NorNed cable off to a promising start

09-07-2008 With almost 100% cable availability, the NorNed cable between the Netherlands and Norway is off to a promising start. In its first two months in operation, the cable generated exceptionally high revenues of approx. 50 million euro. These results exceed all previous estimates: in the business case drawn up for the NorNed cable, annual revenues were estimated at EUR 64 million. In two months’ time, 8% of the total costs of the cable have been recovered.

Since the NorNed cable came into service on May 6, it has more than lived up to the expectations the two TSOs TenneT and Statnett had when embarking upon this ambitious project. Low electricity prices in southern Norway combined with high electricity prices in the Netherlands have ensured that the current flows go from Norway to the Netherlands most of the time. So far, 1 Terawatt-hour (1 million megawatt-hours) of Norwegian hydro-energy has been imported into the Netherlands.

TenneT’s President and CEO, Mel Kroon, commented: “TenneT and its Norwegian counterpart Statnett expect year-end results to be significantly higher than the 64 million euro originally forecast in the business case.” The NorNed cable has increased the resilience of the Dutch electricity market. Analyses indicate that in the first weeks after the NorNed cable went live, the APX index for Dutch next-day electricity would have been over three times higher without the buffering effect of NorNed. As an example, the APX Index for 6 May 2008 reached 180 Euro/MWh, without the NorNed cable this price would have spiked to 500 Euro/MWh on several occasions. This example clearly shows how the NorNed cable and its imports have added to the stability of the Dutch wholesale electricity market.