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German grid operator 50Hertz awards 4.6 billion eur power line contract for renewables switch

Part of transformer substation hosted by 50Hertz Transmission Company is pictured in Neuenhagen

By Riham Alkousaa

BERLIN (Reuters) - German power grid operator 50Hertz said on Friday it had signed a 4.6 billion euro ($4.88 billion) contract with Denmark's NKT and Italy's Prysmian Group as it expands high-capacity submarine and land cables for Germany's renewables switch.

The contracts are for cables covering at least 3,500 kilometres which could be later extended by an additional 2,700 kilometres, the company added.

"In terms of financial volume, this is the largest single award decision that the 50 Hertz company has made in its history," 50Hertz Chief Executive Stefan Kapferer told a news conference presenting the deal in Berlin.

The project is part of Germany's 2045 ambitions to generate 100% electricity from renewables, of which onshore and offshore wind power in the north would have to be transmitted to the industry-heavy south.

50Hertz, 80% owned by the Belgian group Elia and 20% by state-bank KfW, said the production and installation of the systems will start in 2025 and will be fully commissioned in the mid-2030s.

The projects include 525-kV cable systems with a capacity of 2 gigawatts each, a technology that is ideal for large amounts of power transportation over long distances, Claes Westerlind, CEO of Denmark's NKT, said.

The cables will have a lifespan of 40 to 60 years and would be manufactured in Germany and Sweden.

NKT will be responsible for the cables in the Baltic Sea for offshore grid connect systems off the island of Ruegen and for the planned energy hub on the Danish island of Bornholm, with five projects worth 3.5 billion euros.

Germany and Denmark in June signed an agreement to connect at least 3 GW of wind energy generation capacity on Bornholm to the mainland by the beginning of the 2030s, of which 2 GW will be transmitted to Germany.

It will also build an offshore grid connection project in the North Sea as well as an onshore in the northern states of Schleswig-Holstein and Mecklenburg-Vorpommern.

Prysmian Power Link, a subsidy of Italy's Prysmian Group, will supply and install an offshore grid connection system in the North Sea, in a 1.1 billion euro ($1.17-billion) contract.

Prysmian's two turnkey projects, called NOR-11-1 and DC31, will have an overall cable length of around 1,000 kilometres, the world's largest cablemaker said in a statement.

($1 = 0.9428 euros)

(Reporting by Riham Alkousaa and Tom Kaeckenhoff; Editing by Miranda Murray, Elaine Hardcastle)