£2bn Norway-Scotland electricity interconnector project at risk if Oslo accepts EU energy rules

The main opposition party in Norway is this week likely to support the Oslo government’s plan to adopt European Union energy rules, enabling Norway to remain a full member of EU markets.

But Labour’s support may come on condition that all power cables should be state-owned – raising questions about the future of North Connect, a planned 2 billion-euro power cable between Norway and Scotland.

Norway is working on three cables, two of which are under construction by state-owned grid Statnett and will export electricity to Britain and Germany.

Plans for a third cable to Scotland, called North  Connect, could come under scrutiny as it is backed by a private consortium consisting of Norway’s Agder Energim Lyse, E-CO and Sweden’s Vattenfall.

“If this goes through, North Connect must be taken over by Statnett or it will be very difficult to realise the project,” said Leiv Ingve Oerke, Lyse’s head of energy business.

Cancelling the 1.4 gigawatt cable will mean all subsidies that European Union so far spent on it will be lost, he added.

Labour is also asking that any decision on a cable built after the first two should be made after they are completed and have been assessed.

Statnett, which in January said North Connect should be delayed as it may overburden the existing power infrastructure in the Nordics, declined to comment.

For the past 24 years, Norwegian companies have enjoyed market access on equal terms with companies in the EU via the European Economic Area treaty, in return for the country’s adoption of EU common market regulations.

The centre-right minority government feared that rejecting the EU’s Third Energy Package, designed to enhance energy flows and improve regulatory oversight, would put Norway on a slippery slope to a Brexit-like ending of its close EU relations.

Norway’s parliament is expected to vote on the package on March 22, said a spokesman for the oil and energy ministry.

Also this week, Energy MPs are set to quiz junior British energy minister Claire Perry, MP, on the effect of Brexit on the UK’s action on climate change.

Powers over this area are at the centre of a bitter Scottish devolution battle between the Scot- and Brit-governments over where these powers should return to Holyrood or Westminster after Brexit.

According to the Committee on Climate Change, EU-level policies would have covered approximately 55% of the emissions reductions required for the UK to meet its 2030 climate targets.

MPs on the Westminster parliament’s Energy Committee will ask Perry what steps the Government is taking to ensure that Brexit does not undermine the UK’s climate ambitions.

19 Mar 2018