European TSOs call upon political leaders to enhance UK-EU electricity trade
The companies are calling upon the political leaders toprioritise a more efficient electricity trade between the UK and EU. Thecurrent situation is deemed unfit for the future, and investors are hesitant tocommit without efficient mechanisms in place. While some projects may stillprogress, Europe will be missing out on investment opportunities to fullydevelop offshore wind projects in the North Seas while we should, in fact, beaiming towards a European energy system that is more independent, sustainable,and resilient. Therefore, all signatories call upon the North Seas EnergyMinisters to discuss the proposed solution during their upcoming meeting on 24October in Odense, Denmark.
Supported by prominent EU and UK organisations within theenergy sector, the joint letter highlights the critical importance of resolvinginefficiencies that post a substantial barrier to achieving the full potentialof the renewable energy resources of the North Seas. Since Brexit, theinefficient market mechanism of explicit auctions has been in place on severalborders between the Internal Energy Market (IEM) and GB markets. Additionally,the foreseen target model in the post-Brexit agreement, the Multi-Region LooseVolume Coupling (MRLVC) mechanism is unfit for the specificities of offshoredevelopments such as the hybrid interconnectors. Hence, we need price couplingas this is the only efficient market mechanism.
Boostinginvestor confidence for substantial investments in offshore gridinfrastructure
Efficient, transparent, and well-functioning electricitymarkets are essential for optimal operation and investment within the sector,particularly for the roll-out of future hybrid interconnectors. The letteracknowledges that the current market design and its foreseen evolution issub-optimal and not fit for the future. In view of this, the signatories putforward a valid alternative to reach an efficient and well-known price couplingmechanism to be re-established between the UK and EU/EEA, in order to increaseefficient market operations and provide the appropriate context forinvestments.
Without confidence that the infrastructure will be usedfairly and efficiently, critical grid and renewable generation investments areat risk of delay or cancellation.
“To fully harness the offshore wind potential of theNorth Seas, it is essential to involve the UK. Market coupling and priceconvergence are prerequisites for successful UK-EU partnerships, as they willenhance efficiencies and generate greater social benefits. This improvedcollaboration will stimulate investments in offshore wind and hybridinterconnectors. As we progress towards decarbonisation, such cooperation willmake our European energy system more independent, sustainable, and resilient.Ultimately, this represents a win-win scenario for both the UK and theEU.”
James Matthys-Donnadieu, Chief Customers, Markets & System Office
PriceCoupling is the only viable market mechanism
The signatories propose re-establishing a system of pricecoupling between the IEM and GB markets. This will also maximise efficientelectricity exchanges and ensure affordable prices for households andindustries. It is broadly recognised that this would provide the framework forthe optimal development and operation of the North Seas, meeting the climateand energy goals of the EU and UK.
Along with thisletter, Elia has published a technical study to substantiate the issues thatwould arise if we continue with explicit coupling or if MRLVC were implemented.
It is proposed that the UK participates in the EuropeanPrice Coupling framework but without full membership in the IEM, the governanceof which remains fully under EU control. This can be achieved by integrating(hybrid) interconnectors from the GB market into the Single Day Ahead Coupling(SDAC) allocation process as a distinct service extension.
Call toaction towards the NSEC Ministers
Enhancing market mechanisms and ensuring efficientelectricity exchanges are pivotal steps to secure mutual benefits, bolster energysecurity, and meet climate goals across the region. Our aim is a Europeanenergy system that is more independent, sustainable, and resilient. Therefore,and in light of the ongoing political momentum regarding the EU-UK relationshipand the untapped potential for further strategic cooperation in critical areassuch as energy and climate, the joint letter calls on the EU and UK EnergyMinisters to discuss this topic, define concrete actions, and plan thenecessary follow-up to investigate the proposal, ideally already during theupcoming NSEC Ministerial meeting taking place on 24 October in Odense,Denmark.
