The first megawatts of electricity will flow between Norway and the U.K. Wednesday along the longest submarine power cable in the world.
Once fully operational Britain is expected to import supplies of low carbon power on a regular basis.
Tests on the 1,400-megawatt, 450-mile long cable will be complete in time to transport power from Norway’s hydro reserves this winter. In return, Britain will be able to send Norway its excess wind-generated power.
“We expect Norway to export fairly consistently through the North Sea Link over the short/medium term,” said Glenn Rickson, head of European power analysis at S&P Global Platts. “As of now Nordic stocks are at the top end of the recent historic range so, unless there is a prolonged dry spell this summer, that should be good news for flows to the U.K.” by the winter.
The extra supply is needed. The U.K. experienced record power prices this winter as tight margins brought National Grid Plc’s supply buffer to alarmingly low levels. Supplies were particularly low after the BritNed interconnector with the Netherlands had an outage and the start of a new cable to France was delayed.
Given some of the recent issues with existing interconnectors it is understandable that there may be some concerns about the North Sea Link, Rickson said.
The interconnector will provide the equivalent of about 4% of U.K. demand, according to consultant EnAppSys Ltd. That means any failure will cause big swings in day-ahead power prices with expensive plants needed to fill the gap, said Phil Hewitt, director at EnAppSys.
As Britain builds offshore wind capacity to reach a 40 gigawatt-target by 2030, flows should start to equalize in both directions, Hewitt said.
Norway has some of the lowest power prices in Europe, meaning that most years it is able to meet its own demand and send power abroad. The nation already has existing interconnectors with Sweden, Denmark, the Netherlands and Russia. A new link with Germany started in April.
Last year a combination of very wet weather and lower domestic demand left Nordic reservoirs full to the brim. With not enough demand for the electricity, hydroelectric producers in Norway had to spill out water to avoid overflowing their dams. This year it hasn’t been as wet but there is still a surplus compared to normal, which means producers will be able to export electricity abroad for higher prices than those available domestically.
Norway may depend on power imports from Sweden, Germany or the Netherlands to match the export capacity to the U.K. — where prices are higher — according to Sigbjorn Seland, an analyst with Stormgeo Nena Analysis AS in Oslo. Power flows along interconnectors to where prices are highest and in this case to the U.K., which will probably increase Norwegian prices.
Traders can’t take the surplus of power in Norway for granted. The business case for connecting vast natural green resources with growing demand abroad has been dented by a forecast surge in domestic consumption. Electrification of transport, heating and industry to meet climate goals will spur a growth in domestic consumption of 30% by 2040, according to a forecast from Statnett, the Norwegian grid operator. To remain a net exporter for the next 30 years Norway needs to increase its wind and solar generation almost fivefold.
Norway’s energy ministry paused plans to build a second interconnector to Scotland in March last year.
Commercial operations start on Oct. 1 when the testing phase ends for the North Sea Link.