2025Annual report

2025 was another year of expansion for Småkraft. And for another year, we were the greatest contributor to increased renewable energy production in Norway, adding 127 GWh of new annual production capacity during the year. According to updated statistics from NVE, Småkraft is constructing 22% of all new renewable energy projects under development in Norway at year-end 2025.

On the one hand, I am proud to see how our employees, partners, and landowners continue to lead the way. On the other hand, one may get a bit concerned on behalf of the society in a larger context. It is remarkable that four years after the energy minister called for “more of everything, faster”, our small-sized company with 34 employees delivers a significant share of that growth.

And it is a paradox that the Government in the fall of 2025 proposed implementing a ground rent tax that threatened the very existence of small-scale hydropower. We appreciated the efforts of the opposition by once and for all turning down the proposal from the ministry and thereby helping secure the future of our industry.

In 2025, our production reached 1,488 GWh, a 26% decrease compared to 2024. During parts of the year, we experienced extremely low or even negative prices in the NO4 and NO3 regions in the northern parts of Norway. This led us to curtailing production in periods. Adjusted for this, the decrease in production was 2%.

In the years ahead, our home market will electrify transportation, buildings, and industry. This creates a pressing need for more renewable energy. Increased production will be essential to meet future demand. Hence, we remain motivated and fully focused on working actively with landowners, municipalities, grid operators, and regulators to develop new capacities.

We have repeatedly talked about our efforts in industrialising the company. Småkraft’s powerplants operate fully automated and remotely controlled. Our growth would not be possible without strong partners, robust processes and advanced supporting technology. We are fortunate with more than 1100 landowners who challenge us and contribute with local knowledge.

While each of our powerplants are relatively small, our combined size enables us to leverage on economies of scale, share expertise across a large portfolio and realise synergies that smaller operators cannot access. To Småkraft, this represents great opportunities for further operational excellencies and growth.

Småkraft operates in an increasingly complex and demanding power market. Price volatility has intensified due to grid constraints and the growing share of unregulated power generation, as well as the increasing interconnectivity of energy systems, geopolitical developments, and climate-related changes.

To meet these challenges and seize the opportunities they create, Småkraft continues to improve the way we work and invest in modern technology, advanced systems, and enhanced expertise. We have increased our capacity and strengthened our analytical and operational capabilities through closer monitoring of market activity and price volatility. We are also exploring and actively pursuing opportunities available in the intraday and reserve markets.

These measures are essential for ensuring that Småkraft remains well-positioned in a market characterised by rapid change and increasing complexity.

Construction of new power stations and acquisition of existing ones require substantial capital and robust long-term financing. Småkraft benefits from committed owners and strong financing partners, supported by a diversified funding mix that includes bank debt, bond obligations and US private placements. Our long-standing relationships with local Norwegian and Nordic banks, green bond investors and private debt investors continue to provide a solid foundation for future growth.

With higher interest rates in recent years, balancing fixed and floating interest exposure has been essential to support our long-term strategy.

In the second half of 2025, Småkraft secured a NOK 394 million bank debt facility on attractive terms, financing 15 power plants constructed and acquired during 2024/2025 and strengthening the company’s liquidity position.

Producing more electricity from the natural resources available, is one of the most sustainable ways to increase renewable energy generation. However, all interventions impact nature, and we take pride in meeting the requirements set by the authorities. We maintain close cooperation with regulators to ensure a responsible and sustainable use of our resources.