German-Norway 1.4GW cable to support offshore integration

25% stake edges KfW closer toward offshore grid market

A deal involving Norwegian and German transmission system operators (TSOs) and Germany’s powerful development bank, KfW, is expected to offer a partial solution to Germany’s future offshore wind electricity balancing needs.

The agreement is also being interpreted by some within the German offshore wind market as a sign that KfW could invest, in future, in grid projects designed to link offshore wind farms in the German North Sea to the land-based network.

Thus far, Germany’s federal government has been opposed to direct investment by KfW in offshore grid infrastructure, despite the fact that KfW has been an active investor in individual offshore wind farms, including projects beyond German borders.

This week’s announcement focuses on a non-binding deal between Norwegian power grid operator, Statnett (50%), KfW IPEX-Bank (25%), and German North Sea TSO, TenneT.

The three plan to jointly develop a 1.4GW subsea cable linking Germany and Norway at a cost of about €1.5-2bn. A final investment decision is scheduled for 2014. Cable commissioning is planned for 2018.

The high voltage direct current (HVDC) 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". Wind and solar power will be exported from Germany to Norway when there is a surplus, while Norway can export hydropower to Germany when its southern neighbour needs to buy power.

As Germany’s portfolio of offshore wind projects increases the country’s need for such balancing options will grow. Offshore wind capacity in Germany currently stands at a modest 248MW. However, about up to 1GW of new capacity could be installed next year, with several more gigawatts likely to come online before the decade is out.

The Norway-Germany interconnector will see KfW team up with TenneT to create a joint venture. Such a partnership represents a welcome step forward for those who have been arguing in favour of a change in German federal policy in order to allow KfW to support construction of the German North Sea offshore electricity network. There is regional political support for exploring this option, according to Ronny Meyer, managing director of wind energy agency, Windenergie Agentur.