27 Nov 2020
EUR 100 million
Infrastructure, transportation and telecom
|Date of agreement:||2 Nov 2020|
|Amount in NOK:||NOK 1,200 million|
|Amount in EUR:||EUR 112.89 million|
|NACE sector / loan type:||Transmission and distribution of electricity|
|Business area:||Energy and water|
This loan contributes to climate change mitigation: 100%
NIB has provided the loan to finance part of Statnett’s investments in the Western Corridor project.
The Western Corridor project is a collective term for the main grid in south-western Norway, including the counties of Agder and Rogaland. The project supports the green transition, enabling Norway to benefit from surplus wind power in Denmark, Germany and UK—while saving water reservoirs for exports during low-wind periods—thus crowding out power production with fossil fuels.
The project objectives are to secure reliable operation of the grid and high capacity utilisation of the cross-border cables between Norway and Denmark, Germany, the Netherlands and the UK. The project will also enable and contribute to an increase in renewable electricity production in south-western Norway, and on the Norwegian side, contribute to high utilisation of the two new 1,400 MW connections between Norway and Germany.
Statnett expects to complete the Western Corridor project by the end of 2021, and estimates a total investment cost of NOK 6.5 billion.
Statnett is the transmission system operator (TSO) of the Norwegian electric power system. The Norwegian State owns the operator through the Ministry of Petroleum and Energy.
The loan comprise the upgrading of the 78 kilometre Sauda-Lyse power line from 300 kV (kilovolt) to 420 kV, and to upgrade the Hylen switching station accordingly. The investments forms part of a larger programme comprising several interconnected subprojects.
Investment in the high voltage power system infrastructure reduces transmission grid constraints and provides several benefits, not only for the Norwegian market, but also for the integration of markets in Northern Europe. Upgrading the voltage and increasing transmission capacity will secure operations in the Western Corridor and enable the full utilisation of interconnectors, while allowing the connection of new generation sources such as wind and hydropower.
The increased intermittent energy generation is expected to provide a considerable surplus over the next two decades. As a result, value can be created by optimising grid systems and connections to respond to the changing consumer pattern, increasingly unregulated production and exchange capacity potential.
With the ongoing development of the NordLink to Germany and the North Sea Link to the UK (to be operational in 2020 and 2021 respectively, each with a capacity of 1,400 MW), the new capacity adds value to Norwegian power generation, increases congestion revenues and periods of cheaper imports and provides, overall, improved energy security.
New power generation in Southern Norway is expected to increase by 20 TWh until 2040, providing Norway with the opportunity of higher revenues from the export of flexible balancing services. Norway will benefit from importing wind power while saving hydropower reserves, which is the most valuable and flexible source for storage and use.
The main reason for strengthening the Western Corridor is to enable the flow of power between UK, Denmark, the Netherlands and Germany via subsea cables.
Strengthening the systems makes it possible to crowd out the most expensive, and usually also the most CO2 emitting generation capacity, thereby reducing emissions.
The upgrade of the western corridor has partly enabled new connection of wind power. Two new wind parks have been connected; Tonstad (210 MW) and Buheii (83 MW).
The Western Corridor project consists of several sub-projects, of which two are still under construction. Permits have been issued for all the projects.