The Nordic Investment Bank (NIB) has agreed to lend Norwegian grid operator Statnett EUR 106 million to partly finance a new 420 KV power line which could help facilitate planned new renewable power production in the region.
The 420 kV overhead transmission line from Ofoten in Nordland to Balsfjord in Troms is approximately 150 kilometres long and is scheduled for completion by 2018. The new power line will ensure security of supply and promote the establishment of new businesses as well as further industrial and economic growth.
The 15 year loan has allocated the loan under NIB's Arctic Lending facility. Statnett's total project cost is expected to amount to NOK 3-4 billion.
The investment will significantly increase the transmission capacity in the region. This is required for security of supply reasons, something which is expected to become more pressing due to expected increases in both local power consumption and production of renewable energy over the coming years.
The project will have direct impacts on regional economic activities, and to some extent the entire Nordic electricity pool, where Norway's hydropower resources are crucial in balancing supply and demand.
Locally, higher capacity will enable frictionless operations of the oil and gas industry where, for instance, the recent development of the Goliat offshore oil field requires a stable electricity supply.
On the production side, the significant potential for renewable and intermittent energy production can be efficiently used to reduce the use of valuable hydropower reservoirs under most load conditions.
