Europe’s largest renewable energy producer limits its plans for wind and solar power plants

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Europe’s largest renewable energy producer is limiting plans to build new wind and solar power plants due to lower electricity prices and higher costs.

Statkraft chief executive Birgitte Vartdal, who took up the role in April, pledged to “refine” the strategy to cope with a more challenging environment.

“The transition from fossil energy to renewable energy is happening at an accelerating pace in Europe and around the world. However, market conditions for the entire renewable energy industry have become more challenging,” she said.

Although Statkraft is not listed on a stock exchange, public markets have highlighted declining demand for renewable energy sources.

The S&P Global Clean Energy Index of wind turbine and solar panel makers has fallen 25 percent since July last year, while ESG equity funds have seen $38 billion in outflows this year through the end of May, Barclays said.

Statkraft, which is owned by the Norwegian state and produces power mainly from its vast fleet of hydropower plants, announced plans on Thursday to slow capacity growth

It currently intends to install onshore wind, solar and battery energy with a capacity of 2-2.5 GW per year from 2026, which is potentially enough to supply approximately 2.5 million households with electricity. For comparison, the previous target was 2.5-3 GW per year from 2025 and 4 GW per year from 2030.

Offshore wind currently aims to produce a total of 6-8 GW by 2040, down from its previous target of 10 GW.

“We still believe strongly in offshore wind and would like to stay there, but we are reducing our ambitions a bit,” Vartdal said. Last year it bought Spanish renewable energy company Enerfin for 1.8 billion euros.

Statkraft is one of several European utilities that have slowed growth plans over the past year.

Denmark’s Ørsted, the world’s largest offshore wind developer, has cut its 2030 targets by more than 10 GW after encountering difficulties in implementing projects in the US.

Meanwhile, Portugal’s EDP also cut its annual targets in May, blaming “lower electricity prices and a higher interest rate environment for longer,” Chief Executive Miguel Stilwell d’Andrade said at the time.

The moves come despite growing political pressure on renewables, with countries agreeing at the COP28 climate summit last November to try to triple global renewable energy capacity by 2030.

“Projects have become much more difficult and the relative gains are simply not there,” said Vegard Wiik Vollset, vice president and head of renewables and energy at consultancy Rystad Energy.

“I argue that this is not conducive to the energy transition. Its relative speed is questioned.”

For hydrogen, Statkraft lowered its target from 2 GW by 2030 to 1-2 GW by 2035.

Many governments consider this fuel crucial to decarbonization goals, but it requires government support to stimulate supply chains and demand.

Engie, the French state-backed utility, has pushed back its target of developing 4 GW of hydrogen projects between 2030 and 2035, arguing that “development and structure (of the market) are progressing slower than expected a year ago.”