VOLLESFJORD, Norway (Reuters) - A power cable being laid between Germany and Norway may lower Norwegian energy prices in its first years as wind power in northern Germany at times cannot be exported further south due to grid bottlenecks, Norway’s Statnett said.
NordLink, a 1.4-gigawatt interconnector that will begin operations in 2020, will export power produced by hydro-electric dams from Norway to Germany. It could also import power.
The project and other planned cables have been under fire in Norway over concerns the Nordic country would lose its cheap power supply by exporting electricity to Germany. Cheap power has been a draw for energy-hungry industries in Norway.
Statnett spokesman Christer Gilje said the new cable could initially lower prices for Norwegian customers until Germany’s grid is upgraded to distribute the extra supplies from Nordlink, although he said prices would rise after 2025.
“Power prices in Norway may sometimes be lower in the beginning,” he said on a visit to the site where a bright yellow subsea cable was being connected to Norway’s grid on land.
He said this was because Germany now sometimes had surplus power from wind generation in the north, pushing down prices as the German grid could not yet transmit the extra power south.
“When you have a big surplus that drives prices down to zero and sometimes actually below zero in Germany ... it will affect Norwegian prices,” he said, without saying by how much.
After 2025, the 1.5 billion-2 billion euro ($1.8 billion-$2.3 billion) cable would increase Norwegian power prices by an estimated one euro per megawatt hour, he said.
This week, Statnett began laying the second of two 0.7 gigawatt subsea wires that together make up the interconnector, in a fjord in the southwest of the country.
“The Norwegian subsea part will be completed this year,” project director Stein Haavard Auno told Reuters.
NordLink is being developed by Statnett, Dutch-German grid firm TenneT and Germany’s KfW investment bank. French cable maker Nexans is installing the cable in Norway.
NordLink is due to start commercial trials by the end of 2020, with upgrades on the Norwegian grid completed by 2022, Statnett said.
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Editing by Gwladys Fouche and Edmund Blair