North Sea power cables a plus for Denmark

The vision of an interconnected power grid in the North Sea region may soon be a reality. Cables are already in place connecting Denmark to Norway, Sweden and Germany. A new grid link to the Netherlands is currently underway, and there are plans to build one to Britain as well.

Earlier this year, Energinet.dk and its Dutch counterpart, power transmission company TenneT, signed contracts to establish a direct link, called COBRA, that consists of a 325-kilometre-long submarine cable between Denmark and the Netherlands. In addition, Energinet.dk is planning an even longer grid link to the UK, called the “VikingLink”, which if built will span 760 km between the two countries. From a Danish perspective, it makes good sense to build more power grid links to the other North Sea countries, according to Torben Glar Nielsen, CTO of Energinet.dk:

“We won’t build international interconnections unless there is a good business case. We have that in COBRA, and we have it for the VikingLink.”

Driven by green transition
“All countries have begun to use renewable energy instead of oil, coal and gas, the traditional sources of energy,” Mr Nielsen explains.

“Denmark’s geographical position makes us a natural connecting link. We can, so to speak, build a motorway that connects hydro power with wind and solar energy. This will allow us to combine different sources of renewable energy and give us a better system.”

Greater interconnection between the European power grids will lead to a more efficient use of green energy, according to Mr Nielsen. For example, it will be easier for countries producing large volumes of wind, hydro or solar energy to sell their energy to other countries during periods of low consumption in their home countries.

At the same time, grid connections provide better opportunities for a country to buy power abroad if, at some point, it is not self-sufficient, allowing it to also benefit from a security of supply.

“The more connections we have, the easier we will be able to source power on days when there is no wind in Denmark and the cheaper it will be,” says Mr Nielsen.

Significant capacity increase
The reason is that power cables can be used both to import and to export energy, depending on the balance of production and consumption of power in each individual country.

In 2015, for example, Denmark had a net export of 2700 GWh to Germany, but a net import of almost 5000 GWh from Norway and just over 3600 GWh from Sweden.

Denmark’s total export capacity is a massive 6520 MW, almost equivalent to the country’s entire peak load consumption, i.e. the maximum power consumption on a cold and dark winter’s day.

The new connections will make Denmark’s export capacity even greater. COBRA will have a transmission capacity of 700 MW, but the VikingLink has a planned capacity of no less than 1400 MW. Together, they will provide a combined capacity increase of almost 33%, which is equivalent to the power consumption of more than two million households.

Danish energy exports set to grow
These international grid links will not only be good for the environment and the security of supply, they will also have a good effect on the Danish economy.

For example, energy prices in countries such as the Netherlands or the UK will likely be higher than in Denmark. As a result, says the Danish Energy Association, Danish power companies will be able to export their energy at a good price.

“Countries produce power under different circumstances and at different levels of cost. That’s why it makes sense to trade power between countries. Some of the winners will be owners of wind turbines or power stations, who will be able to grow their earnings through this expansion of the market where they can sell their products,” explains Stine Leth Rasmussen, department head at the Danish Energy Association.

“From a manufacturer’s perspective, grid connections are also part of building a sustainable and cohesive power market.”

More competition equals lower prices
But the energy producers are not the only ones who win in a market with a better-integrated European power grid: consumers will also benefit.

“Our goal is to build these grid motorways so we can trade power in a way that is as flexible and inexpensive as possible. That will give us the lowest possible power prices for Danish consumers: the bigger the market, the greater the competition and the lower the price,” says Mr Nielsen.

Ms Rasmussen agrees that having power cables connecting Denmark and its neighbouring countries is good for both power producers and consumers.

“It all balances out in the sense that producers make an extra profit because they get a slightly higher price for their power, both in the domestic market and abroad. And it actually also balances out for consumers, because they save on the power tariff and renewables subsidy,” she explains.

In other words, there is clearly an overall socio-economic gain to be had from laying power cables between countries, Mr Nielsen concludes.

“We are looking at which markets we should connect to get the best possible financial results, and we will only build a connection if it makes good economic sense for Denmark.”

This is a translation of the Danish article published in Port of Esbjerg Magazine 4, 2016.