Green Grid Investments

Nordic TSOs publish NGDP2021 to achieve regional goals

The Nordic countries are pursuing an aggressive decarbonisation effort, wh­i­ch is changing the electricity landscape in the region. Finland aims to beco­me carbon neutral by 2035, Sweden by 2045 (with interim milestones for 2030 (63 per cent) and 2040 [75 per cent]), Den­ma­rk by 2050 (with a 70 per cent milestone for 2030), and Norway aims to be­come a low-emission society (with 90-95 per cent re­du­ction) by 2050. To achie­ve these targe­ts, countries are rapidly ramping up their rene­wable capacities.

To ensure a smooth transition, the four No­r­dic transmission system operators (TSOs) – Energinet.dk (Denmark), Fingrid Oyj (Fin­land), Statnett SF (Norway) and Sv­enska kraftnät AB (Sweden) – have been closely coordinating and cooperating to establish a common perspective on the overall de­velopment of the Nordic power system. Th­is was presented by the four TSOs in a recently released (Novem­ber 2021) report, “The Nordic Grid Deve­lopment Perspective (NGDP) 2021” as well as a webinar organised by them on the subject. The analyses are based on a common Nordic scenario – Climate Neu­tral Nordics – for years 2030 and 2040, created by the Nordic TSOs. The scenario is based on the European Net­work of Tra­nsmission System Opera­to­rs for Electri­city, Ten-Year Net­work De­ve­lopment Plan 2020, distribu­ted energy scenario as well as the latest national scenarios. The TSOs performed the identification of system needs (IoSN) analysis for the No­r­­dic grid in the created scenario. The report also presents a more detailed outlook on certain selected focus areas such as north-south transmission needs, resour­ce adequacy and offshore wind.

The NGDP is published every second year. NGDP2019 described the status of the ongoing and planned investments in the region and investigated the need for increased transmission capacities bet­ween Nordic countries over five “corridors of interest”. However, the latest report presents a common Nordic view on selected key topics rather than presenting a traditional technical grid development plan. Therefore, the name of the 2021 report has been changed to “perspective” inste­ad of “plan”, as used previously. The 2021 report is an updated version of NGDP2019.

Climate Neutral Nordics scenario

The report points out that a lot has ch­an­ged since NGDP2019 was released in terms of forecast for electricity consu­mp­tion and renewable capacity addition. Nor­dic annual electricity consumption is expected to grow from 400 TWh in 2020 to 530 TWh (33 per cent growth) by 2030 and 655 TWh (65 per cent) by 2040. Hy­dro­gen production/power-to-X (P2X) wo­u­ld acc­ount for the highest demand grow­th. Fur­ther, electrification of existing and new industries, transport and data centres’ power consumption would be the key drivers for demand growth in the Nor­dics. The scenario also predicts an exponential growth in renewable energy sources from 85 GW in 2020 to 145 GW (70 per cent) in 2030 and further to 185 GW (122 per cent) by 2040. The levellised cost of electricity from renewable energy sources would continue to fall, thus enabling a huge amount of installed ca­pacity to meet the increasing demand.

The scenario shows that the electricity transfer needs in the Nordic system are increasing and the existing patterns of energy flow can change significantly. The­refore, there is a need to reinforce the networks in the Nordic countries and invite ma­jor investments to increase network ca­pacity in several Nordic corridors. This will require both construction of a new network as well as solutions to increase ca­pa­cities without traditional grid investments. The needs identified based on the Climate Neutral Nordics scenario will se­rve as a vital input to a more detailed planning process.

Identification of system needs

Transmission needs are expected to in­crease in the future when consumption increases and huge amounts of renewable energy is integrated into the Nordic power system. While the analysis shows large price differences in many corridors, it may not necessarily be addressed th­ro­ugh in­vestments in a new grid. Over time, market dynamics are likely to lead to more equal prices, which will reduce the need for such investments. Alternative options for inc­reasing grid capacity will have to be explo­red through measures such as dynamic line rating, series compensation, static var compensator/st­a­tic synchrono­us co­mpen­sator devices, voltage control solutions, and system protection sc­hemes. The Nordic TSOs are investing in the most cost-efficient options for increasing grid capacity.

