Black Sea Energy Conference Bucharest April 3-5 Bo Normark Submarine HVDC Interconnections, examples and proposed for Romania – Turkey Black Sea Energy Conference Bucharest April 3-5 Bo Normark

EU Plans for interconnections 2001 1 2 10 6 7 8 4 9 5 3 2003 2005

EU Common Energy Policy

Cross Sound, USA Financial set-up Project specifics Private Limited Recourse Financing, private banks and investors Tariff set by auction Project specifics In commercial service since 2002 ±150 kV, 330 MW HVDC Light® 40 km long subsea cable between Connecticut and Long Island Domestic market coupling (New York – New England) The client is TransÉnergie U.S. a subsidiary of Hydro Québec

Cross Sound Cable, market value Cost 2002 120 MUS$ Value 2005 210 MUS$

Estlink, Nordic Energy Link AS. Project specific Improved security of the electricity supply in the Baltic States Integration of electricity markets Turnkey 350 MW ±150 kV HVDC Light cable transmission system. 70 km subsea cable, 30 km land cable Improvement of the voltage stability in both grids Short implementation time 19 month

NorNed, Norway - Netherlands Feda Eemshaven 580 km Financial set-up Public limited recourse financing Tariff set by auction Project specifics Commissioning year 2007 ±450 kV, 700 MW Classic HVDC 580 km long subsea cable between Feda – Eemshaven a world record of subsea cable Bilateral market coupling The clients are the TSO’s of respective country, i.e. Statnett and TenneT

Romania – Turkey, Project summary Countries: Romania and Turkey Customers: Transelectrica and TEİAŞ Scope of Works: Turn key cost approximately 290 MEUR excluding AC connections and strengthening of respective grids Rated power: 600-700 MW Submarine cable: >300 km Water depth <1000m

Why HVDC? Classic or Light® HVDC is a well proven, straight forward, state of the art technology and in case of the “Black Sea Interconnection”, the only viable alternative. The distance in excess of 300 km preclude the use of a AC-subsea cable interconnection The distance (+ 300 km) and anticipated capacity (600-700 MW) makes it possible to use either Classic or Light® technology Investment cost versus technical features and loss evaluation of the different technologies will be the decisive factor for choosing between the two

Project prerequisites The macro-political drivers is very good, Romania expect to be a EU member 2007 and Turkey just commenced the accession negotiations. The political drivers seem to be very good, i.a. Bilateral Ministerial protocol and MoU between Transelectrica and TEİAŞ. Additionally Romania is already a full member of UCTE and Turkey is applying to become one The technical drivers are evident, in particular Security of Supply and sharing of Spinning Reserve Market Coupling is a clear Commercial driver and the pre-feasibility study conducted by Transelectrica and TEİAŞ looks promising.

Stakeholders interests in the Project EU EU will most likely promote the project since it will interconnect two of its potential member countries. It could even be part of the respective countries Energy Chapter in the accession negotiations UCTE UCTE is a very strong promoter of bilateral interconnections and this project fits very well into their strategy of increasing the number of bilateral interconnections in Europe The Romanian Government Consider it a very important infrastructure project. Have realised that the project is an Energy export opportunity for Romania

Stakeholders interests in the Project, cont The Turkish Government Agree with its Romanian counterparts that it is a very important infrastructure project Has recently launched a new regulation for bilateral Energy trading, Market Coupling, allowing private initiatives. This has resulted in Turkish Energy traders being interested in the privatisation of Romanian Power Plants (Thermal and Hydro). The link can facilitate the possibility to “bring home their power”. Can establish Turkey as an Electric Energy Hub (like it already is for Gas), trading energy with all it neighbouring countries Transelectrica and TEİAŞ Consider the link important for System adequacy, Sharing of Spinning Reserve and Security of Supply Will most likely the ultimate owner of the link due to EU regulations and the link being an infrastructure project that must be available to all eligible traders of energy

Possible financing models Traditional Buyer’s credits Medium term loans based on Export Credit Agency Guaranteed Financing Long term loans from Multilateral Development Banks such as WB, EBRD, EIB, NIB, BSTDB Combination of a) and b) Private financial solutions Limited Recourse Project Financing with loans (from 1 above) + equity from investors Private Insurance company ”off balance sheet”-solutions

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