All agreed loans

Norway. Varanger Kraft AS

Date of agreement: 6 Jul 2021
Country: Norway
Customer: Varanger Kraft AS
Amount in NOK: NOK 235 million
Amount in EUR: EUR 23.07 million
Maturity: 7 years
NACE sector / loan type: Transmission and distribution of electricity

This loan contributes to climate change mitigation: 100%

Project

NIB is providing a loan to co-finance three new high voltage (132 kV) lines, four new substations and the refurbishment of two older substations.

As part of the project, there will be two connections to the national transmission grid rather than one, which will provide the necessary redundancy to connect new wind power plants, and to avoid extensive damage in case of a substation failure.

The project will enable an early-stage development project at Varanger Kraft where hydrogen is produced from wind power. The total project cost of the Varanger Ring is NOK 625 million, of which NIB is financing 38%.

Varanger Kraft is currently constructing a ring-formed power line in the Arctic Varanger region of Norway that will secure the supply of electricity in the region, increase the voltage and enable new renewable energy assets to be connected, including the Raggovidda wind power project.

The project also allows for increased electrification, the supply of renewable power to land and sea vessels, and for the general upgrade and improvement of the grid to ensure security of supply. Nearly 150 MW of wind power have been connected by the project to the grid. The total concession approved for wind power is 320 MW, and the Varanger Ring is built to service that capacity.

Established in 1938, Varanger Kraft is a regional utility, grid, transmission, and sales company. It produces renewable energy from hydro- and wind power, provides services to grid operators and power plants, operates power transmission networks, provides telecom services as well as supplies electricity to consumers in Northern Norway. The company is owned by the municipalities of Sør-Varanger, Vadsø, Deanu/Tana, Båtsfjord, Berlevåg, Vardø and Unjarga/Nesseby. Varanger Kraft has 170 employees and has its headquarters in Vadsø.

Fulfilment of NIB's mandate

Productivity:
In the ongoing transition of the power sector with increasing capacity demand and integration of wind into the existing power system, the infrastructure needs to be adapted to accommodate the rising share of decentralised and fluctuating forms of power generation which puts the electricity grids in a more centralised position.

Regionally, the grid investments will contribute to security of supply given new grid capacity reducing outage time and interruptions. In addition, a stronger grid will enable the utilisation of the generation capacity currently constrained by the weak lines.

The capacity shortage is preventing development and connection of further wind power development. The increased voltage and reliability of electricity provision will also support continued electrification of society in such areas as transport and industrial activities.

Environment:
The strengthening of the regional grid has substantially reduced losses in the network. In 2016, the losses were around 4% (5 GWh) and in 2021 they are expected to be 1.5% (2 GWh).

The investment in the Varanger Ring will connect new renewable energy generation to the grid.

Impact indicators in relation to the investment:

  • Additional renewable generation capacity connected in MW
  • Additional transmission of renewable energy in TWh
  • Reduced losses in the grid
  • Reduced outage time

Sustainability summary

No significant issues identified.

Press release

NIB låner til utbyggingen av Varrangerringen