2nd North Europe Electricity Miniforum

Planning and financing of investments

in interconnectors

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Nordic Planning Procedure• Common planning instead of coordinated planning• Common methods and tools• Headed by the Nordel Planning Committee • Consists of the planning directors of the Nordic TSO’s• 6-7 meeting per annum

Results:• Common Nordic System Development Plan• Proposal of Nordic investments• Decision by each company involved in an interconnector

Planning the investments...

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Nordel’s new Samlast Simulation Model

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1 1

1 4 1 7

1 5

1 6

1 9 1 8

2 0

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D i s t r i b u t i o n o f• g e n e r a t i o n• l o a d• i m p o r t / e x p o r t

M u l t i a r e a p o w e r m a r k e t

s i m u l a t o r

• S t a t i s t i c a l d a t a• i n f l o w• t e m p e r a t u r e

• H y d r o s y s t e m • T h e r m a l p o w e r p l a n t s • P r i c e d e p e n d e n t a n d

i n d e p e n d e n t l o a d

D C / A Cl o a d f l o w

• U t i l i z a t i o n o fl i n e s a n d c a b l e s

• T o t a l a n d m a r g i n a l l o s s e s

M a r k e t s i m u l a t o r m o d i f i c a t i o n s

• r e s t r i c t i o n s o n t r a n s m i s s i o n

• l o s s e s

• G r i d d e s c r i p t i o n• l i n e s• c a b l e s• t r a n s f o r m e r s

• S p o t m a r k e tp r i c e s f o r a r e a s

• C o s t o f c o n g e s t i o n

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Nordic System Development Plan 2002Evaluated Cross-sections

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32

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Denmark

Norway

Sweden

Finland

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1. Skagerrak (HVDC)

2. Kattegat N-DK (HVDC)

3. Kattegat N-S (HVDC)

4. Konti-Skan (HVDC)

5. The Hasle cross-section (AC)

6. Nea-Järpströmmen (AC)

7. Cross-section no. 4 (AC)

8. Fenno- Skan (HVDC)

9. Øresund (AC)

10. The Great Belt (HVDC)

11. The Finnmark cross-section (AC)

Status year 2010

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• Total costs inclusive related grid reinforcements.

• All links are standarised to 600 MW

(except Finnmark-Finland 100 MW)

Nordic System Development Plan 2002Reinforcement Costs

0 5 10 15 20 25

Nea-Järpströmmen (57/65 mill. EURO)

Finmark cross-section (76 mill. EURO)

The Great Belt (156 mill. EURO)

Kattegat N-S (392 mill. EURO)

Kattegat N-DK (384 mill. EURO)

Fennoskan (239 mill. EURO)

The Hasle cross-section (171/211 mill. EURO)

Cross-section no. 4 (202 mill. EURO)

Øresund (98 mill. EURO)

Konti-Skan (228 mill. EURO)

Skagerrak (277 mill. EURO)

mill. EURO per year

HVDCAC

0 5 10 15 20 25

Nea-Järpströmmen (57/65 mill. EURO)

Finmark cross-section (76 mill. EURO)

The Great Belt (156 mill. EURO)

Kattegat N-S (392 mill. EURO)

Kattegat N-DK (384 mill. EURO)

Fennoskan (239 mill. EURO)

The Hasle cross-section (171/211 mill. EURO)

Cross-section no. 4 (202 mill. EURO)

Øresund (98 mill. EURO)

Konti-Skan (228 mill. EURO)

Skagerrak (277 mill. EURO)

mill. EURO per year

HVDCACHVDCAC

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Nordic System Development Plan 2002

• Cost-benefit analyses based on socio-economic considerations

Conclusion:• Investments in five cross-sections were prioritized

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Status for the reinforcement measures in the5 Prioritized Cross-Sections

StorebæltDecision: 2005

Commissioning: 2009/10

Capacity: 600 MW

Investment: 160 mio. €

Skagerak IVDecision to be taken: 2006

Commissioning: 2012

Extra capacity: 600 MW

Investment: 259 mio. €

Nea-JärpströmmenDecision: 2005

Commissioning: 2009

Extra capacity: 200/750 MW*

Investment: 66 mio. €

*after further internal reinforcements

Fenno-Skan 2Decision: 2005

Commissioning: 2010

Extra capacity: 800 MW

Investment: 260 mio. €

Snitt 4Decision: 2005

Commissioning: 2011/12

Extra capacity: 400-600 MW

Investment: 150 mio. €

Open interconnectors

owned by TSO’s

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Next step: Nordic System Development Plan 2007

Scenario work• Defining

scenarios for 2025

Scenario work• Defining

scenarios for 2025

Scenario work• Development• Testing

robustness of plans

Scenario work• Development• Testing

robustness of plans

Follow-up analysis 2015

• 5 prioritized reinforcements

• Other known changes

• New SAMLAST simulation model

Seminars, interviews, workshops• Internal and external parties

DEC 2006

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Nordic System Development Plan 2007

• Analysis and perspectives

• Proposal for new investments 2015-2025

DEC 2007

Seminars, interviews, workshops• Internal and external parties

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• Today traditionally bilateral financing• A more Nordic approach is needed in the future

– The financing should be based on a Nordic cost/benefits approach

Financing the investments...

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Solution• The five Nordic projects gives a satisfactory balance between TSO investments

• Congestion rent from the elspot marked is allocated to Nordic investments (115 M€ 2005)

• N.B. Not financed by marked players – no long-term contracts

Financing the investments...