Interconnecting Germany and Norway: Market, Grids and Technology

Tor Eigil Hodne, Senior Vice President European AffairsBerlin, German-Norwegian Energy Forum, 23 October 2014

Kvilldal

Tonstad

FedaKristiansand

Tjele

Eemshaven

Hawthorn Pit

NO SE

DK

DE

NL

GB

BE

FR

PL

CZ

IE

MaasvlakteIsle of Grain

Mandarins

Sellindge

Wilster

Esbjerg

NSN (1400 MW)2020

Lindome

V. Hastings

Kruseberg

Stämö

Slupsk Wierzbleçion

BentwischHerrenwyk

NordBalt

Nybro

Rush

Deeside

Hunterston

Peterhead

Zeebrugge

Blyth Nord.Link (1400 MW)2018

SK4 (700 MW)2014

"The North Sea Ring"

1. Why interconnect ?

Value creation

Climate

Security of Supply

Why we do it: Connecting & balancing renewables…

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• Linking variable renewables optimizes efficiency of our energy systems

• Enables renewables to play increasingly important role and supports the green shift

• A natural balancing market • Advances a European Energy Market

• Norway imports German solar and wind power when surplus and exportshydropower when the sun is gone and the wind is missing in Germany

• Stabilizes power prices and grids

Connecting renewables = value creationPrice difference between Germany and Norway

5

0

20

40

60

€/ MWh

Spot prices in Germany and Norway 2009‐2014 – average week

Norge

Tyskland

Week day Weekend

NorwayGermany

The Project- NordLink

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1400 MW at +/- 515 kV DC

VSC converter technology

Grid connection points Tonstad (NO) Wilster (DE) Schleswig-

Holstein

Cable 514 km submarine cable route 55 km underground cable route in

Germany 53km Overhead line in Norway

Investment 1,5-2 billion €

Planned in operation 2018

Nord.Link Ownership

• 50% share

• Norwegian state-owned TSO

• Owns and operates the Norwegian grid, incl. interconnectors to Denmark, Sweden, the Netherlands and the UK (future)

• 25% share

• Dutch/German TSO

• Owns grid at connection points in Germany

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• 25% share

• German development bank, government owned

• Invests in Energiwende

The Norwegian governmentinterconnector licence

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Granted 13th October 2014 3 weeks time period for lodging an appeal Capacity markets: "Statnett must ensure that the interconnector is

included in a potential capacity market in Germany, provided that doing so increases socio-economic profitability. The participation scheme shall be presented to the Ministry of Petroleum and Energy for approval well before the changes become effective."

If the introduction of capacity markets is deemed necessary, they must be designed so that all market players, also interconnectors, are allowed to participate

Political support for both interconnectors, from 2012 and onwards

License to build - NordLink

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Granted

Pending

3. Nord.Link answering to European energy challenges • Key concerns

• Affordability

• Security of supply

• Energy security

• Sustainability

• Integrating markets

• Upgrading and extending infrastructure

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Commission communication 14 October 2014 on Internal Energy Market

Nord.Link answers to all these concerns and is on EU list of Projects of Common Interest (PCI) & part of the Federal Requirement Plan

Importance of the project to EU and German energy market

European energy infrastructure : Investment requirements for 2030 and beyond

• Energy-only markets• We believe the Internal Energy Market is the best capacity

market - free flow of electricity• Capacity markets impacts business case for interconnectors; if

introduced its important to allow participants and interconnectors access

• EU state aid guidelines is a good fundament

• A strong ETS • With ambitious target for GHG emission reduction

• A stable regulatory framework• Electricity price lays the premise for investment decisions and is

influenced by regulatory interventions

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MORE INTERCONNECTORS ARE NEEDED

“I want to reform and reorganise Europe´s energy policy (…) into a resilient Energy Union with a Forward-Looking Climate Policy

Jean-Claude Juncker, incoming European Commission president

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…and an infrastructure overhaul that has the green shift as a strategic orientation

Looking to 2030: EU-summit 23 October

2030

40 % GHG reduction

27 % RES

15 % inter-connection

??

27 % efficiency

330

18045

82

0102030405060708090

0

50

100

150

200

250

300

350

2013 2030

GWg/kWh

CO2-intensity Cross border Capacity

Estimated change in CO2-intensity from the power sector and cross border capacity in North of Europe (Statnett BID-model)

13

Enabling ambitious climate policy

Conclusion:• Interconnectors for a renewable future• Improves security of supply on both sides• Socioeconomic viable projects• Contributes to a resilient energy system which better absorb shocks• Grid strengthening is needed on both sides• If capacity markets are deemed necessary, they should be designed

so that all market players, also interconnectors, are allowed to participate

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