National Grid agreeing €2bn link to buy cheaper electricity from Norway

26th Mar 2015 10:48

UK energy infrastructure operator National Grid said it was nearing agreement on the creation of a €2bn electricity link to allow the UK to buy cheaper power from Norway.FTSE 100-listed National Grid said it intended on Thursday to sign an ownership agreement with Norway's main electricity transmission network, Statnett SF, which follows another agreement signed in February for a similar link to Belgium.The 730km North Sea interconnector (NSN link) will have a capacity of 1,400 megawatts (MW), which would be enough to meet the needs of around 750,000 homes.Energy regulator Ofgem has called for the UK to build such electricity interconnectors with Europe in order to open up the UK market and lower household bills.A recent study sponsored by the company said that that 4GW-5GW of additional new interconnector capacity could cut wholesale price of electricity in the UK by around £1bn per year.Along with the 'Nemo' Belgian interconnector, when both are fully operational National Grid will be have access to 2.4GW of further capacity.National Grid, which will share the €2bn investment with Statnett, said it expected the NSN link would not be operational until early in the next decade, with construction contracts expected to be awarded in the summer and begin work later this year.The company said it has made interconnectors a strategic priority as they have the potential to provide attractive growth, returns and long-term earnings benefits, as well as the capability to add significant additional flexibility in managing the GB energy market.Chief executive Steve Holliday said: "Interconnectors have an increasingly important role to play in supporting security of supply for us and our neighbours in a cost effective manner and in helping to lower wholesale prices for consumers."The NSN link will also allow the UK to access low-carbon energy from Norway's hydro-electric power stations, helping us to meet the challenge of greener, affordable energy."