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DTe Approves Cable to Norway Subject to Conditions

The Office of Energy Regulation (DTe) will approve the construction by TenneT, the manager of the national high-voltage grid, of an electricity cable between the Netherlands and Norway subject to conditions. The 580 km long ocean cable will have a capacity of approximately 700 MW and will make it possible to transmit electricity between the Netherlands and Norway.

DTe has stipulated a number of conditions which give DTe the confidence that the cable will be economically profitable. A so-called bonus malus system applies to these conditions. If TenneT exceeds the deadline for delivery of the cable and the cost of construction, TenneT will provide compensation for this up to a reasonable maximum amount. On the other hand, TenneT will be rewarded if it delivers the cable earlier. A further condition is that the cable is available to market parties for a sufficient number of hours each year for the transmission of electricity between the Netherlands and Norway. TenneT will receive or pay a maximum annual amount of EUR 1.2 million respectively if it does or does not meet this obligation.

'An important improvement is the guarantee given by TenneT that the capacity of the cable will amount to 700 MW rather than 600 MW, as stated by TenneT in the application, at no extra cost to the consumer," according to Gert Zijl of DTe. "As a result, the comparison of the revenues and costs of the cable was much more favourable. The following applies in this case: if the capacity of the cable turns out to be lower than 700 MW when it is delivered up, TenneT will pay a maximum of EUR (15 ) million."

For DTe the most important consideration is that consumers in the Netherlands must benefit from the cable, for instance due to lower electricity prices or greater security of supply. Gert Zijl emphasises that the cable link is only justified if the costs and the risks are manageable. "For this reason, we assess proposals for the construction of such large infrastructural projects very carefully before DTe gives its approval. Unforeseen risks may cancel out the advantages of the cable or even result in higher tariffs for consumers."

TenneT may compensate the cost of the cable with income from the transmission of electricity across connections to grids in other countries.

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