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NEMO Link first-half earnings soar on Eur13.50/MWh UK-Belgium spread: Elia

Highlights

99%-plus availability on 1 GW cable

Spread widens on improved nuclear

SuedOstLink contract 'Elia's largest ever'

First-half 2021 earnings on the 1 GW NEMO subsea power link from Belgium to the UK increased 160% year on year as improved nuclear availability in northwest Europe contrasted with rising gas and carbon prices in the UK power market, Belgian transmission company Elia said in a results presentation July 28.

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The average price spread between the two markets increased from Eur5/MWh in H1 2020 to Eur13.50/MWh in H1 2021, Elia CFO Catherine Vandenborre told analysts on a call.

"At 99.89% availability [during the six month period], NEMO is one of the highest performing assets of its kind in the world," Vandenborre said.

The generous price spread between the two markets saw NEMO's contribution to group EBIT climb Eur9.6 million year on year to Eur15.6 million, she said.

Meanwhile Elia continued to invest ahead of plan in major network projects to connect offshore wind and improve internal supply, CEO Chris Peeters said.

"We've delivered Eur387 million of investment in the first half. Important projects include Ostwind 2 where we've laid the first sections of offshore cable [connecting future German wind farms], and we've commissioned a phase-shifter in the south of Belgium at the French border to improve security of supply," he said.

Elia's largest commitment ever, Peeters said, related to the award of a contract to Siemens to build two converter stations for SuedOstLink -- the 2 GW bi-directional HVDC "power superhighway" project in Germany involving Elia-owned 50Hertz and Tennet.

This direct current connection is to run from wind-rich northern Germany to major demand centers in the south of the country. The stations are needed to convert power to alternating current. No price was put on the contract, said to be worth several hundred million euros in the context of overall project costs of Eur4-5 billion.

On system security Peeters restated that, on the phase out of 6 GW of nuclear capacity in Belgium by 2025, the country would need to incentivize 3.6 GW of new generation via a capacity remuneration mechanism, which should be approved by the European Commission "in the coming weeks", he said.

Longer term, Belgium would be still be short of renewables in the long drive to net zero.

"Belgium has dense energy demand and limited potential for new renewable energy. We will have to make alliances with other countries, and a good example of that is the hybrid interconnector we plan to do with Denmark," he said.

The project would link the countries' high-voltage grids over a distance of more than 600 km, with the Danish segment connected to a new energy island 80 km off the Danish coast, to which up to 10 GW of wind capacity could be connected.

"This will give Belgium direct access to the bulk renewable energy it needs in order to decarbonise its energy-intensive industry and to achieve the EU's climate objectives," Elia said.

A joint report on the economic and technical feasibility of the project would be published by the end of the year, it said.