EU to look at UK capacity market after Norway complaint - Oettinger

OSLO (Reuters) - The European Commission will look into Britain's plans to introduce capacity payments to domestic power producers after Norway complained that its exporters will be excluded from the system, the Europe's energy commissioner said on Friday.

Norway is not a member of the European Union, but is the second-largest gas supplier to the bloc, and also plans to build new subsea cables to trade power with Britain and Germany, making it an important EU partner.

These plans were thrown into doubt after London proposed to exclude international cable operators from the capacity payment system, saying they cannot guarantee supplies when needed.

European Energy Commissioner Guenther Oettinger said Brussels will look into the UK's plans, but added there would be no quick answer after meeting Norway's Oil and Energy Minister Tord Lien in Oslo.

"... we will look if it's acceptable, if it's in line with our internal market rules, or do we have a better solution," Oettinger told journalists.

"We need some time, maybe until the middle of the next year. So, it's good time to involve our Norwegian partners," he added.

Norway has said the UK's plans to exclude power supplied through the 1,400-megawatt (MW) cable from the capacity market has cast doubt on its profitability.

The energy ministry has yet to decide whether to license the national transmission grid operator Statnett to build the cable.

Lien said there would be no decision on the licence by the year-end, increasing the risk the project could be delayed.

Statnett's Chief Executive Auke Lont told Reuters earlier the project's implementation would be delayed beyond 2020 if no licence is issued by next spring.

"We had a very good business case before ... If we can be a part of the capacity market mechanism now, then it will be a good business as well," Lien said.

Oettinger and Lien said they preferred Europe to have a single capacity mechanism instead of 28 national schemes, which run against EU goals for a common power market by end-2014.

UK and Germany are interested in trading power with Norway with its vast hydropower resources which could be used to balance volatile output from renewables, such as wind or solar.

(Reporting by Nerijus Adomaitis; editing by David Evans)