European transmission system operator (TSO), TenneT announced that it has, together with the European Investment Bank (EIB), closed the issuance of €100 million in hybrid capital for the construction of an interconnector between Norway and Germany.
As such, the EIB will purchase €100 million in hybrid securities, to be consolidated and form a single series with TenneT’s hybrid securities programme, launched in early 2017.
Norwegian TSO Stanett and TenneT will now develop the NordLink interconnector in close partnership. Statnett from Norway will take 50% ownership of the project, while DC Nordseekabel will retain the remaining 50%. The latter is responsible for developing the German side of the project, and is owned in equal parts by TenneT and German development bank, KfW.
The NordLink interconnector, once finished will span 624 km, 516 km of which will go under the North Sea, between Norway and Germany. Its transmission capacity will reach 1,400 MW – equivalent to the electricity demands of 3.6 million people, the company says. According to TenneT, meanwhile, the project will reach full commercial operation by 2020.
Otto Jager, TenneT’s Chief Financial Officer, said: “Today’s transaction underlines the further deepening of our strong relationship with the EIB. In addition to the senior commitments of EUR 1.5bn, the EIB today supports one of the most challenging projects for the establishment of an interconnected renewable energy market in Europe. We are proud that we are the first issuer of a market hybrid bond with the EIB as participant and we are looking forward to further extend our relationship with the EIB in the near future.”
ABB will design, engineer, supply, and commission two 525 kV, 1.4 GW converter stations using its Voltage Sourced Converter (VSC) technology, known as HVDC Light. One station will be located near Tonstad in southern Norway, while the other will be built near Wilster in northern Germany.
The high voltage direct current (HVDC) interconnector allows increasing wind and solar capacities from Germany to be distributed directly to the Norwegian electricity market. Norway will, in return, transmit mainly hydroelectric power, which is the Scandinavian country’s primary source of electricity.
According to the project developers, the interconnector will significantly improve energy security and the integration of renewable energy resources.
Since 2015, the EU has been pursuing plans to further interconnect the European electricity grids, to allow for better renewable energy distribution. Earlier this year, Portugal Spain and France reached an agreement over the construction of similar interconnectors.
In Germany, debates about slow grid infrastructure adaptations are leading the discourse on the continuation of its energy transition. Federal Economy and Energy Minister, Peter Altmaier said, when he took up his current post in March 2018, that he links the continuation of renewable energy development to grid infrastructure development.
Germany plans to build 1,800 km of new transmission lines within its borders, in order to cope with the decommissioning of its nuclear power plants, which should happen by the end of 2022, and increasing renewable energy loads. To date, just 800 km of this target has been approved and realized.
On Tuesday, Altmaier presented a plan to speed up the grid infrastructure development. “For a successful energy transition, we need well developed grids as much as we need renewable energy resources. The grids are the vital organ of our electricity supply,” he said.
European Commission Vice-President for the Energy Union, Maroš Šefčovič added, “We need forward-looking investments into modern energy infrastructure with adequate interconnections, in particular, to integrate renewables into the grid.
“It is a vital element of our energy security as well as our climate action. This smart combination of renewable power generation – solar and wind in Germany and hydroelectric in Norway – underlines our firm commitment to bring clean power to millions of people.”