BritNed Begins Construction of $408 Million Netherlands-U.K. Energy Interconnector

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Researched by Industrial Info Resources (Sugar Land, Texas)--BritNed (Arnhem, Netherlands), a joint venture company of electricity grid operators TenneT TSO BV (Arnhem) and National Grid plc (NYSE:NGG) (London, England), recently announced that it has started construction of marine cables at Maasvlakte near Rotterdam in the Netherlands. The company is building a 260-kilometer energy interconnector linking Maasvlakte in the Netherlands with the Isle of Grain in Kent. On commencing operations, this will be the first energy link connecting the two countries. The interconnector is expected to augment the energy supply and security in Britain and the Netherlands and will help open European energy markets, improve competition, and create a more transparent energy trading system. The link is expected to be available for trading by the first quarter of 2011.

The $408 million interconnector project will consist of two high-voltage direct-current (HVDC) cables, which will run across the bottom of the North Sea. The cable network will have 9 kilometers of cables on land, while the remainder will be undersea cables. Construction of the cables will be completed by 2010. Construction of the first phase will consist of 29 kilometers of cables and landing facilities.

Considering the length of the network, HVDC cables were the best choice for power transmission. The cables will be linked on both ends to a converter station. The station will transform the received direct current to alternating current and link it to the respective national electricity grid. Construction of the converter station has begun, and the installation of power equipment is expected to start shortly. The 1,000-megawatt interconnector will be able to transmit power to the Netherlands and Britain.

TenneT and National Grid have prior experience in HDVC interconnection projects. Earlier, TenneT and Norwegian energy transmission operator Statnett SF (Oslo) jointly developed the $374 million, 580-kilometer NorNed undersea cable interconnector, which connects Feda in Norway with Eemshaven in the Netherlands. National Grid is also operating the France-United Kingdom interconnector. Presently, this is the U.K.'s only fully operating energy link with continental Europe. In February 2008, National Grid also completed the construction and commissioning of the Basslink interconnector, linking Tasmania with Australia's mainland.

In 2007, BritNed awarded a $350 million contract to design, engineer and implement marine cables and allied equipment to ABB Limited (NYSE:ABB) (Zurich, Switzerland). A consortium led by Siemens AG (NYSE:SI) (Munich, Germany) secured the contract to supply equipment for converter stations.

On commencing operations, the BritNed interconnector will offer the option of explicit and implicit auction to customers. Implicit auction or market coupling allows bidding and buying on the principal of Day Ahead Market. Explicit auction will provide a separate, independent platform for the interconnector transmission capacity to be auctioned. Buyers can purchase energy based on specific temporal capacity requirement and flow direction.

The BritNed interconnector is part of the European Union's strategy to develop and implement a single integrated electricity market. The interconnector will also create a unified power trading market in northwestern Europe. Countries in the European Union are now focusing on developing regional interconnectors, which provide energy independence and a sustained high-quality energy supply. In 2007, the E.U. identified 42 projects under the 'priority interconnector' scheme. In July this year, the member governments of the E.U. agreed on a $3.44 billion funding for 27 gas and power interconnector projects in the region.

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