OSLO (Reuters) - NorthConnect, owned by three Norwegian power firms and Sweden’s Vattenfall [VATN.UL], will seek permission to build a power link from Norway to Britain costing up to 2 billion euros (1.68 billion pounds), its chairman Odd Oeygarden told Reuters.
An application will be submitted to Norway’s energy market regulator, NVE, and a second one to the oil and energy ministry, either by the end of 2016 or in January, he said.
Britain faces an energy supply crunch by the early 2020s as coal-fired power stations close and its oil and gas production declines, and building interconnectors could help fill the expected gap.
With a capacity of 1.4 gigawatt (GW), NorthConnect’s 650-kilometre subsea cable could meet about a quarter of Scotland’s peak demand with power from Norwegian hydroelectric dams and wind turbines.
The project partners plan to make a final investment decision in 2019, if the licensing process goes smoothly, and aim to have the cable in operation by 2022 or 2023, NorthConnect Chief Executive Tommy Loevstad said.
Norway’s state-owned transmission grid operator Statnett[STASF.UL] and the UK’s National Grid (NG.L) have already agreed to build a first power interconnector between the two countries by 2021.
“We are planning to submit to the authorities two applications for construction and foreign trade licenses,” NorthConnect’s Oeygarden said.
The application became possible after Norway’s parliament in October lifted a ban on building private interconnectors.
NorthConnect in June received a license from British energy market regulator Ofgem to operate the cable, but must still obtain a separate building permit.
The project owners include Norway’s third-largest power company Agder Energi [AGDER.UL], partly owned by Norwegian Statkraft [STATKF.UL], as well as Oslo city-owned E-Co Energi and power company Lyse.
Launched in 2011, NorthConnect initially included a subsidiary of Scottish and Southern Energy (SSE.L), which pulled out after Norway imposed a ban on private cables in 2013.
The Nordic firms may seek another partner in Britain to share the interconnector’s costs, estimated at about 1.5 billion to 2 billion euros, Oeygarden said.
While parliament has lifted the ban, the project has been criticized by Norwegian trade unions, which fear that more exports would lead to higher power prices at home, and even from the country’s competition authority.
Norway’s Norsk Hydro (NHY.OL), one of the world’s largest aluminium producers, said it was concerned about the impact of higher prices on its competitiveness as electricity represents nearly half its production cost.
Norway’s Oil and Energy Minister Tord Lien said last January the country should not rush to approve new cables.
The opposition Labour party said it could impose a new ban if it were to win a general election in September 2017.
Editing by Terje Solsvik and Susan Thomas