Hydro and Lyse to establish hydropower company Lyse Kraft DAChristian Fernsby ▼ | October 21, 2020
Hydro and Lyse plan to merge part of their respective hydropower production to create a stronger joint hydropower company.
Lyse Kraft Hydro and Lyse
As a consequence of the transaction, the RSK assets will not revert to state ownership at the end of 2022, meaning Hydro can use its share of the power produced by the new company for aluminum production in Norway.
Based on the agreement, Hydro will remain the operator of the RSK assets and assume operatorship for Lyse’s fully owned hydropower plants.
Consequently, Hydro will larger power operator and remain the Norway’s third-largest provider of renewable power, with a combined renewables production of 13.6 TWh in a normal year. Hydro’s annual production, based on equity shares, will be 9.4 TWh in a normal year.
Lyse will become responsible for the water management and market activities with a portfolio of 9.5 TWh.
Facts about the transaction:
- Hydro and Lyse establish Lyse Kraft DA, which will have a normal annual power production capacity of 9.5 TWh
- Hydro transfers the hydropower assets Røldal-Suldal Kraft (RSK) and receives 25.6% ownership in Lyse Kraft DA
- Lyse transfers its total power production portfolio (except shares in Jørpeland Kraft) and receives 74.4% ownership of Lyse Kraft DA
- Hydro remains operator of the RSK assets and resumes operator responsibility for Lyse’s fully owned hydropower plants. Consequently, Hydro will increase its total operator responsibility of Norwegian hydropower and wind power to 13.6 TWh in a normal year
- Lyse becomes Norway’s third-largest power market entity, with a market portfolio of 9.5 TWh in a normal year
- 34 employees are transferred from Lyse Produksjon AS to Hydro Energi AS as a result of Hydro becoming the operator
-The agreement is expected to bring savings totalling a present value of approximately NOK 500 million in Lyse Kraft DA. These will be realized through economies of scale and more efficient operations, as well as new ways of working through digitalization and collaborative solutions in daily operations and investment projects
- Total savings and synergies for Hydro are expected to amount to a yearly EBITDA effect of approximately NOK 40-50 million after a few years
The transaction is expected to close in the fourth quarter of 2020, pending approval by the Norwegian Competition Authorities. ■