Brexit TCA dashes hopes of £15M annual saving on electricity balancing costs – NGESO seeks feedback on the way forward

The UK’s exit from the EU has shut the GB electricity market out of sharing arrangements for backup power that the UK’s system operator estimates would cut GB balancing costs by €17M (£15.4M) a year. Now NGESO is seeking industry feedback on a plan of action to set up new arrangements with the EU’s electricity market (IEM) to access the IEM market for  balancing and back up.

The IEM’s TERRE (Trans-European Replacement and Reserve Exchange) project provides a platform for industry participants to offer flexibility to the system, allowing  system operators to tap least-cost options for short term system balancing. Generators with as little as 1MW of supply can participate and so can smaller plant, via aggregators. Demand-side response providers can bid into the market on the same basis.

NGESO says the Trade and Cooperation Agreement (TCA) signed at the end of  2020 indicates that the GB market will have no access to the TERRE platform. It wants industry feedback on the options and on the costs and benefits of the plan.

Costs include setting up a new IT platform. All the TSOs that  participate in TERRE are connected to the EU’s LIBRA IT platform hosted by RTE. New arrangements will require a new GB platform to interact with TERRE that will have to work within the constraints of GB’s existing BM technology, which was  originally introduced in the late 1970s. Changes to the GB platform are complex and slow because, unlike more modern platforms, it is not modularised.

One scenario could see GB operates a TERRE-like mechanism in standalone mode with no cross-border component. Alternatively it could  maintain access to European reserves via a bilateral agreement, which would require changes to existing interconnector agreements.

When Grid Code changes were made in 2018 to enable the GB market to join TERRE, National Grid considered that a new pan-European market for reserve power could meet 25% of the GB system’s balancing needs, which at that time would cut GB balancing costs by €13 million a year.The new system is partially implemented but delays in France mean the GB system had not connected to TERRE under the initial timetable.

Read NGESO’s letter here


Further reading

Resilience: exploring the Brexit penalty

As Project Terre gets the go-ahead: from the New Power archive – European reserve auction platform ‘could cut balancing costs by a quarter’

French delays leave GB users shut out of Terre platform benefits until 2020