NGDP2019 studied five bilateral corridors: Norway-Sweden, Finland-Sweden, Finla­nd-Norway, Norway-Denmark and Denma­rk-Sweden. The report gives an update of the work done since the analyses and further development of the corridors.

TSOs plan huge investments in future grids

The Nordic TSOs are making substantial investments to increase the capacity of the grid over the next 10 years. Energinet is bu­ilding about 3,000 km of cables and lines and eight new substations, and has pla­nned investments of about Euro 7.8 billion. This value excludes the investments in the proposed energy islands. Fingrid plans to build 3,700 km of lines and 41 new sub­stati­ons, and invest about Euro 2.1 billion. St­a­t­nett is building 2,500-4,000 km of lines and 30-35 new substations, and ma­k­ing investments worth Euro 6 billion to Euro 10 billion. Svenska kraftnät is building 800 km of lines and 20-30 new substations and making investments totalling about Euro 8.1 billion. Invest­ments include TSOs’ pl­ans to reinvest in several substations and lines as well as make equipment upgrades.

Jointly, the Nordic TSOs will build over 10,000 km of lines and more than 100 new substations, and invest around Euro 25 billion over the next decade.

Focus areas

North-south transmission needs: Due to changes in both electricity production and consumption, there will be modifications in the overall north-south flow patterns in the Nordic grid. The grid is likely to experience power flows in the opposite direction to what is predominant today. That said, in the majority of corridors, the north-south flow will not decrease and will be significant in many instances. The Nordic grid must therefore continue to have strong north-south connections. To avoid overinvestme­nts in grid capacity due to volatile wind power, P2X and other flexibility providers [such as demand-side res­po­nse, st­orage and electric vehicles] could be complements to grid reinforcements.

It is expected that there will be significant changes in the Nordic demand-supply balance. Country-wise, Denmark is in a key position regarding the development of connections between the Nordic countries and continental Europe. It is in the process of expanding both onshore and offshore renewables connected in the southern and western parts. New high voltage direct current (HVDC) projects are being planned, both internally and in the North and Baltic Seas, to expand capacity to the neighbouring countries to handle these new flows. In Finland, most of the new onshore wind power will come up in the north, while most of the demand is ex­pected to stay in the southern part. This will require large investments in north-south transmission lines. Potential HVDC co­nnections from southern Finland to Es­tonia and Sweden will further increase the need for internal grid investments.

Sweden faces the challenge of using mainly wind power to balance both con­su­mption growth and replace power production from decommissioned nuclear uni­ts. These developments could significantly increase the north-south transmission needs. Compared to Sweden and Finland, Norway has a more decentrali­s­ed power system where consumption and production is spread across the whole co­untry. Statnett has plans to upgrade all 300 kV lines to 420 kV lines by 2040.

Resource adequacy: In the Climate Neu­tral Nordics scenario, the Nordics is a surplus area with respect to energy production in 2030 and 2040. But the power margin (which is equal to the difference bet­ween the available production and current consumption) at the Nordic level will be­come negative in a longer time duration as 2040 approaches. The time duration with a negative power margin in the Nor­dics is expected to increase from 3 per cent to 28 per cent from 2030 to 2040. At the same time, the power margin at the most negative would fall from -16 GW to -38 GW. In this context, the transmission grid would serve as a valuable enabler for the exchange of resources between re­gions to help resolve adequacy issues.

In cases of similar weather conditions in the entire region, to ensure the security of supply, the Nordic countries may import from surrounding countries on the continent or the UK. Import capacity in 2030 in the Nordics is expected to be around 12 GW – although significant, it is lower than the power margin at the most negative, warranting the need for additional measures. Greater flexibility in consumption and peak plants based on biofuels/hydrogen, fuel cells or increased capacity in re­servoir hydropower will become increa­si­ngly important in this context.

