ElecLink is seeking market feedback on an ‘Access Rules and Charging Methodology Statement’ that will apply from the commercial go-live of the interconnector, which is expected in Q1 2020. But the proposals only apply if the UK remains in Europe’s Internal Energy Market – ie if the UK and EU can avoid a no-deal Brexit and include membership of the IEM in future market arrangements.
ElecLink said that “depending on the outcome of the ongoing negotiations between the UK government and the European Union in respect of Brexit, ElecLink may consult on a second set of rules”. These would apply in case access to the European Internal Energy Market is to be discontinued under a No Deal Brexit.
ElecLInk wants market responses by 1 May. See full details of the methodology linked to the IEM here.
Last year, in an exclusive interview with New Power Report, ElecLink chief executive Steven Moore, warned that Brexit could load IT costs onto interconnectors if it is not clear how the GB market will trade with Europe. “In parallel with building the interconnector … we have to build the business environment that allows us to operate a fully functional and compliant interconnector business. [That means] all the systems that allow us to connect to power exchanges, allow traders to trade capacity, make sure the power flows come through, to balances and settlement. That systems investment is another string to the business,” he said.
His fear is rule changes and divergence between GB and Europe that change the systems being written. “If you have a new set of requirements, that has not been a great use of time and resources. We are investing a lot of our shareholders money in making sure that we are compliant with current licence conditions.” The fear over incurring big IT system costs goes for other interconnector projects, he believes. “There are a lot of potential investors that are looking at this business model at the moment and want some certainty before they will proceed.” (Subscribers: login to read the full interview )
While GB is part of the EU’s Internal Energy Market (IEM), power contracts between GB and European parties include so-called ‘implicit’ Interconnector allocation. But if the UK exits the EU with no deal it will no longer be part of IEM and, among other issues, the markets will be decoupled and there will no longer be a single reference price generated for the border. Instead, ‘explicit’ capacity allocation will be required in which Interconnector capacity is booked separately. The new access rules, agreed by continental regulators as well as Ofgem, will provide a framework for these trades. The change will, however, mean trades between GB and neighbouring markets are no longer ‘frictionless’ and will raise costs.