OSLO A project to build a power cable between Britain and Norway may be delayed, Statnett said, if the British government does not agree by the spring to include the Norwegian grid operator in a payment system for providing backup capacity.
Britain is introducing an auction system to fix payments to power facilities for making spare capacity available on standby. But the government has proposed to exclude international cable operators from the system, saying the interconnectors cannot guarantee power will enter the market when needed.
"If there is no agreement by Easter, I would not exclude that the UK cable project could be delayed beyond 2020," Auke Lont, Statnett's chief executive, told Reuters on Wednesday on the sidelines of an energy conference.
Statnett wants to build a 1,400 megawatt (MW) interconnection to Germany by 2018 and another 1400 MW cable to Britain by 2020.
Both Britain and Germany are interested in improving access to Norway's vast hydropower resources to help them balance volatile renewable power output, which varies from day to day depending on weather.
Statnett is awaiting Norwegian government licenses to build the cables to Britain and Germany.
New Norwegian Oil and Energy Minister Tord Lien told the Statnett conference on Wednesday the new government supported plans for building power interconnections but that there were still regulatory issues to be solved.
"We have to look at the economics of the cable," Lien later told journalists, when asked whether the new government was ready to issue a license for the UK cable, echoing concerns of his predecessor.
Norway's previous energy minister, Ola Broten Moe, has said the UK's decision to exclude interconnectors from capacity payments called into question the potential profitability of the cable.
The new government, which came to power in October, has said it will revise rules that gave Statnett a monopoly on building power links abroad, to allow other companies to take part.
Statnett has also expressed concerns about plans in Germany to introduce capacity payments to prevent companies from shutting down gas-fired plants needed to back up renewables.
"We are talking about (cable) projects to last for the next 50 years, and we need to know what kind of market design we will have on the other end," Lont said.
(Reporting by Nerijus Adomaitis; editing by Jane Baird)