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UPDATE 1-Norway power prices to rise when German, UK links completed - grid CEO
May 16, 2017 / 9:26 AM / 4 months ago

UPDATE 1-Norway power prices to rise when German, UK links completed - grid CEO

* Trade union official says Norway prices could double

* Power prices in Britain, Germany seen lower, more stable

* Norway-Germany cable to run below capacity for 5 years (Adds quotes, reaction from trade union official)

By Lefteris Karagiannopoulos

OSLO, May 16 (Reuters) - Norwegian power prices may rise 0.03-0.04 crown per kilowatt hour (kWh) on average once two cables to Europe are completed by 2021, the head of Norway’s grid said on Tuesday, suggesting a rise of more than 10 percent based on current prices.

Statnett is building two 1.4 gigawatt (GW) subsea cables to Germany and Britain to start up in 2020 and 2021 respectively, with each cable costing up to 2 billion euros ($2.21 billion).

Trade unions have criticised the project saying higher power prices will make the Nordic country less attractive for energy-hungry industries such as aluminium production. One union official said Norwegian prices could double.

“When we install those two interconnectors, prices in Norway on average may increase by about three, maybe four oere (NOK 0.03-0.04) per kilowatt hour,” Statnett CEO Auke Lont told Reuters, citing his firm’s analysis of the impact on prices.

The Nordic power price was trading at 0.281 crown per kWh on Tuesday, suggesting the rise after the cables were completed would be roughly 10 to 14 percent.

Geir Vollsaeter, an adviser at the Industri Energi trade union, said Lont was underestimating the impact. “Our estimate is that Norway prices will harmonise with British prices which are 50 to 100 percent bigger than Norway,” he said.

The Statnett CEO said Britain and Germany, which both charge more for power than Norway, would see lower and more stable prices.

Lont said the North Sea Link cable to Britain was on target but grid bottlenecks in Germany that have led to price volatility could mean the NordLink cable initially ran below capacity. “There will be a five-year transition period,” he said.

The bottlenecks would ease once Germany expanded grid capacity between the north, where most new renewable wind and solar power is generated, and the south, where demand is higher.

Lont said this work would be completed by 2025, based on discussions with German officials.

Norway also needs to boost grid capacity. Nyhamna, a top gas processing plant on the west coast that relies on grid power, is raising its capacity by 20 percent to 84 million cubic metres per day from 2018 as more gas fields come on stream.

Statnett was in talks with Nyhama on roughly doubling power capacity from 145 megawatts today, Lont said.

The Nordic grid needed strengthening to accommodate the planned decommissioning of three out of nine of Sweden’s reactors by 2020, he said. Nuclear now accounts for 40 percent of the Nordics’ power generation.

$1 = 8.5024 Norwegian crowns $1 = 0.9065 euros Editing by Gwladys Fouche and Edmund Blair

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