Dec 4, 2012

Subsea cable Norway / Germany: Cooperation agreement concluded on large-scale project

•    Cooperation agreement between Statnett, KfW and TenneT TSO GmbH to develop, construct and operate a 1400 MW subsea cable between Norway and Germany
•    Investment volume totalling approx. EUR 1.5 - 2 billion, planned commissioning in 2018
•    Climate protection: Supports the expansion targets for renewable energy
•    Coupling the markets results in more stable and lower energy prices for both industry and consumers

The Norwegian power grid operator Statnett, KfW IPEX-Bank on behalf of KfW and TenneT TSO GmbH, transmission system operator for the German North Sea region, have concluded a cooperation agreement to develop and construct a subsea cable between Germany and Norway. The high voltage direct current interconnector will enable energy to flow between Germany and Norway and help improve the distribution of in particular renewable energy sources, between the two nations. It thereby contributes to the success of the German energy turnaround. The integration of the Norwegian and German electricity markets, which thus far are not connected directly, will ensure greater grid stability in the two countries, increase market efficiency, and stabilize prices between seasons.

The interconnector project comprises an investment volume of approximately EUR 1.5 - 2 billion. The three-party agreement provides for a 50:50 partnership between Norway and Germany. Norway's state-owned Statnett will own 50 per cent of the project. On the German side, KfW and TenneT will jointly own 50 per cent of the project via a newly established project company. The target is to commence operation of the cable late 2018. The agreement is based on the agreement reached in June between Norway and Germany. The agreement comprises provisions on the further development and implementation of the project; these will result in a final investment decision in 2014.

Quote Statnett
"This is an important milestone for Statnett, for Norway, and indeed for Europe. The interconnector will enhance our domestic security of supply during dry and cold winters, and will also incite more stable energy prices throughout the year. The cable will contribute to greater efficiency in the Northern European power market and to increased production of renewable energy in Europe. But first and foremost, the realization of an interconnector between Norway and Germany represents a major leap towards a more integrated European market, something that will be to the benefit of all customers, said Auke Lont, CEO of Statnett.

Quote KfW IPEX-Bank
"Through key projects such as this one the energy policy rethink is taking concrete shape. Our financing of the submarine cable through this joint effort with Statnett and TenneT has created an additional foundation for the sustainable transformation of the German energy mix, in this way contributing to energy supply security and stable electricity prices," said Harald D. Zenke, Speaker of the Management Board of KfW IPEX-Bank.

Quote TenneT
"We have been preparing this subsea interconnector between Norway and Germany for two years. It is a good development for the integration of wind power and a vital contribution to the German Energy transition. We are pleased with the participation of the German KfW IPEX-Bank. Statnett, KfW and TenneT combine the innovative power, financial solidity and technical leadership needed for a project of this scale", said Martin Fuchs, Chairman of the Board of TenneT TSO GmbH.
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With this cable wind power and solar power can be exported from Germany to Norway when there is a surplus of this, while Norway can export hydropower to Germany when the sun does not shine and the wind does not blow. This again will support the ambitions for more renewable energy and increased energy supply in the region, and thus EU's climate and energy goals, both on a short and long term.
About Statnett
Statnett is responsible for developing and operating the Norwegian power grid to ensure that it meets society’s expectations for the energy sector at all times. Statnett's main objectives are to develop the next generation main grid, to maintain security of supply, contribute to value creation and facilitate better climate solutions. Statnett is involved in operating and developing interconnectors between Norway and several other European countries, amongst them the world's longest subsea cable, NorNed. State owned Statnett has 950 employees and an operating profit of 1,5 bn NOK in 2011.

About KfW IPEX-Bank GmbH
Within KfW Bankengruppe KfW IPEX-Bank is in charge of international project and export finance. It is responsible for providing financing to support the German and European economy, a task derived from the legal mandate assigned to KfW Bankengruppe. Its prime focus is on medium- and long-term lending to boost the export economy, develop economic and social infrastructure and support environmental and climate protection projects. KfW IPEX-Bank operates as a legally independent group subsidiary and plays a major role in fulfilling the promotional mission of KfW Bankengruppe. It has 531 employees (as of 31 December 2011) and is represented in the key economic and financial centres throughout the globe.

About TenneT
TenneT is a leading electricity grid operator in the Netherlands and a substantial part of Germany, through its subsidiary TenneT TSO GmbH. With over 20,000 kilometres of high voltage lines and 36 million end users, it ranks among Europe’s top 5 electricity transmission system operators. Our focal point is the development of a Northwest-European energy market and the integration of renewable energy. State-owned TenneT  is also involved in subsea interconnectors between The Netherlands and Norway (2008 NorNed) and between The Netherlands and the UK (2011 BritNed).