UK’s National Grid started preliminary studies for construction of an undersea cable linking Britain and Norway. The project would involve construction of a 600 km cable under the North Sea, at a cost of $800 million.

It has signed a joint development agreement with Norwegian transmission company Statnett and the energy group Norsk Hydro. The proposed link capacity would be 800 MWe.

According to the National Grid, economic studies show the project would work because of the difference in the UK and Norway markets. The net result would be a downward price pressure in both markets.

Energy in the UK comes predominantly from thermal power plants, whereas 98 per cent of Norwegian power is hydro-based. As a result, UK prices fluctuate over a 24 hour period whereas in Norway they are stable, fluctuating instead between Summer and Winter.

During the day, when UK prices are high, power would flow from Norway to the UK. At night, UK electricity is cheaper than Norwegian so power would flow in the opposite direction. The EU, which supports the interconnection of the girds of its member states, is underwriting 50 per cent of the cost of the preliminary study.