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EuropaGrid: has Europe’s dream of an integrated grid come true?

In January privately owned Irish firm Imera Power went public with plans to build EuropaGrid – a €4.4 billion pan-European electricity grid project to develop a more truly integrated network with greater security of supply. Unusually for grid interconnector schemes, the money will be raised almost entirely from private sources. Tim Probert finds out more.

Tim Probert, Deputy Editor

Matters are coming to a head. The European Union (EU) says there is an urgent requirement for both a single electricity market and increased renewable energy production. The European Commission’s Third Energy Package went into greater specifics – it wants to see the “development of a blueprint for a North Sea offshore grid, interconnecting national electricity grids and plugging in planned offshore wind projects”.


The EuropaGrid is intended to become part of a pan-European supergrid.
Click here to enlarge image

The Commission has not had to wait long. In January, Irish firm Imera announced its plans to build EuropaGrid – a €4.4 billion ($6 billion) project that will develop North Sea and Atlantic electricity grids connecting key markets and offshore wind farms, which the ambitious company believes will be the foundation for a pan-European offshore electricity network.

Imera is an asset investment company specializing in the development of subsea power interconnectors and power transmission grids. Its founder, and now president and CEO, is Rory O’Neill, a former executive of Irish gas utility Bord Gáis, is heavily involved with the deregulation of the Irish energy sector.

Since December 2007, Norwegian subsea cable layer Oceanteam ASA has owned 70 per cent of Imera Power, after it merged its Hydragrid business with Imera. Oceanteam Power & Umbilical is the preferred supplier of the subsea preparatory and cable laying work.

POWER LICENSES

At present, Imera holds five licenses and is actively developing interconnectors between Ireland and the UK (East West I + II), France and the UK, and Belgium and the UK (BelBrit). These projects form the foundation for EuropaGrid.

The Imera EuropaGrid project will comprise of two networks. EuropaGrid North Sea will connect Scandinavia, Western Europe and the UK. The first phase represents an investment of €2.76 billion.

EuropaGrid Atlantic will connect the UK, Ireland, France and Spain. The first phase, East West 1 – a 350 MW capacity DC line between the Arklow 220 kV substation in the Republic of Ireland and the Pentir 400 kV substation in North Wales, UK – has been approved by the EU, is ready to go once the financial close has been achieved and is on schedule for delivery in 2010.

O’Neill said: “Because we are a private company, we can build networks faster and cheaper than most regulated organizations. We also have access to the largest fleet of specialized cable-laying vessels and marine engineering expertise through our parent company, Oceanteam.“

In January 2009 the EU reaffirmed its commitment to the development of interconnection and offshore wind projects with a stimulus plan of €500 million of offshore wind and €705 million for electricity interconnector projects. O’Neill says that Imera does not face time or technology barriers compared with competitors and can complete projects within the three-year deadline for interconnector schemes set as part of the EU’s €5 billion stimulus package.

Financial matters

However, Imera does face some barriers with regards to funding. Whereas previous European interconnectors have mostly been built by state-owned/controlled transmission system operators (TSOs), Imera Power is a private concern, and most of the funding is being raised from private equity, with very little governmental support, despite an expected €100 million from the Irish government via the EU stimulus package.

The money is expected to come from infrastructure funds, banks and grant aid. Grace Samodal, commercial director of Imera Power, is confident that the Irish firm can raise the necessary finance for the various schemes. She says: “Despite the recession, infrastructure investment is still strong.

“The energy industry is being supported by governments, and although some pre-credit crunch sources of funding are a little more risk averse, the same kinds of sources are still interested in investing in power infrastructure.”

Imera Power also has a UK-France transmission project lined up: an 800 MW interconnector running from Meneuil in Normandy, northern France to Lovedean in Hampshire, southern England, which will increase the existing cross border capacity by 40 per cent once operational in 2012.

Imera Power has partnered with ABB to provide the technological support for its current interconnector projects. ABB’s scope of work includes the design, project management, manufacture, works testing, shipping, installation, site testing and commissioning of a complete HVDC light transmission link consisting of the converter stations and associated substation works at each end.

