Germany to cap minimum capacity on new 1.4-GW Norway power link

London — German grid constraints are to limit import capacity guarantees on the 1.4-GW NordLink power cable from Norway from 2021 to the end of 2025, Norwegian grid operator Statnett said Sept. 1.

Minimum import guarantees into Germany are to start at 11.7% of capacity in 2021, rising to 70% by 2026.

"We are fundamentally disappointed that the minimum level is so low, but this is unfortunately beyond Statnett's control," executive Vice-President Gunnar Lovas said in a statement.

"We expect that significantly more capacity will often be offered than this minimum level, and that our goal is to offer the greatest possible capacity at all times," Lovas said.

The minimum capacity guarantee is required in all situations, while daily capacity may be higher.

Minimum capacity is set to rise above 23% for 2022 and 35% for 2023.

Available transmission capacity on NordLink will be given to the spot and intraday market for power trading, Statnett said.

"The capacity will vary from day to day as a result of Tennet's and Statnett's capacity calculations," it said.

"For us, it is of course important that we are guaranteed a minimum capacity for the new power cable, and we know that this is also important for Norwegian players in the power market," Lovas said.

Trial operations are set to start in December, with Statnett and Tennet testing IT and trading solutions from September.

NordLink is a cooperation between Statnett, Tennet and German state investment bank KfW with an investment volume of up to Eur2 billion ($2.4 billion).

The cable will bring surplus hydro form Norway to Germany, but will also help to ease German grid constraints by allow the evacuation of surplus wind generation from Germany.

Nordic power prices are generally below German forward power deep into the 2020s with Germany's nuclear and planned coal phase-outs expected to lift German prices further.

German baseload power for 2021 delivery traded around Eur42/MWh compared to levels around Eur26/MWh for Nordic 2021 power, exchange data showed Sept. 1 with Norway's power zones currently the lowest priced spot power in the Nordic system.

Statnett is also building a 1.4-GW sea cable to the UK planned for completion in 2021.

Minimum capacity guaranteed on 1.4-GW NordLink cable

Source: Statnett