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Brexit poses risk to international power cables - Norway's grid

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By Reuters
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OSLO (Reuters) – Britain’s exit from the European Union could leave companies planning to build more power interconnections at the mercy of possible new trading arrangements and potential tariffs, Norway’s state-owned grid operator Statnett [STASF.UL] said.

Statnett and Britain’s National Grid <NG.L> agreed before the Brexit vote to construct the first interconnector between the two countries by 2021.

A separate consortium of Norwegian energy companies and Sweden’s Vattenfall [VATN.UL] is seeking to build a second cable by 2022-2023 for about 2 billion euros (1.8 billion pounds).

Brexit could mean that new trading arrangements may be required to sell power via the interconnectors as Britain might not be allowed to participate in the European spot and intra-day power trading market, according to the Norwegian grid.

“In that case, the UK will be treated in the same way as Switzerland,” Statnett told Norway’s NVE power regulator in a letter reviewed by Reuters.

Brexit could also mean that Britain will no longer be bound by EU competition rules, which currently allow interconnectors to seek British subsidy payments for providing supply capacity.

“There is therefore a risk that British authorities exclude international connections from participation in the capacity market or significantly reduce the value of participation,” Statnett said.

“We would also like to point out that there is a risk that British authorities may introduce a border tariff,” it added.

NorthConnect has been at the centre of a political row in Norway, with left-wing opposition parties and some trade unions opposing the second cable over fears of rising power prices.

Statnett also said that plans to build NorthConnect by 2022 were unrealistic given the time needed to manufacture and install the cable.

Odd Oeygarden, chairman of the NorthConnect owners’ group, said Brexit made the situation unclear to some extent, but pointed out that Statnett was already building a cable and that there are more links from the European mainland in place.

“I think in the long run the UK and the EU will find the solutions that would allow the interconnectors to operate,” he said.

(Reporting by Gwladys Fouche and Nerijus Adomaitis, additional reporting by Lefteris Karagiannopoulos, editing by Terje Solsvik and Louise Heavens)