World-Longest Subsea Power Cable to Blunt UK's Price Peaks Despite 'Tight' State in Norway – Pundit

With Norwegian water reservoirs at a record low over the past 20 years amid sparse rains, the probability of electricity rationing has gone up by 20 percent. According to power analyst Marius Holm Rennesund, the new power cable will push up prices in Norway, while at the same time removing the British price peaks.

The subsea North Sea Link cable between Norway and the UK has been put into trial operation amid a protracted calm spell that left British wind farms severely underpowered.

Not only is North Sea Link the first power cable that directly links together Norway and the British Isles, it is also the world's longest submarine cable at 720 kilometres. It was built at a cost of over NOK 16 billion ($1.8 billion), Norwegian power grid operator Statnett said in a statement.

Running from Kvilldal, where Norwegian hydropower operator Statkraft has a 1.2 GW hydropower plant, to Blyth north of Newcastle, The cable has a capacity of up to 1400 MW and can theoretically transmit over 12 TWh of electricity over the course of a year.

The cable will mainly facilitate the export of electricity from Norway to the UK, which is not only working to phase out both coal and gas power, but has been caught in an energy crisis, with rising bills and fuel shortages.

According to power analyst Marius Holm Rennesund of Thema Consulting, the new power cable will push up prices in Norway, while at the same time removing the British extremes.

“We will hardly get extreme prices in Norway because of it, but the price can increase somewhat because we get higher demand for power as a result of the export opportunities. It also appears that the cable in such extreme situations can lead to a significant price drop in the UK,” Marius Holm Rennesund told the newspaper Nettavisen.

Statnett communications manager Christer Gilje called the current situation with high prices and lack of electricity throughout Europe “very special”.

The UK and Norway have historically had very different electricity prices, with the former experiencing price peaks of a different dimension compared with the latter. The current high prices have been attributed to a combination factors, such as elevated energy demand amid low wind and scarce gas reserves.

Furthermore, the new cable has been inaugurated as Statnett, for the first time since 2013, has declared that the power situation in South-West Norway is “tight”. The large amounts of precipitation expected to run over Norway will largely miss the important reservoirs in western Norway. With little water in the reservoirs, the lowest level in 20 years, the probability of electricity rationing has grown 20 percent.

Statnett said the cable will operate at half capacity in the beginning, but is hopeful to raise it to full capacity over the course of the year.

Despite the current circumstances, Statnett argued that the opening was fully justifiable, assuring that it has sufficient storage capacity and that the situation will revert to normal with enough rain.

“This is a connection we have worked on for ten years, and built for five years, and it will work for 40 years. It would be special, also to our British partner, if we didn't put it into operation for price reasons. The high power prices came before this cable”, Gilje emphasised.

It is nevertheless expected that in periods when the UK has a surplus of wind power, electricity will be transmitted the other way around.