Country-wise, in 2040, the estimated maximum negative power margin in Denmark and Sweden would be more than -10 GW each. Finland, which currently has 5-7 GW of power margin deficit, is expected to co­ver its deficits by imports, thus requiring strong interconnections. Norway, which has a positive margin today, is expected to have a negative power margin of -1.7 GW in 2030 and -2.5 GW in 2040, and thus will be in the tightest situation.

Offshore wind: As the EU aims to become climate neutral by 2050, offshore wind is expected to play a greater role. The EU aims to achieve 60 GW of offshore wind ca­pacity by 2030 and 300 GW by 2050. A large part of the new capacity in the Baltic Sea and the North Sea is expected to be connected to the Nordics. The number and size of planned offshore wind farms are rapidly growing in this region. Besides constructing radial lines, the massive offshore deployment may require new offshore grids that connect offshore wind capacity located far from shore to hubs that can be connected to multiple countri­es (such as energy islands). Although such offshore grids are not technically ma­­­­­­ture enough, they are needed to inte­gra­te offshore wind to multiple markets, meet the expected increase in electrificati­on consumption and support the development of green fuel (P2X).

The Nordic TSOs expect a substantial growth in connected offshore wind power over the next two decades. The total connected offshore wind capacity will inc­rease from 2.5 GW currently to 17 GW by 2030 and 35 GW by 2040. The Nordic co­untries are following different approa­ch­es to offshore wind development. In Den­mark and Norway, areas for potential new offshore wind parks are identified by the respective governments and are aw­arded through tender. In 2020, the Nor­wegian government opened two areas for application – Sørlige Nordsjø II and Utsira Nord, which together have a potential for 4.5 GW of offshore wind. The Danish government is planning for a 3.5 GW radial connected wind capacity, including Hes­selØ, Thor and Kriegers Flak, and has de­cided to construct two energy islands, one in the North Sea with an initial capacity of 3 GW expandable up to 10 GW, and one in the Baltic Sea near Bor­nholm with 2 GW of capacity. In Sw­eden and Finland, developers have submitted applications for potential wind far­ms. For example, Fingrid and Svenska kraftnät have receiv­ed approximately 20 GW and 120 GW of offshore wind connection enquiries respectively.

Similarly, the TSOs have differing roles with respect to offshore wind connections. In Finland and Denmark, the project deve­loper pays for the connection to the grid for traditional radial connections. In Swe­den, a new policy has been proposed, which will come into force from January 2022 and where Svenska kraftnät will be responsible for connections within territorial waters for those offshore connections that will be built to promote the fulfilment of the target of 100 per cent renewable electricity production by 2040. Norway is still in the process of finalising a policy, but a parliamentary white paper indicates that developers will be responsible for the cost for connection to the shore as well as the necessary grid reinforcement onshore.

While the planning of radial grid connections for offshore wind is relatively straightforward and national in nature, hybrid offshore solutions, with connections to several countries, may require the development of completely new grid planning principles, such as dimensioning of the offshore grid, fault withstand, interoperability as well as system operation principles.

The way forward

NGDP2021 highlights that the Nordic region is attractive for future energy-intensive investments and that the future power system will be more volatile and complex, increasing the demand for flexibility and new technologies.

The Nordic TSOs are working closely to ensure that transmission becomes an enabler for achieving regional climate and energy targets. Besides their collaboration for the NGDP, the TSOs are in the process of formulating a common Nordic strategy for the next 10 years (up to 2030) to meet the developments in wind power and sector integration. The TSOs released the Nordic TSO draft strategy in early 2021. The strategy, which will provide a broad view on transmission planning, system operation and markets, will be published in the next Nordic TSOs’ joint solutions report, which is released once every two years and is due in 2022. Further, the Nordic TSOs have identified the need for mid-term collaboration both in operational and planning aspects to complement long-term collaboration. Net, net, the transmission sector in the Nordic region is set for exciting times ahead.

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