Denmark. Energinet

NIB is providing the loan to co-finance the construction of the Viking Link, a 760-kilometre, 1.4 GW high voltage direct current electricity interconnector between the substations of Revsing in southern Jutland, Denmark, and Bicker Fen in Lincolnshire, Great Britain.

The Viking Link interconnector has a projected capacity of 2 × 700 MW and will enable more effective use of renewable energy, access to sustainable electricity generation, and improve the security of electricity supplies.

The plan is to install land and submarine cables between 2020 and 2023, with a full commissioning expected in December 2023. The total project cost for Denmark’s part of the project is estimated to be DKK 6.2 billion.

Energinet operates, maintains and develops the transmission systems for electricity and natural gas supply in Denmark. Founded in 2005 by the Danish Ministry of Climate, Energy and Utilities, the transmission system operator (TSO) is a hybrid between a company and a public authority. The TSO’s operations are regulated through a cost-recovery model, which means that Energinet is a non-profit maximising organisation. In addition, Energinet operates a gas storage business on commercial terms.

A second loan of DKK 1,500 million was signed on 23 February 2022.

Productivity:
Energinet and electricity producers will get access to a new market with an initially higher price level, which should provide potential for revenue generation for both the TSO and producers.

Given the location and time difference between the price areas, the interconnection will allow benefits to be drawn from various weather conditions, the time difference and the associated consumption peaks, as well as to share renewable energy between the both countries and beyond.

From the perspective of the NIB member country area, the connection to a higher price area in the short-run will most likely mean a slight increase in domestic price levels to the end consumers in Denmark and other NIB member-countries. From the long-term perceptive though, the interconnection might decrease price volatility and periods of ultra-low electricity prices, that in turn will incentivise investments into new generation capacity in the future.

Environment:
The interconnector strengthens the northern Europe power grid, allowing for an optimal flow of power between the UK, Denmark, the Netherlands and Germany via the large subsea cables and high voltage overhead power lines connecting the countries.

The investment allows more renewable energy to be connected to the grid, supporting the crowding-out of power generation based on fossil fuels, thus reducing CO₂ emissions. For example, during times of high generation of wind and solar power in Denmark, the UK could benefit from the surplus and not use fossil-generated electricity during peak loads.

The total length of the interconnector is approximately 760 kilometres, with 620 km of submarine cable and 65 km and 75 km of onshore cable in Great Britain and Denmark, respectively.

The environmental impacts from the project can be divided into onshore impacts such as the footprint of the converter buildings, laying of the underground cables with associated impacts on archaeology, river crossings, sensitive land areas and so forth. All these potential issues have been thoroughly assessed both on the UK side and in Denmark.

The other section of the cable includes the offshore section. Impacts here are typically spawning areas for fish, sensitive habitats, unexploded ordnance, etc. All these aspects have been studied in detail and the cable stretch has been re-aligned to avoid sensitive areas.