Norway. Varanger Kraft AS
| Date of agreement: | 26 Sep 2023 |
|---|---|
| Country: | Norway |
| Customer: | Varanger Kraft AS |
| Amount in NOK: | NOK 50 million |
| Amount in EUR: | EUR 4.3 million |
| Maturity: | 7 years |
| NACE sector / loan type: | Electricity, gas, steam and hot water supply |
This loan contributes to climate change mitigation: 100%
Financing from NIB Environmental Bond proceeds
NEB-eligible share: 100%
NEB category: Transmission, distribution and storage systems
Amount disbursed: EUR 1.9 million
Note: For loans in other currencies than EUR, the equivalent in EUR is based on the exchange rate effective for the disbursement. Read more about the NIB Environmental Bonds
Project
The loan has been provided to upgrade a hydrogen facility for commercial operations and improve the electricity distribution network in the Varanger region in northern Norway.
The company is making a hydrogen production facility in Berlevåg, using a 2.5MW electrolyser, hydrogen compressors and a hydrogen storage tank. The goal of the project is to produce hydrogen for regional applications by late 2024. Potential hydrogen applications include the mining sector, fish farming, and maritime transport.
While the region has limited grid capacity, it is the location of Varanger Kraft’s Raggovidda wind power project. This wind farm boasts a load factor of approximately 50% establishing it amongst Europe´s premier land-based wind power plants in efficiency. The hydrogen facility will contribute to grid balancing and make use of surplus wind energy.
The hydrogen project’s total cost is NOK 45.3 million. This part of the loan sum, of which NIB is financing 44%, is 100% eligible for financing with proceeds from NIB Environmental Bonds.
Separately, Varanger Kraft is investing in its electricity distribution network on the northern edge of Varangerfjorden. The focus is on replacing 36 kilometres of old lines and ensuring the security of power supply.
The total cost of this sub-project will be NOK 62.1 million in the period between 2023 and 2026.
Varanger Kraft, established in 1938, is a utility company serving northern Norway. Specialising in the production of renewable energy from hydro and wind sources, it also offers services to grid operators and power plants. Beyond energy production and distribution, Varanger Kraft, whose headquarters are in Vadsø, manages power transmission networks and delivers telecom services. The company is owned by the municipalities of Sør-Varanger, Vadsø, Deanu/Tana, Båtsfjord, Berlevåg, Vardø, and Unjarga/Nesseby.
Fulfilment of NIB's mandate
Hydrogen project productivity
The hydrogen facility has the potential to produce up to 400 tonnes of hydrogen annually, capitalising on excess wind power from the Raggovidda wind park. The new compressor increases storage potential, compressing hydrogen to 350–500 bars, making it viable for diverse applications such as industry, shipping, and mobility. As a result of years of R&D within the Haeolus EU project Haeolus, the hydrogen facility is positioning itself as an early innovator, offering energy storage solutions and paving the way for greener energy alternatives with notable growth prospects.
Hydrogen project environment
The environmental impact arise from the optimal use of renewable energy and the potential to replace significant amounts of fossil fuels across various industries.
Electricity distribution productivity
Replacing outdated infrastructure can enhance the voltage and consistent electricity provision and improve the infrastructure´s quality and efficiency. A strengthened grid also contributes to the society’s growing electrification demands, spanning transport to industrial operations.
Electricity distribution environment
The upgrade is expected to reduce interruptions and energy losses by 1.8 GWh.
Sustainability summary
No significant issues identified in the hydrogen project.
