Revenue Secured

On 23 December 2004, the Dutch Office of Energy Regulation (DTe) approved TenneT's application to finance the NorNed interconnector from regulated grid tariff revenues, ending a regulatory process that had effectively paused the project for over four years since ABB's original contract award in 2000. DTe's assessment was based primarily on independent advice from TCA and two reports by The Brattle Group evaluating the cable's economic viability and cost of capital. The decision followed a public consultation in which stakeholders submitted opinions on the project's merits, and intensive oral consultations with TenneT held on 7, 8, 13 and 20 December 2004, during which TenneT demonstrated the technical feasibility of operating the cable at 700 MW continuous capacity rather than the rated 600 MW, significantly improving projected revenues. DTe approved the financing subject to conditions including accounting rules, market coupling requirements, and force majeure provisions. The approval cleared the way for ABB to receive the go-ahead to proceed the same day, with the three-year construction programme commencing in January 2005. The decision established that TenneT could fund the cable's capital costs (~EUR 600 million) and annual operating costs (~EUR 3 million) from NorNed capacity auction proceeds, with revenues shared 50/50 between TenneT and Statnett.