BERLIN --
Talks between Germany and Norway about how to boost the trading of
electricity from renewable sources are being held up by concerns that
the power cable running under the North Sea won’t ever make money.
Plans to build the 387-mile-long cable costing as
much as 2 billion euros ($2.8 billion) are at risk because Norway’s
state- owned Statnett SF is worried that the project won’t be
profitable. Norway wants assurances from the German government that the
works dubbed Nordlink will be part of a future capacity market that pays
for backup power.
“We have been able to discuss this matter with German
authorities on several occasions and we have made it clear that it is of
great importance for the profitability of the cable project to be
included in a future capacity market,” Christer Gilje, a spokesman for
Statnett, said yesterday.
The cable would be the first direct power link between
the nations, running from Tonstad in southern Norway to Wilster in
northern Germany. It would have the capacity to transmit 1.4 gigawatts
of power starting in 2018 and would allow Norway to export excess
hydropower. Germany would use it to offset intermittent production from
renewables, mainly wind farms in the north.
Key Link
It’s one of the key links Germany needs to ensure its grid is flexible enough to handle increasing flows of renewable energy that
will replace nuclear power by 2022. Reactors work around the clock
while wind turbines and solar farms produce only when it’s breezy and
sunny.
Norway’s Petroleum and Energy Minister Tord Lien will be at a conference in Berlin tomorrow to discuss the project. Statnett will own a 50 percent stake in the
transmission- line project. German state-owned bank KfW Group and the
grid company TenneT each will hold 25 percent shares. Power-trading will
helprenewable energy production on both sides of the link, the companies involved say.
The German and Norwegian governments are holding
“intense discussions” over whether to include the cable in the capacity
market, Torsten Albig, premier of the northern Schleswig- Holstein
state, where the line would make landfall, said in an interview last
week.
Norway’s Ministry of Petroleum and Energy is reviewing
the application to build Nordlink and its decision hinges on whether
the project will be profitable, said Hakon Smith-Isaksen, a spokesman
for the ministry.
‘Complicate Treatment’
“Possible income from capacity markets can contribute
toward the economic profitability,” Smith-Isaksen said in an e- mail.
The ongoing discussions of market interventions in Europe complicate the
treatment of the application and are “creating a new type of
uncertainty” about revenue that will flow from the interconnector, he
said.
Germany’s Economy Ministry is in “close contact” with
Norwegian authorities and the companies involved and it was told the
project “is making good progress,” the ministry said today in an e-mail.
The companies involved still seek to make a final investment decision
this year, it said.
Germany has adequate generation capacity to the end of
the decade and will consider “medium-term” the need for a capacity
market, the ministry said in a separate e-mail. The government won’t
focus on any one particular generation source and seeks cost-efficient
and competitive market mechanisms that comply with EU law, it stated.
‘Remain Committed’
“We definitely won’t put off the matter,” the ministry
said. “Yet over-capacity means that we can use the time needed” to
develop a reliable capacity market. The German companies involved don’t necessarily back the Norwegian demands. Integrating the project into the capacity market isn’t
one of TenneT TSO GmbH’s demands, said Ulrike Hoerchens, a spokeswoman
for the grid company.
“TenneT remains committed to Nordlink and wants to
build it as previously agreed,” Hoerchens said March 20 by phone.
Nordlink is “an extremely important project” because it can send excess
German wind-power to Norway. Hydroplants in Norway can store the power
for delivery back to Germany when consumers need it most, she said.
Norway produces about 95 percent of its electricity
with hydropower and is building a similar cable to the U.K. It’s already
linked with the Netherlands via NorNed, a 700-megawatt subsea cable
that began operating commercially in 2008. It also has connections with
Denmark and Sweden.
German authorities told Statnett that the
interconnectors will be taken into account “in a fair way” in a future
capacity market, Gilje said in comments confirmed by the German Economy
Ministry. German and Norwegian authorities are meeting on a
regular basis, Smith-Isaksen said. “We hope to know more on where
Germany is going in the coming months.”
Copyright 2014 Bloomberg
http://www.renewableenergyworld.com/rea/news/article/2014/03/germanys-2-8-billion-power-link-with-norway-threatened
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