Alemania : May 18, 2009

Norway and Germany are planning on building an underwater cable between their two countries allowing Norway to export more electricity. Currently, electricity prices are much cheaper at the Nord Pool in comparison to the German electricity market EEX. Unfortunately, due to a lack of transmission capacity, electricity from Norway is currently not available.

The Swiss/Norwegian consortium Norgen is planning on shaking up the German market. With an investment of about 1 billion euros, Norgen plans an underwater cable between Norway and Germany. Once completed, this transmission cable is expected to drive down electricity prices not only in Germany, but other surrounding countries as well.

The plan is not without its pitfalls. German energy giants E.ON, RWE, EnBW and Vattenfall currently control more than 80 percent of the market and control most of the country’s distribution network. Any new supply outside of these four energy companies would need political help in getting their power to the public.

Of course, the transmission cable is not a one way conduit. The setup would allow German wind farm generation to be sold in Norway. However, it is widely anticipated that most of the power would flow from Norway’s hydroelectric plants to German consumers.

Some Norwegian industrial groups are protesting the transmission cable as they fear it would eventually drive up their electricity prices. Their fears are not unfounded as Norwegian power prices would likely rise as Germany creates more demand.