(Montel) Power flows to the UK from Norway on the new 1.4 GW North Sea Link (NSL) interconnector have curbed sky-rocketing prices in the British market, analysts Volue said on Thursday.
"We see that UK prices rise sharply in the hour after the exports cease. The NSL test volumes clearly have a price effect," Volue analyst Katinka Bogaard told Montel.
UK spot prices hit a record high of GBP 2,500/MWh for delivery at 19:00-20:00 UK time on Wednesday, easing to GBP 1,500/MWh for the same period on Thursday.
"The UK will likely continue to see a supply squeeze [in the coming weeks] with high prices, although the situation will ease compared to today," Bogaard said.
An outage on the 2 GW IFA1 interconnector between the UK and France compounded the situation and had happened at the "worst possible" time, she added.
Other analysts told Montel earlier that the outage could spark new price highs.
Volue's base scenario showed NSL would mainly send power from Norway to the UK all winter with an average capacity of 1.1 GW.
"We don't expect the cable's full capacity to be available all the time and have assumed there will be some limits," Bogaard said, stressing a lot of uncertainty surrounded the expected flows.
"If we have a mild winter with a lot of wind power in the UK, the country could end up exporting to Norway, which looks to be running low on hydro supply," she said.
A very cold winter in southern Norway could therefore lift local prices in the NO2 bidding zone to a level which triggered imports from the UK, she added.
Volue warned this week that hydropower reservoirs risked dropping to critically low levels following a dry summer and early autumn.