Norway, Britain to Build World's Longest Subsea Power Cable

The world's longest subsea electricity transmission cable is to be laid between Norway and Britain by 2021, Norway's Statnett said on Thursday.

The 730km 1.4 gigawatt (GW) power cable will connect the two electricity markets directly for the first time and will be able to power nearly three quarters of a million British homes.

The estimated cost of the project is between 1.5 billion euros and 2 billion euros ($1.65 billion-$2.2 billion), shared jointly by Statnett and Britain's National Grid (NGG).

"Britain will benefit from Norwegian green hydropower, at the flick of a switch, providing green back-up power when the wind's not blowing, and this will actually save people money," Britain's Energy Secretary Ed Davey said.

National Grid said that supply from Norway could potentially reduce peak prices, saving money for households and businesses.

It will also help to increase renewable energy production in Norway and contribute to the security of supply, Statnett said.

The European Union, which wants to have a more interconnected power market to level out price differences across the bloc, is expected to provide 30 million euros for the cable's development and early stage engineering studies.

The decision on the British cable comes after Statnett made a final investment decision in February to build a 1.4 GW cable to Germany.

The planned completion date, however, was put back by a year to 2019 because of a shortage of capacity to produce such cable. The British project will also delayed by a year from an original target of 2020.

The two cables are expected to help to reduce the power surplus that has pushed average Nordic power prices to their lowest levels since 2007.

Analysts said they expect the British cable to export power from the Nordics most of the time, leading to higher prices in southern Norway.

The two interconnectors were seen by the market as preconditions for adding more renewables, thereby guarding against a crash in prices.

Norwegian state-owned power group Statkraft said last week that it plans to build 1 GW of wind power capacity by 2020, with the final investment decision expected later this year.

Danish transmission system operator Energinet.dk said last week that the country also needs to build more power links, including to the Netherlands and Britain, to handle increasing system volatility as it adds more wind turbines.

Reporting by Nerijus Adomaitis; Additional reporting by Susanna Twidale in London