New power cable to unite Baltic and Scandinavian power supplies

TALLINN - Work on a new underwater power cable between Estonia and Finland is set to begin next spring after the signing of a contract between Estonian, Finnish, Norwegian and U.S. companies on Oct. 9 in Tallinn.

The 315 megawatt, 70 kilometer long sea cable will start operation in 2004.

The projected capacity of the cable was increased from 200 megawatts to 315 megawatts because of strong interest from Nordic power engineering companies.

The undersea cable project called Estlink involves Eesti Energia, Finland's Pohjolan Voima and Helsingin Energia, Sweden's Granige AB, Latvia's Latvenergo, Norway's state-owned Statkraft and TXE Nordic Energy, a subsidiary of the U.S. company TXU.

Eesti Energia spokesman Erki Peegel said the Finnish company Pohjolan Voima would choose the final contractor in about a month. "It will be a large international company, either Siemens, ABB or Pirelli," he said. "Next spring, work should begin."

Commenting on the benefits of the project to Estonia, he said, "For Estonia as a state, it is a chance to export its oil shale energy to Scandinavia and it is a significant step toward integrating with the European power engineering environment."

Karlis Mikelsons, chief executive of Latvenergo, said: "We are trying to participate in this project, because it is something new from a technological point of view as well as politically. It is also important for us to cooperate with such companies. The project is a new step toward the liberal market."

Although Latvia mostly imports energy, it would be possible to sell energy generated by the country's hydroelectric plants on the Nordic market during the three or four months when water levels are at their highest.

The Scandinavians' motives are simple, said Peegel. "According to their forecasts, in the next five years the production of electricity in Scandinavia will become less profitable and too expensive. They just plan to get cheap electricity."

He declined to comment on the effect of the cable on energy prices in the region. "Our energy prices would not rise to Finnish levels. On the contrary, in the long run, over 5-10 years, the cable will help stabilize electricity prices in Estonia."

The cable is a step toward greater independence from Russian power supplies since once complete, electricity may be bought from Scandinavia in the event of a crisis. But, cautioned Peegel, "The cable itself is not sufficient to separate ourselves from Russia's energy system."

The 100 million euro project is expected to pay for itself in about 10 years. A special company will be established to manage the project and take a loan to pay for it. According to Peegel, it has not yet been decided how much each participant will contribute.