Installing a 1,400MW electrical interconnector between Scotland and Norway will provide cheaper electricity to both countries and rUK, according to the finance director of the Swedish state-owned energy utility.
In an interview with Bloomberg, Vattenfall’s Stefan Dohler said it would allow power traders to ‘arbitrage’ between the disparate power markets of the two countries, and “balance out each market internally” at a cheaper cost than batteries or demand response,
Dohler said that the £1.3 billion project is expected to reach financial close in 1Q2019. The consortium of project partners, which includes Agder Energi, E-Co and Lyse Produksjon, may look for additional equity investors depending on whether the cable link is approved under the Capen floor framework by the U.K. government in May.
The framework would guarantee a minimum income level and hence revenue certainty.
Dohler explained: “The economic fundamentals of the North Connect project are likely to assure its continuation no matter what happens in the Brexit negotiations.
“Government Ministers from Scotland, the U.K. and Norway are behind the venture because it will ultimately bring down the overall cost of electricity in all three countries.
“Scandinavia’s large hydro-electric storage capacity would complement the UK energy mix, with its relatively high share of wind and solar generation, because excess UK power could be exported when water levels drop, and hydropower also acts as a great energy supply when renewable generation dips in the British energy market.”
See also: 22 Jun 2016
Scandinavian energy consortium to build new £1.3bn international connector between Scotland and Norway