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UK and Norway sign cross-border electricity trade agreement – An acceleration of offshore wind development?

On Thursday September 16th, 2021, Norway and the United Kingdom (“UK”) signed an agreement regarding cross-border trade in electricity, and cooperation on electricity interconnection. The agreement is a follow-up of Norway’s free trade agreement with the UK.
Fornybar energi og grønn vekst Energirett

The main purpose of the agreement is to contribute to a predictable framework for cross border trade in electricity. This is mainly achieved through establishing core principles for electricity trading between the two countries. However, the agreement also contains specific provisions regulating cooperation between the UK and Norway on offshore wind power and related infrastructure.

Specifically, in the preamble, the agreement acknowledges that an acceleration of “the delivery of offshore wind generation and interconnection” in the North Sea, is an important part of the two countries’ contribution to combating climate change. To achieve such acceleration, the parties have, in article 5 (c), defined “[f]acilitating the timely development (…) of (…) deployment and use of offshore wind generation and electricity infrastructure in the North Sea” as a planned area of cooperation between the two countries. This planned area of cooperation includes a commitment to jointly consider “how to facilitate multi-purpose interconnector projects, which combine cross-border transmission with offshore wind generation”. In other words, the agreement expresses a mutual and cooperative political will between the parties to promote and expand their commitment to offshore wind projects.

However, it is important to note that the agreement does not put obligations on the parties to initiate and carry out specific offshore wind projects. That being said, seeing that the two countries are working together on the operation of the North Sea Link interconnector, it is not unlikely that we will see further interconnection, in particular in relation to offshore wind generation, hence affirming the energy relationship between Norway and the UK. 

Background – Offshore wind on the Norwegian Continental Shelf:

On 11 June, 2021, the Norwegian Ministry of Petroleum and Energy presented an Energy Report, a white paper on long-term value creation from Norwegian energy resources. Hereunder the Ministry proposed amendments to both the Offshore Energy Act and the Offshore Energy Act Regulations, as well as guidelines for the offshore wind concession process. The Energy Report sets targets for long-term development of energy resources in Norway, and the guidelines addresses key issues in the licencing process for would-be applicants. For the time being, two areas have been opened for offshore wind projects: Utsira Nord and Sørlige Nordsjø II. Despite the change of government which will follow the recent Parliamentary election it is relatively safe to assume that the work with the Energy Report and the guidelines for offshore wind will proceed also after a new government has been formed.

UK and Norway cross-border trade cooperation agreement (download PDF)