By Nora Buli
OSLO (Reuters) -Norway's largest utility, state-owned Statkraft, on Wednesday reported a 150% year-on-year rise in first-quarter profits, benefiting from soaring Nordic power prices.
Underlying earnings before interest and tax (EBIT) rose to 18 billion Norwegian crowns ($1.86 billion) for the January-March period, from 7.2 billion crowns a year ago.
High power prices drove the increase in earnings at Statkraft's generation business, CEO Christian Rynning-Toennesen told Reuters.
"But it's also that we have not sold a lot in advance so we get a very direct impact from the high prices by low hedging into the quarter," he said.
The company sells around one third of its generation ahead for the next years so was able to get the full benefit of higher current prices for two thirds of production, he added.
Statkraft, one of Europe's biggest producers of renewable energy, produced 18.5 terawatt hours (TWh) of electricity between January and March, down 10% year on year, with hydropower accounting for 16.5 TWh of the total.
The benchmark Nordic system price for wholesale power averaged 110.06 euros per megawatt hour (MWh) in the first quarter of 2022, up from 42.13 euros per MWh a year prior, in line with higher European prices following the war in Ukraine.
Prices in southern Norway, where the majority of Statkraft's Norwegian production is located, jumped to a record 151.86 euros per MWh.
Rynning-Toennesen highlighted the need to accelerate renewable energy investments to reduce Europe's dependency on Russian energy and welcomed plans announced by the Norwegian government to develop up to 30 gigawatt (GW) of offshore wind by 2040, much of which could be exported.
"The government plan is ambitious but it is realistic and it will also be big enough to create a new industry," he said.
Statkraft is involved in two groups seeking licences to be awarded by next year.
Norway's wind resources are "enormous", and the bulk of announced capacity would be constructed between 2030 and 2040, Rynning-Toennesen said.
The company posted a net profit of 11.4 billion crowns, up from 4.8 billion crowns in the first quarter of 2021.
($1 = 9.6910 Norwegian crowns)
(Reporting by Nora Buli, editing by Terje Solsvik and Elaine Hardcastle)