The government has launched a consultation to improve cross-border trade with Europe following the decoupling of Brexit from the common market.
Until January 1, the UK electricity market was part of the EU’s internal energy market, operating at the same day-ahead price through the operators European Power Exchange (Epex) and Nord Pool.
However, with the completion of the country’s exit from the region, electricity is no longer marketed through the market coupling regime. Instead, the interconnection capacity is sold to the market separately and independently through explicit auctions, settlement and clearing at different and independent prices.
The government Ministry of Business, Energy and Industrial Strategy now proposes that “arrangements be put in place between the” relevant day-ahead markets “to support the formation of a single compensation price for the GB”.
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As such, this would also be in line with the Trade and Cooperation Agreement, which commits the two parties to strengthen and support their common energy goals, including by ensuring the efficient use of power interconnections, including jointly selling the capacity on interconnection and electricity.
Specifically, BEIS considers the “relevant daily markets” to be the two GB daily hourly auctions that currently take place at 9:20 am and 9:50 am, and are most likely to maximize the benefits of cross-border trade by providing the most reliable information on the market. Marlet. These were the two auctions previously coupled by Epex and Nord Pool when Great Britain was part of the common market.
Great Britain has four European interconnections to Ireland, France, Belgium and the Netherlands. A fifth, the North Sea Link connecting Britain and Norway, entered service on October 1 with Nord Pool operating implicit daily auctions.
BEIS considers that a single clearing price in GB will support the effective implementation of the so-called Multi-Regional Loose Coupling (MRLVC) trading model, designed to optimize connector flows with the aim of maximizing the benefits of trading.
Proposals are open for consultation until October 28. Whether or not the proposal will alleviate the energy crisis caused by high gas prices is open, but current and future regional interconnections are expected to be an important component of the market for the foreseeable future.