Statnett, KfW and TenneT Conclude Agreement for Norway-Germany Interconnector
The Norwegian power grid operator Statnett, KfW IPEX-Bank on behalf of KfW and TenneT TSO GmbH, transmission system operator for the German North Sea region, have concluded a cooperation agreement to develop and construct a subsea cable between Germany and Norway.
The high voltage direct current interconnector will enable energy to flow between Germany and Norway and help improve the distribution of in particular renewable energy sources between the two nations. It thereby contributes to the success of the German energy turnaround.
The integration of the Norwegian and German electricity markets, which thus far are not connected directly, will ensure greater grid stability in the two countries, increase market efficiency, and stabilize prices between seasons.
The interconnector project comprises an investment volume of approximately EUR 1.5 – 2 billion. The three-party agreement provides for a 50:50 partnership between Norway and Germany. Norway’s state-owned Statnett will own 50 per cent of the project. On the German side, KfW and TenneT will jointly own 50 per cent of the project via a newly established project company. The target is to commence operation of the cable late 2018. The agreement is based on the agreement reached in June between Norway and Germany. The agreement comprises provisions on the further development and implementation of the project; these will result in a final investment decision in 2014.
“This is an important milestone for Statnett, for Norway, and indeed for Europe. The interconnector will enhance our domestic security of supply during dry and cold winters, and will also incite more stable energy prices throughout the year. The cable will contribute to greater efficiency in the Northern European power market and to increased production of renewable energy in Europe. But first and foremost, the realization of an interconnector between Norway and Germany represents a major leap towards a more integrated European market, something that will be to the benefit of all customers,” said Auke Lont, CEO of Statnett.
Quote KfW IPEX-Bank
“Through key projects such as this one the energy policy rethink is taking concrete shape. Our financing of the submarine cable through this joint effort with Statnett and TenneT has created an additional foundation for the sustainable transformation of the German energy mix, in this way contributing to energy supply security and stable electricity prices,” said Harald D. Zenke, Speaker of the Management Board of KfW IPEX-Bank.
“We have been preparing this subsea interconnector between Norway and Germany for two years. It is a good development for the integration of wind power and a vital contribution to the German Energy transition. We are pleased with the participation of the German KfW IPEX-Bank. Statnett, KfW and TenneT combine the innovative power, financial solidity and technical leadership needed for a project of this scale,” said Martin Fuchs, Chairman of the Board of TenneT TSO GmbH.
Alongside the grid expansion in Germany, one of the greatest challenges in the transition to a carbonfree energy supply is the creation of storage capacities for intermittent energy.
With this cable wind power and solar power can be exported from Germany to Norway when there is a surplus of this, while Norway can export hydropower to Germany when the sun does not shine and the wind does not blow. This again will support the ambitions for more renewable energy and increased energy supply in the region, and thus EU’s climate and energy goals, both on a short and long term.
Press release, December 4, 2012; Image: Statnett