OSLO, Jan 31 (Reuters) - A planned power cable linking Norway and Scotland, due to be operational by 2023, should be postponed as it may overburden the Nordic region's existing infrastructure, Norwegian grid operator Statnett said in a report on Wednesday.
The 1.4 gigawatt (GW) link, NorthConnect, is a joint project by three Norwegian power firms and Sweden's Vattenfall , and is currently due to be in operation by 2022 or 2023, with an investment decision expected in 2019.
It is seen meeting a quarter of Scotland's peak power demand with energy from Norwegian hydropower dams and wind turbines, and would help Britain as coal-fired power plants close and its oil and gas production declines in the coming years.
Statnett, however, said adding more export and import capacity will complicate operations in the Nordic grid, requiring IT investments and close integration with Statnett, all of which can be difficult to achieve and have uncertain timelines.
"Statnett believes the startup of the connection should take place at a later time than currently proposed," the operator said in the report.
Statnett is already building two 1.4 (GW) subsea cables of its own to Germany and Britain to start up in 2020 and 2021 respectively. The three links each have a price tag of up to 2 billion euros ($2.5 billion).
Plugging in NorthConnect at the same time could make it challenging for the Nordic grid to handle the flows and could lead to a capping of capacity in order to keep the system reliable, said Statnett.
The biggest risk of adding NorthConnect to the Nordic grid is in balancing electricity supply and demand in the region, it added, as Norway, Denmark, Sweden and Finland are negotiating a new deal to handle their system's imbalances.
NorthConnect has its critics in Norway, with the country's opposition and several unions campaigning against it in the last years, fearing it would raise domestic power prices.
"With increased leased lines... the Nordic region is more exposed to power prices in Europe. Statnett believes that this exposure will increase the variation in Nordic power prices, thus increasing prices for reserves," the grid operator wrote.
Norway's average spot power price for Oslo, the capital, was at 29.04 euros per megawatt hour in 2017, one of the lowest in Europe.
NorthConnect project chairman Odd Oeygarden said the cable's partners disagreed with Statnett's report and would discuss the case with Norway's state regulator prior to an expected decision on issuing a license.
"We haven't changed our plans," Oeygarden told Reuters, while adding he couldn't rule out the possibility that the project could face delays. ($1 = 0.8033 euros) (Editing by Susan Fenton)