Business & Investment

Power-hungry Britain throws the world’s longest lifeline from Norway

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Jesper Stern and Rachel Morrison

(Bloomberg) —

Britain, with some utilities out of business at record electricity and gas prices, has an energy lifeline just in time for winter.

On October 1, commercial flow will begin at the 450-mile (724-kilometer) North Sealink, the world’s longest undersea power cable, connecting the UK and Scandinavian electricity markets for the first time. Supply will initially be limited to about half of the 1,400 MW capacity and will gradually increase to full power by early next year.

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The risk of a power outage in Britain increased earlier this month after a fire robbed a major power link with France, while soaring prices are causing an energy crisis across Europe. Since then, several small retailers have withdrawn from the market. The government says there will be no shortage, but the supply is so short that further accidents and unexpected plant shutdowns can mean that electricity is gone.

Interconnectors are considered an important way to access electricity from countries with a variety of natural resources. Electricity flows to the market at a higher price. In this case it is the United Kingdom.

“In the short term, adding the Hokkai Link could mitigate some of these events,” said Rajiv Gogna, a partner specializing in energy issues at consultancy Lane Clark & ​​Peacock LLP. .. “Demand will increase as winter approaches.”

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Storage levels remain so low in Europe that most of the soaring electricity prices have fallen to record highs. Gas will continue to affect electricity prices this winter, Gogna said.

In Norway, the timing is not so coincidental, and when the summers are dry, there is usually a significant shortage of abundant hydropower resources. According to Olav Johan Botnen, senior analyst at Volue Insight AS, a small number of reservoirs at home limits producers’ ability to export electricity to the UK and mainland Europe to just over one-third of their maximum capacity this winter. increase.

“Almost all exports to the UK will take place this winter. UK prices are expected to be higher than in other European countries,” said Botonen. “Under normal hydrological circumstances, of course, we see complete export flows to both the UK and the continent at these price levels.”

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Norway is already connected by submarine cables to Germany, the Netherlands and Denmark. Through its vast hydropower resources, it became Europe’s largest net exporter of electricity in the second half of last year.

However, seduced by high European electricity prices this summer, Norwegian hydropower plants exported more electricity than usual, but less rain curtailed the influx into the reservoir. According to Volue Insight data, this put the Nordic region in the red at 22 terawatt hours.

Reduction of surplus

According to grid manager Statnett SF, there are plans to electrify everything from oil platforms to the electricity-intensive onshore industry, and Norway’s electricity surplus will be cut in half by 2030.

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Hilde Tonne, CEO of Statnett, said: “When we want to export electricity we need to have access to the UK market, and when we want to import it we need to secure imports.” For society as a whole, these cables are very beneficial to Norway. “

Even if capacity is reduced, interconnectors can help the UK tackle extreme pricing events. Recent tests on cables have shown that pricing can be mitigated or exacerbated, depending on the direction of the test flow.

Norway has put all future interconnect projects on hold until it evaluates the full impact of the North Sea Link. The Moratorium includes both a merchant cable to Scotland and plans for the National Grid Plc to link North Sea wind farms to both countries.

© 2021 Bloomberg LP

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    Power-hungry Britain throws the world’s longest lifeline from Norway

    https://financialpost.com/pmn/business-pmn/power-starved-u-k-thrown-worlds-longest-lifeline-from-norway Power-hungry Britain throws the world’s longest lifeline from Norway

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