Nord Pool exchange is granted UK-Norway power auction licence

By Nora Buli

OSLO (Reuters) - Norway's Energy Regulatory Authority (RME) on Thursday issued the Nord Pool power exchange a licence to operate a daily auction for electricity trading on the new Norway-UK power cable.

The licence is valid for one year, entitling Nord Pool to hold a daily auction at 1050 CET (0850 GMT) for deliveries the following day.

The new 1,400 megawatt (MW) North Sea Link (NSL) cable will start commercial test operation in early October, linking Norway's southern price zone NO2 with the British power market.

Nord Pool already operates in both markets and will be running an implicit auction, meaning capacity on the cable and production traded on the exchange are auctioned together.

This ensures that electrical energy flows from areas with a surplus of power and lower prices to areas with a deficit and higher prices.

The licence was granted the same day Norway and Britain signed a bilateral power interconnection agreement to formalise the use of the new cable and potential future interconnections between the two countries.

Britain's exit from the European Union excluded the UK from European market solutions, requiring a separate trading solution for North Sea Link, the regulator said.

To ensure a timely start, Nord Pool is awarded an exclusive auction licence, as it is not practically feasible to arrange for more marketplaces before the cable is put into operation, RME said.

"However, RME requires the licensee to contribute to the development of a solution with several marketplaces, should RME later require this," it added.

(Reporting by Nora Buli, editing by Terje Solsvik)