Last week the Finnish Ministry of Trade and Industry granted Fingrid Oyj, Finland’s electricity transmission system operator, a permit to build a new 800-MW power transmission cable between Finland and Sweden. The new Fenno-Skan 2 link will be built as a joint project of the countries’ transmission system operators, between Rauma and Finnböle in central Sweden, alongside the current submarine cable linking the two countries. The project should be completed by 2010.

“The Fenno-Skan 2 submarine cable forms part of one of the major current projects underway to improve the functioning of the Nordic electricity markets. The new transmission link will improve the reliability of Finland’s electricity network and enhance the functioning of the Nordic electricity markets in a number of respects,” said Mauri Pekkarinen, Minister of Trade and Industry, who granted the permit.

The new link will secure electricity transmission between Finland and Sweden. The current transmission capacity of approximately 2,000 MW, now directed into the Nordic countries, will grow by 800 MW. This cable will reduce the risk of serious disruptions and transmission breaks, as well as transmission losses in the Finnish and Swedish networks by around 100 million kWh, compared to a situation in which much electricity would be transmitted through cross-border lines in the North. The link will have a positive effect on the functioning and competitive situation of the Nordic electricity markets. For example, the number of transmission restrictions due to network congestions will reduce by 60 to 80 percent. Bothersome price spikes will become less frequent, due to the harmonization of Finnish and Swedish market prices for 98 percent of the time.

The Ministry of Trade and Industry said the project will not greatly affect market prices in Finland. The wholesale price of electricity will fall slightly during wet years and rise during dry years. In terms of the national economy, this is a viable project with a direct contribution to the economy of over EUR 30 million a year and an indirect one of around EUR 100 million. Its estimated cost is around EUR 290 million. The license application procedure has revealed no environmentally detrimental effects that would prevent the implementation of the project.

The Fenno-Skan 2 cable forms part of the electricity network plan agreed by the Nordic transmission system operators in 2004, involving five major line projects. The other four are the Snitt 4 southern and central Sweden transmission link, the Great Belt submarine cable linking the systems of eastern and western Denmark, the Nea-Järpströmmen power line linking central Norway and central Sweden and the Skagerrak submarine cable between Norway and North Jutland.

These power line projects will reinforce the Nordic electricity network, improving the reliability of its electricity supply and the functioning of its electricity markets. The network plan has the objective of increasing the North to South and East to West transmission capacity of the Nordic electricity network.