Norway is close to agreeing a €2bn investment to construct a 700km
underwater power line that would allow the UK to import hydroelectric power as
Britain attempts to solve the squeeze on its fragile generating capacity.
Auke Lont, chief executive of Statnett, Norway’s grid operator, said he
hoped that a firm decision to build the world’s longest subsea interconnector
between the two countries would be made early this year.
"The plan is to take a decision on
investing in the first quarter,” said Mr Lont, with the hope that could be in
operation by 2020.
The NSN interconnector, a joint venture with National Grid, the FTSE 100
operator of the UK’s electric grid system, will be capable of delivering 1,400
megawatts of power and is expected to cost €1.5bn-€2bn.
The project, which would add to an existing network of interconnectors
between the UK and France, the Netherlands and Ireland, still requires official
sanction from Ofgem, the UK’s energy regulator. Ofgem launched a consultation
two weeks ago aimed at agreeing an acceptable "cap and floor” regulatory regime
for the project that would link Blyth in Northumberland and Kvilldal in
southern Norway.
This would see UK taxpayers effectively underwriting the project as the
government would offer National Grid and Statnett a guaranteed minimum return
on the interconnector. However the government would be able to claw back any
excess profits if returns from the trading of renewable energy across the North
Sea are higher than expected.
Dermot Nolan, Ofgem’s chief executive, said he expected to make a decision
on an acceptable financial framework for the project by March.
Ed Davey, the UK energy secretary who met Mr Lont last month to discuss the
project, has already signalled his backing for the scheme which the government
estimated could save UK consumers £3bn over 25 years.
Describing the interconnector as "a crucial milestone”, Mr Davey added that
the project could provide enough green electricity to power up to 4m homes.
Last month Ofgem formally approved cap and floor arrangements for project
Nemo, an interconnector linking Kent and Zeebrugge in Belgium that is expected
to add an additional 1,000MW to the UK’s electrical grid. Nemo is a joint
venture between National Grid and Elia, its Belgian counterpart.
Mr Lont said a bilateral deal with National Grid was one of several plans
to market Norwegian hydroelectric capacity, which represents half of Europe’s
total output. It would be used to improve supply to countries affected by
intermittent output from wind farms and solar energy.
Norway’s grid system, which is powered almost exclusively by hydroelectric
systems, has a maximum capacity of about 256GW. However, the installation of
further renewable and conventional power capacity across Scandinavia and
Finland is expected to increase Norway’s ability to offer a larger tranche of
output from its network of hydroelectric dams further afield in northern
Europe.
Statnett already has subsea interconnector links with Denmark and the
Netherlands. Mr Lont said these had helped Denmark deal with unpredictable
lulls in supply from its growing wind farm fleet and even meet peaks in Danish
electricity demand during transmission of Borgen, the hit political
drama.
The Norwegian transmission company is also working on plans to install a
500km subsea cable to Germany, which is struggling to guarantee its own
electrical supply in the face of its programme of shutting down nuclear power
fleet to help diversify the power supply of Europe’s leading economy. The
scheme is budgeted at similar cost to the Norway-UK link.
The NSN interconnector could also be used to send excess wind power
produced by UK turbines to Norway, which Statnett would resell at a premium to
other countries.
(Financial Times)