HVDC technology

High-voltage direct current (HVDC) light is an environmentally benign technology for modern electrical power transmission systems. HVDC light cables are buried underground and underwater and are therefore invisible.

Imera says the cables emit negligible amounts of electromagnetic fields (EMFs), so there are no health issues. HVDC light cables are made using a strong polymeric insulation material and contain no oil. Overall, the cables provide a minimal impact alternative for large-scale electrical power transmission.


Imera Power has partnered with ABB for EuropaGrid. The equipment chosen is HVDC Light technology. Source: ABB
Click here to enlarge image

The converter stations use state-of-the-art semiconductor technology to deliver highly flexible, reliable and maintainable electrical power transmission. Virtually all components, with the exception of transformers and heat exchangers, are enclosed in a building that can be designed to be visually compatible with the local environment.

Imera uses a technology called HVDC VSC (voltage source converter), extruded polymer underground cables. The system comprises two (or more) converter stations at the ends of the transmission and an underground or submarine cable link between them. Standardized designs with compact, factory assembled, pre-tested transportable modules allow for delivery times as short as 12 months. Converter stations are virtually maintenance free.

Speed is the name of the game

Samodal says Imera Power can build interconnectors much faster than TSOs, which have had little incentive to reduce costs and the build time, which she says has averaged at 14 years. “We’re much faster,” says Samodal “We look to build interconnectors in three years.”

Imera Power’s first project is the East West 1 direct current (DC) line with an interconnection capacity of 350 MW between the Arklow 220 kV substation in the Republic of Ireland and the Pentir 400 kV substation in North Wales. The total length of the link will be approximately 135 km, and it will be laid under the seabed across the Irish Sea.

The project is currently in the design and engineering stages and seeking planning permission. A decision on the project would rest with the Irish government and the Irish regulator. The project is currently on schedule for commissioning in 2010.

Imera says the link would allow Irish-based suppliers to access the UK wholesale market to competitively procure power and increase competition in the Irish market, while enabling UK generators and suppliers to supply customers in Ireland without the need for them to commit to large capital investment in Ireland itself.

As the Imera Power East West Interconnector, development is funded by the private sector and is a market-based solution, the costs of the project will not be recovered by increasing use of regulated system tariffs for all end users in the UK or Ireland, but rather by the users of the cable, large wholesale energy traders. To ensure a return on its hefty investment, Imera Power is seeking a 25-year exemption from EU regulation to own and operate an electricity interconnector.

Samodal likens ownership of capacity rights on Imera’s interconnectors to mobile phone tariffs. Traditionally, users of electricity interconnectors would do so on a pay-as-you-go basis, paying the owner of the interconnector, National Grid/Réseau de Transport d’Electricité (RTE) for the UK-France link, for transaction on a short-term basis. With Imera’s independent East West Interconnector, utilities, TSOs and trading companies will be able to purchase longer-term contracts or ‘season tickets’ for access to the link. Access agreements would be sold on a minimum ten-year basis, with users subject to a maximum megawatt usage limit.

EXEMPT FROM REGULATION

As it would be exempt from EU regulation, Imera Power would not be allowed to pass on its costs to the electricity end user. Therefore it would not be subject to price caps or price falls and would take the full upside and downside risks of power prices. With electricity prices expected to rise in the long term, Imera believes it has a strong business model that will attract investors.

EuropaGrid North Sea, which will connect Scandinavia, Western Europe and the UK, is set to offer another key element of a European electricity ‘supergrid’ – grid access for offshore power generation. Samodal says EuropaGrid North Sea would increase the efficiency of offshore wind farms. “The wind is always blowing somewhere. EuropaGrid North Sea would always give wind energy a place to go.” It is hoped that, once complete, EuropaGrid North Sea would ultimately link up with NordPool, the single electricity market for Norway, Sweden, Denmark and Finland, making for a secure, open power market across western and northern Europe.

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