OSLO Feb 5 The prospects of building the
longest subsea electricity cable in the world across the North
Sea have improved after Britain joined the European move to a
single power market, Norway's grid operator Statnett said on
Europe on Tuesday unified electricity trading across 15
countries, including Britain and Norway, through a process
called market coupling, to ensure that electricity flows from
cheaper to more expensive areas.
"Having market coupling, having a liquid spot market in both
the Nordics and the UK, is very important for the trade and
gives incentives to build the longest subsea cable in the
world," Bente Hagem, Statnett's vice-president, told Reuters in
Statnett and the UK's National Grid have been working
on a 1.5 billion to 2 billion euro project to build a more than
700 km subsea cable across the North Sea with a capacity of
Hagem said plans by the two companies had already included
expected gains from Britain's participation in the market
coupling with the North Western Europe (NWE) region.
"If we had failed (to implement market coupling) ..., we
would have lost about 10 percent of the income" from sales of
power via the cable, said Hagem, who has co-chaired the market
"That's about 200 million Norwegian crowns ($31.8 million)
per year for the two cable owners. That's a lot of money," she
This week power exchanges began calculating day-ahead power
prices simultaneously and using the same method across 15
countries from France to Finland, an area covering 75 percent of
European power consumption.
The new pricing method calculates power prices and
cross-border capacities at the same time, ensuring that
electricity flows from cheaper to more expensive areas.
When prices and transmission capacities are calculated
separately, flows go the wrong direction about 10-20 percent of
the time, because market participants are less able to predict
The UK-Norway cable project still requires approval by the
Norway's oil and energy minister Tord Lien told Reuters on
Tuesday he could support the cable, with the condition that it
should be profitable for his country.
The Nordic country wants the interconnection, planned to
come online in 2020, to be included in the UK's planned capacity
market. That means Norwegian power exporters, similar to British
utilities, could be eligible to receive state payments for
keeping capacity on standby for times when it is needed.
"To establish a capacity market without interconnectors, the
business case is not very good," Lien said.
Discussions with British authorities are ongoing, and both
sides are willing to reach an agreement, Statnett's Hagem said.