The deal will enable Britain to benefit from Norwegian hydroelectric power, when the country’s own wind energy runs low.
National Grid and Statnett have agreed to the €2bn NSN Interconnector, a joint venture between the grid operators, which will stretch 730km across the North Sea and be capable of delivering 1400 MW of power — enough to supply 750,000 homes — in either direction, when it becomes operational in 2021.
UK taxpayers will underwrite investment in the interconnector through offering National Grid and Statnett a guaranteed minimum return on the interconnector. However the government would be able to claw back any excess profits if returns from the trading of renewable energy across the North Sea are higher than expected under a “cap and floor” regulatory regime approved by Ofgem, the energy industry regulator.
Analysis by DECC suggests that, in spite of the interconnector’s cost, the project could save UK consumers £3bn over 25 years.
The NSN interconnector is one of several additional links to neighbouring countries planned by Statnett aimed at exploiting Norway’s ability to smooth the power supplies of other grid systems using its network of reservoirs.
Alan Foster, director of European business development for National Grid, said on Thursday the link would “add to the diversity of energy sources for UK” and could “reduce peak prices”.
The link will run between Blyth in Northumberland to Kvilldal in Rogaland, Norway.