Statnett buys main transmission grid from BKK Nett

Norway's Statnett SF and BKK Nett AS have entered into an agreement concerning the sale of BKK Nett's existing and new main transmission grid to Statnett, including construction of a new power line on the Kollsnes - Mongstad - Modalen section.

The background for the transaction is that the EU's Third Energy Market Package is expected to be adopted into Norwegian law and that, in such an event, all facilities in the main transmission grid would probably have to be acquired by Statnett.

BKK is in the process of constructing the so-called "outer ring", which involves a new 420 kV power line on the Kollsnes to Mongstad section, and onwards from Mongstad to Modalen valley. The latter section is under planning. These facilities are expected to be classified as transmission grid, and will consequently be purchased by Statnett following completion. The projects have high priority, and are of major significance for the power supply to Bergen, the offshore and industrial activities at Kollsnes and Mongstad, as well as for connection of new production in the area.

To contribute to efficient continuation of the projects, BKK Nett AS and Statnett SF have chosen to enter into an agreement as of 1 January this year.

The agreement between Statnett and BKK has a ceiling of approximately NOK 3.5 billion (around US$407 million) over time.

The agreement entails the following:

• As of 1 January, Statnett will acquire the existing main grid facilities Fana, Arna, Dale, Samnanger, Evanger and Modalen substation, as well as the main grid power lines Evanger - Dale, Evanger - Modalen, Dale - Arna - Fana, Evanger - Samnanger and Samnanger - Fana.

• BKK Nett will complete the power line and cable on the Kollsnes - Mongstad section. This project is scheduled for completion towards the end of 2016. Along with the existing 300 kV power line between Fana and Kollsnes, this will make up the first section of the outer ring. The parties have facilitated Statnett's acquisition of the Fana - Kollsnes - Mongstad power line as of 1 January 2018.

• The engineering of the Mongstad - Modalen section is ongoing after BKK Nett was granted a licence to construct the power line in June 2015. A separate agreement concerning the Mongstad - Modalen section will be entered into once BKK Nett has made an investment decision for the project.

• Under the agreement, BKK Nett is responsible for preparedness, operation and maintenance of the facilities acquired by Statnett for up to five years.

Thor André Berg, Chief Executive Officer of BKK Nett, said the following:

"We have entered into a good agreement with Statnett. Once the Kollsnes - Mongstad - Modalen section has been completed, we will have a reliable power supply in our area and we are certain that Statnett will manage these facilities in a good manner. BKK Nett will continue to develop a strong power grid in its own grid area."

Statnett's Executive Vice President Knut Hundhammer commented:

"Statnett is pleased to have entered into an agreement with BKK, who, except for Statnett, is the largest owner of the main grid, regarding acquisition of both the existing main grid and the grid that will be constructed over the next few years. Power supply to the Bergen area has been a major consideration for both parties during the negotiations. We are pleased to have been able to reach an agreement that ensures the utilization of BKK's expertise and implementation capability in finalizing the crucial projects of the "outer ring", as well as contributing to day-to-day operations of existing facilities in a transition period. We look forward to continuing to work together in the future. I would like to emphasize that the deal is within the boundaries of our long-term plans, and hence in accordance with what we have previously communicated. ”