Hydro invests in renewable growth – E24

On Friday, Hydro posted a better-than-expected underlying result and the market raised share by more than six percent.

The company cannot do much with low aluminum prices and the uncertainty that has arisen in the aftermath of the crown crisis. Instead, they cut costs and take steps to create value outside of the metal business as well.

For this purpose, Norsk Hydro has established two new units, called “Renewable Growth” and “Batteries”. These will be within the existing segment of the company «Energy», which also operates with hydroelectric energy.

Hydro’s green investment comes at a time when investors around the world have opened their eyes to achieving climate goals, requiring a large investment in wind, solar, hydrogen and batteries. It is also noticeable on the Oslo Stock Exchange, where several green startups have been listed so far this year.

– We focus on megatrends, CEO Hilde Merete Aasheim at Norsk Hydro tells E24.

– Very exciting

Norsk Hydro already has a big business in power production, as Norway’s third-largest power operator (after Statkraft and Hafslund E-CO) with a production of 13.6 terawatt hours per year.

The CEO believes the company has the most to gain from sustainable solutions.

– We mean it. Both in aluminum with our low carbon products, and in renewable energies where we have the prerequisites and capacity. We see this as very exciting, says Aasheim.

Over the past 115 years, Hydro has invested in many different things, such as fertilizers, aluminum, hydrogen, oil, and aquaculture. The hydrogen company Nel originates from, for example, Hydro, the fertilizer maker Yara was spun off from Hydro and listed on the stock exchange in 2004, and Hydro’s oil business was merged in 2007 with what was then Statoil.

Co-owner of two battery companies

Hydro is already in the process of hiring people for investment in solar and wind, including a CFO for renewable growth, battery manager, battery technology manager, business developer for renewable energy, and various analysts.

– We want to grow both in recycling and in the renewable and batteries segment. We see that the electrification of the transport segment requires more and more batteries. We think we have capabilities there, says Aasheim.

Hydro is already heavily involved in the battery industry. The company is co-owner of Swedish battery cell manufacturer Northvolt, and the two are collaborating on a battery recycling plant in Fredrikstad for several hundred million crowns.

Already in 2017, Hydro bought Canada’s Corvus Energy, which supplies batteries for boats and, among other things, has supplied the batteries for the Ampère electric ferry. In 2018, the company decided to build a battery cell factory in Bergen. Hydro is now hiring its own battery manager.

– We’re still a bit in the early stages. We analyze the entire value chain and where Hydro has experience. The EU has taken a very clear position that batteries are a growth area in Europe, also not to depend on Asian suppliers, says Aasheim.

Hydro can also benefit from the battery storage facility at several of its plants. You can reduce peak electricity consumption and reduce costs during periods of high energy market pressure and high prices.

Wind energy and solar energy

Hydro is also a player in wind power, after the company recently took over as operator of the Tonstad wind power plant, which is one of the largest in Norway.

In addition, Hydro has enabled a number of large wind energy projects, as the company is the second largest buyer of wind energy in Europe with long-term contracts. The company recently entered into a 29-year contract with Macquarie to purchase power from a Swedish wind farm.

– The objective is to develop renewable projects, preferably together with partners, where we include the experience we have in the operation of these facilities and the market experience that we have as the main player in the energy market. We can also take positions like the one we have taken on the Tonstad wind project, says Aasheim.

The company says that Brazil is a relevant market. Here, for example, it may be relevant to expand solar and wind power with a view to selling clean power to the company’s Albras smelter and the Alunorte alumina refinery.

– We are a large energy consumer, and we need a lot of energy in Brazil for Alunorte and Albras. Being able to offer power contracts is also an opportunity to develop new projects, says Aasheim.

Has set heavy cutting targets

Norsk Hydro is a large producer and consumer of renewable energy, but it also uses a lot of coal and oil. The company has set a goal of reducing emissions by 10 percent by 2025 and 30 percent by 2030.

This will be done, among other things, by switching from heavy oil and coal to liquefied natural gas (LNG) at Alunorte. Hydro’s Brazilian operations accounted for 3.7 million tons of Hydro’s total emissions of 9.7 million tons of CO in 2019.

– We have a goal of reducing emissions by 30 percent by 2030. Much of this has to do with Alunorte, which today uses oil and coal in its stoves. We want to do something about it, says Aasheim.

– The first block is to use gas to replace the oil. This will be achieved by 2025, and then there will be further electrification of the boilers by 2030 and the coal will be removed. Pará authorities are very concerned about the establishment of gas plants that contribute to local development, he says.

Long-term emission free

Hydro plans to become an emission-free company by 2050. To achieve this, it may be necessary to develop technology that can clean existing plants to detect CO._two, or completely new emission-free technology that requires new foundries.

– Here we work in parallel with several areas, says Aasheim.

Among the solutions Hydro is working on is replacing coke anodes with bio-based solutions. The company is also working on solutions to collect CO_two and capture it, either for storage or for use in other industries.

– Then you can keep the facilities as is. Another initiative is a carbon-free process, says Aasheim.

Among other things, it points to the possibility of developing a chlorine process that produces alumina in a completely different way than today.

– But it’s a completely different career, where you also have to build new facilities, he says.