© Reuters.
(Reuters) – Britain began a consultation on Thursday on how to realign its electricity market more closely to Europe and improve cross-border trading after Brexit decoupled it from a common system, leading to discrepancies in market prices.
Interconnecting cables increase the ability of Britain’s electricity market to trade with others, enhance energy system flexibility and aid decarbonisation, the Department for Business, Energy & Industrial Strategy (BEIS) said.
“We’re seeking views on the current arrangements for trading electricity on power exchanges in the GB wholesale electricity market and our proposals to support efficient cross-border trading,” BEIS added in a statement.
The British electricity market previously operated a uniform day-ahead price which was settled through shared order books on exchanges Nord Pool and Epex Spot.
But when Britain’s EU exit was completed on Jan. 1, it left the bloc’s internal energy market and its market-coupling system, leading the exchanges to run fully separated auctions, settling and clearing at different and independent prices.
BEIS now proposes that the two exchanges “make operational arrangements to couple those auctions, whereby bids and offers from across those auctions are cleared and settled in a manner that results in a single GB clearing price”.
This would also allow the UK to comply with the Trade and Cooperation Agreement (TCA) it signed with the EU, which calls for day-ahead capacity on cross-border interconnector cables and electricity to be sold together, or implicitly.
Britain currently has four interconnectors to continental Europe operated by National Grid (LON:), with a fifth to Norway due to start commercial operation on Friday, with Nord Pool operating an implicit daily auction on deliveries.
The BEIS consultation https://www.gov.uk/government/consultations/re-coupling-great-britain-electricity-auctions-for-cross-border-trade closes on Oct. 28.
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