Ødd Oygarden, chairman of NorthConnect, the consortium behind the interconnector between Peterhead and western Norway, said cancelling the project was a "possible development" if Oslo's proposal to put state-controlled grid operator Statnett in charge of all Norwegian interconnector projects comes to fruition.
Statnett currently has no interest in NorthConnect, but this has prompted fears it would prioritise interconnector projects in which it does have a stake – including its North Sea Network (NSN) joint venture with National Grid south of the Border. NSN proposes to build a line between Northumberland and Western Norway, which would potentially allow the rest of the UK to dominate green energy exporting in the event that Scotland voted for independence.
England already enjoys links to France and the Netherlands and is the subject of proposed links to Belgium and another to France. However, a link to Norway is particularly attractive as it offers access to the entire Scandinavian grid, with 26 million consumers, plus the potential for using Norway and Sweden's vast hydroelectricity resources for pumped storage facilities.
Pumped storage is the only commercially viable way to store electricity, and thus is a way of neutralising wind power's big disadvantage: only generating when the wind is blowing. For this reason, Norway and Sweden are seen as Europe's potential "green battery". As well as the UK, other countries with major green power ambitions such as Germany are also planning interconnectors towards Scandinavia. Scotland's only interconnectors are currently with England and Northern Ireland.
Oygarden said: "We will have to see what will happen with the Norwegian government's proposition. If it goes ahead - You can take it that [cancelling the NorthConnect project] might be a possible development. The government suggesting that there should be a near-monopolistic situation with interconnectors is not what we want as a background for reaching agreements."
The concerns are the second blow to the project. Earlier this month, it emerged that SSE – one of the two main partners, along with Vattenfall of Sweden – was withdrawing from the consortium. With three Norwegian players making up the rest of NorthConnect, SSE's withdrawal means the project loses a firm that would be one of the main suppliers of renewable energy to the interconnector, as well as an in-house specialist in UK regulatory issues.
As a 25% owner in the project, SSE would have had to invest around £375 million in the project by its proposed connection date of 2020-21.
The NorthConnect interconnector would be 570km long and would have the capacity to carry 1.4GW of power, around two-thirds the output capacity of Peterhead power station.
The NSN interconnector would be 800km long and of similar capacity. It has already surveyed the seabed across the entire North Sea route and it is hoped it will be operational by 2020.
Hans Olav Ween, a senior adviser at industry association EnergiNorge, said: "If the proposal is adopted and implemented into Norwegian legislation, already launched merchant interconnector initiatives like the NorthConnect or other future similar initiatives with the participation of commercial players will effectively be stopped.
"The proposed amendments will effectively remove competition and monopolise the development of interconnectors, the result being reduced interconnection capacity development and reduced development speed in existing and future projects."
Rhoda Grant, Scottish Labour energy spokeswoman, described the development as "worrying".
She said: "It's one reason why we are better off together [ie, as part of the UK]. It would be concerning in an independent Scotland if we had invested huge amounts in wind but didn't have the storage capacity. And when it comes to importing energy, it's simple economics that if you have more than one place from which to source it, you have got more bargaining power."
A spokesman for the Norwegian government said: "Statnett is most suited to assess the development of new interconnectors in the context of investments in the domestic transmission grid. Furthermore, ownership unbundling to remove potential conflict of interest between network operation and supply and generation interests is also important."
Asked whether fears about interconnectors being cancelled were reasonable, he added: "Grid investments shall be conducted if they are socio-economically profitable. This includes new interconnectors."
A Scottish Government spokesman said: "Scotland has huge energy resources. We will continue to work to connect and transport that energy - including working with the NorthConnect partners, and governments in UK and Europe to connect and transport energy from Scotland."