Central infrastructure

Central Infrastructure comprises the Group’s infrastructure activities in Norway, Sweden and Finland aimed at the central transmission system for the transmission of power. The business area offers products and services within the areas of transformer stations, power cables and power lines for higher voltage ranges.

 

Since 1 September 2011 the Central Infrastructure business area has been re-organised as a Nordic organisation. Prior to this the business area was structured on a country basis. The reorganisation provides us with better opportunities to submit tenders across national boundaries based on Infratek’s collective expertise, an approach that has already produced results. One of the projects awarded was for the construction of a transformer station for Svenska Kraftnät involving collaboration between our Swedish and Finnish units, and several power line projects in Sweden involving internal resources from both Norway and Sweden.

Infratek is an end-to-end supplier of projects for transformer stations from the design to the commissioning phase. Rebuilding and expansion of existing transformer stations are also important services provided by this business area, and Infratek’s professional expertise additionally includes testing and start-up. The Group is not bound to any specific equipment manufacturers and can therefore offer the customer the best solutions regardless of the manufacturer. During the year under review Infratek was responsible for two major newbuild projects of transformer stations in Finland.

 

Infratek provides project services related to high voltage cables and has qualified personnel for handling splices and terminations from leading manufacturers of cables and equipment up to 420 kV. We possess leading expertise in the field of oil cables, both regarding repairs and maintenance. During the year we consolidated our position in this area, primarily through several projects in Gothenburg and Stockholm.

 

The principal Nordic grid owners have announced numerous major cable projects for the coming years and the Central Infrastructure business area will be further developing competence and capacity within the organisation as a means of strengthening its position in this market.

 

Infratek carries out power line projects up to 145 kV, and voltage upgrades from 300 kV to 420 kV on the central grid. The line projects tend to consist of either erection of entirely new lines or replacement of older materials. Infratek has two line groups, one in Norway and one in Sweden. Increased collaboration between the groups during the year has helped to boost competitiveness.

 

Infratek offers a broad spectrum of maintenance services ranging from preventative maintenance planning to emergency services for the central and regional networks, power and transformer stations and remote controlled control systems. Central Infrastructure boasts expertise in maintenance of materials provided by all the equipment suppliers which are currently used in critical power-related infrastructure. The company can offer a high degree of reliability and uptime for grid owners through proprietary workshops for transformer repairs and by offering advanced on-site maintenance services.

 

Demand for maintenance services has been high in all countries, and in particular for advanced maintenance of transformers in Finland.

 

Results for the business area for 2011 as a whole were not satisfactory. Business in Finland returned good figures, while performance in both Sweden and Norway trailed expectations. In the case of Norway this was largely attributable to a weak market, which contributed to overcapacity internally. In Sweden the main cause of the poor performance was losses in some projects within the regional grid.
 

The next ten years will see considerable investments and reinvestments in the Nordic central and regional grids for voltage levels from 40 kV and higher. The owners of the central grid in Sweden and Norway, Svenska Kraftnät and Statnett, are planning to significantly step up investment levels. The networks’ age is a major contributing factor to this situation, which is further reinforced by the fact that the rate of reinvestment has been relatively low these past 10 to 15 years. In 2011 the first major projects were put out to tender. Examples of this include the first part of the Sydvästlänken project in Sweden and a new power line with transformer stations between Ørskog and Fardal in Norway. Investments in the Finnish central grid will remain largely unchanged.

 

The market for the regional grid was particularly good in Sweden in 2011, while in Norway it was weaker than expected. The construction of wind power is the most important driver of investments currently being made in Sweden. Further growth is expected in this segment in the next few years, and eventually also in Norway. With society switching to a more environmentally friendly approach, and greater percentage of environmentally-adjusted production, this requires a strengthening of the grid.

 

In addition to the above, continuing bottlenecks in the Nordic power grid are restricting the transfer between different regions. Most forecasts point to a surplus of power production in the Nordic system during the next ten years, which will increase the need for more connections to countries outside the Nordic region. Based on these factors, Infratek’s market prospects generally look strong and we see major opportunities in the years to come.

 

One uncertainty factor is the new grid regulation model in Sweden. The Swedish Energy Authority rejected the grid companies’ proposed revenue model for the next four years. Instead a model was adopted limiting revenue opportunities for the grid companies. If the Energy Authority’s proposal is implemented this could impact the Swedish grid owners’ willingness and opportunities to invest in the distribution and regional grids over the next ten years.

 

Central Infrastructure’s strategy will be to grow concurrently with our customer’s investment ambitions and to further build upon competence and experience embedded in the organisation. The business area possesses leading expertise in the building and maintenance of transformer stations, laying and splicing of cables, as well as the building and maintenance of power lines of higher voltage. Our areas of expertise agree well with the areas in which our customers have indicated they intend to make higher investments.

 

Our strategy is to be the market leader within our core areas. With this aim in mind Central Infrastructure was restructured as a Nordic organisation during the year. This provides us with better conditions for sharing expertise and clearer customer orientation in the various segments. Central Infrastructure’s business segments comprise High Voltage Projects, Regional Projects and Maintenance, which focus on the central grid, regional grid and maintenance of both the central and regional grid respectively.