Norwegian aluminium smelter Norsk Hydro ASA and compatriot industrial group Lyse announced earlier this week the formation of a joint hydropower company that will be the result of a merger of the two firms’ hydroelectric assets.
The new company will operate under the name Lyse Kraft DA and feature an annual power production capacity of 9.5 TWh. Hydro will be minority owner with a 25.6-percent share, while Lyse will hold the majority of the ownership interest, or 74.4 percent.
According to Hydro, the merger of assets will yield about NOK500 million net present value in synergies. In addition, the partnership will prevent the firm’s RSK assets from reverting to the state in 2022, allowing Hydro to continue to use the power produced from those assets to smelt primary aluminium.
Hydro President and CEO Hilde Merete Aasheim elaborated upon the advantages of the partnership in a press release.
“This is a great day for the future of Norwegian renewable-based industry. The agreement is strategically important for Hydro, as it secures the value of our RSK hydropower assets and contributes to predictability for further industrial development in Norway.”
Per the agreement, Hydro will continue to operate its RSK assets and take ownership of Lyse’s hydropower plants. This will make Hydro the country’s third-largest power provider of renewable power, churning out 13.6 TWh per year. Hydro’s share will total 9.4 TWh per year.
Aasheim says the partnership meets two of the firm’s objectives: increase its low-carbon aluminium production and increase its presence in the renewable energy sector.
“The agreement supports both objectives, as we secure long-term access to renewable power, and Hydro will become a larger hydropower operator. At the same time, we secure the value that RSK represents for Hydro.”
Lyse will transfer about three dozen employees to Hydro to help run the project, and Lyse’s hydropower assets will be transferred to Hydro’s operator portfolio under the deal as well.