New subsea link a sustainability showcase

The Norwegian energy utility Statnett and its Dutch cooperation partner Tennet are building the world’s longest subsea power cable between Norway and the Netherlands. The new link is seen as a sustainability showcase in efforts to create an integrated European energy market.

The 580-kilometre high-voltage direct current (HVDC) power link, NorNed, laid in the North Sea, will ensure that power is delivered from a lower-cost area to a higher-cost area. The link enables Norway, which is dependent on hydropower, to secure its energy supply with imported thermal power when water levels are below normal.

“NorNed, which will be the longest subsea HVDC power transmission link in the world, will contribute to a more secure power supply in Norway. The cable will help improve the energy balance in the Norwegian system. This is especially important in years when Norway needs to import a considerable amount of power. The cable will also help stabilise power prices,” says Jan Caspersen, Statnett’s finance manager.

During years with more precipitation than normal, the NorNed cable will transport power to the Netherlands. In years with normal precipitation, Norway will export power during the daytime and import power at night.

Energy market showcase

NorNed is seen as a sustainability showcase in the European Union’s efforts to create an integrated and sustainable energy market. The EU’s energy objectives include establishing power exchange interconnections, integrating renewable energy sources into the European grid, optimising the use of fossil fuel power plants, and significantly reducing carbon dioxide emissions. NorNed meets these goals on all counts.

The cable will help integrate renewable “green” hydropower from Norway with the Dutch and European transmission grids and enable the Netherlands to run fossil-fuelled power plants efficiently with an optimal and constant base load. The cable is expected to yield a reduction in carbon dioxide emissions of almost 1.7 million tonnes a year. The reduction is worth 49 million euros a year, according to the EU’s Emissions Trading Scheme.

Trade between the two power markets will be a major source of revenue, benefiting customers of both Statnett and Tennet. As a temporary system, the trade will take place using an explicit auction until 2009. Thereafter, the Nordic and Dutch power markets will be coupled via Nord Pool Spot (the spot market for the Nordic countries) and the Amsterdam Power Exchange.

Joint venture

The 47,000-tonne cable laid between Feda in Norway and Eemshaven in the Netherlands is a 50/50 joint venture of the two power utility companies. The cable’s co-owners will also benefit from the very low transmission losses thanks to technological solutions provided by Swedish ABB, a global leader in power and automation technologies. ABB’s scope of supply for this project includes state-of-the-art converter stations and HVDC cables.

The project budget totals NOK 4.6 billion (EUR 580 million), shared equally between the cable’s coowners. A loan from NIB to Statnett covers one third of the company’s expenses in the project. The utility company’s finance manager believes the cooperation between his company and NIB has provided added value to the project.

“Apart from the competitive terms NIB offered, the loan has helped diversify Statnett’s financing portfolio. We are looking forward to further cooperation with the Bank,” says Mr Caspersen.