, numbers always take the centre stage and Hydro is also giving a total of NOK 2.5 billion (USD 247.5 million), making it an essential aspect of the construction. In consideration of the firm's cash flow tax scheme, which is for the hydropower projects, it expects the total investment may come down to NOK 1.2 billion (USD 119 million) after the tax.
Kari Ekelund Thørud, Executive Vice President of Hydro Energy, stated, "Renewable energy has never been more important. We are now making the largest investment in our hydropower portfolio since the development of the New Tyin power plant in Årdal in 2004. The Illvatn pumped storage plant will contribute increased energy production, reservoir capacity, as well as installed power capacity from our facilities in Fortun. As we take this major step, our ambition is a net-zero loss of prioritised nature. With this, we are setting a new standard for our hydropower development."
Adding capacity while improving balance across the power system
The firm's new investment in this plant makes it hard to ignore the tremendous impact it is about to make from 2030. The plant is set to deliver nearly 107 GWh of renewable power annually. The measured output of the firm will be directly channelled to the firm's overall aluminium operations.
This new plant is set to pump water from the reservoir located in Fivlemyrane, which is 1,018 meters above sea level, and send it to the Illvatn reservoir, which is 1,382 meters above sea level. The investment for the construction will also extend to developing a new tunnel as well as expanding the reservoir capacity with the support of the lowered minimum regulated water level in Illvatn. This way, the firm ensures that the waters which are lost during the summer will be pumped to Illvatn. In the Fortun system, the chances of water loss will be reduced with increased production during the winter times, when the power demand is actually high.
The firm will be building 13-kilometre power lines stretching from Fivlemyr to Sveinsøystølen with 48 power towers, which will be built using aluminium. With this latest investment, the company is developing a new sustainable approach to uplift the power grid development by replacing the traditional composite and steel with aluminium.
Power that is designed to advance industrial development
Factors like the incorporation of emerging technologies and having greater access to renewable energy are paving a clear path for the Norwegian industries to lead in the global context. However, to achieve the goal of reduced emissions within the existing industrial plants, the country urges the need for wider renewable power sources. By keeping this in mind, Hydro's latest investment in the power portfolio in Illvatn will be a greater supporter in supplying adequate renewable energy for producing aluminium in the country.
Kari Ekelund Thørud, Executive Vice President of Hydro Energy, stated, "We need to develop more power and grid infrastructure to secure jobs, new industry, and welfare. As a major industrial player, we want to contribute to building out this power. Increased and more flexible hydropower production is an important and integrated part of our efforts to ensure power at competitive prices for Hydro's Norwegian aluminium plants."
That being said, the firm is roaring towards expanding the aluminium production in Norway, where, in comparison to the worldwide averages, it has lowered its carbon footprint by 75 per cent. The Illvatn project will strengthen the company's long-term renewable power base as it works toward that goal of producing zero-carbon aluminium by 2050.
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