FROM THE ARCHIVE: building ElecLink

In June 2018 Eleclink’s Steven Moore talked to Janet Wood about the strict timetable needed to install an interconnector alongside a busy train service – and the nerve required to take forward the new link at the time of Brexit

When I heard about Eleclink’s plan to use the Channel Tunnel to house an electricity interconnector linking England and France, I assumed the cable made use of the service tunnel. When I meet the project’s chief executive, Steven Moore, he says no, the cable passes through the “running tunnel”.

“The original idea was to put the cable in the service tunnel. But in fact, it’s not easier. The service tunnel is the primary evacuation area for all activities that go on in the tunnel. [It] has to be available and free of obstruction at all times.” As a result, opportunities to work in it are no more frequent than those in the running tunnel. When the link is operating, fixing any problem with the cable would close the running tunnel. On the other hand, “the running tunnel is bigger and it can dissipate more heat”.

I ask about the practicalities of installing a major cable alongside a near 24-hour train service and he explains: “We have very short time slots. We do it overnight at weekends… We are typically getting in just before midnight and we have five or six hours.”

At this point the team is not installing cable but brackets and infrastructure. Moore says: “It’s like a giant curtain rail. We will pull the cable in from the ends and effectively join it in the middle.” Contractors Balfour Beatty and Prysmian both have huge amounts of railway and power experience, so they are the “right people” to do that, he says. When cable installation begins, each week will be spent making a drum of cable that will be pushed in from the outside using a series of relay winches during the weekend “window”.

That will start later this year, and the project is due to start commissioning and testing in summer next year, with commercial operations in early 2020. Construction has sped up after early delays and it is now on schedule, Moore says: “Technically it is very challenging, so we have had to take some of the lessons learnt from other large projects like Crossrail. We have a series of purpose-built railway installation trains that move along to install the brackets. It’s fantastic when you watch it”.

There have been early lessons. “Some drilling mechanisms that we had at the design stage seemed like a good idea, but once in the tunnel you can see it was built in the 1980s and things aren’t quite where you thought they were”. Now drilling is effectively a remote operation.

The tunnel benefits

The benefits of using the tunnel outweigh the risks of running those pieces of infrastructure so close together. Moore says it was seen as an option from the start, and electricity transport was written into the initial treaty. “We think it has the least environmental impact of any project because you are using existing infrastructure, you are not in any way disturbing the marine bed. Laying a cable can be quite disruptive to the marine environment.”

The project’s other cables are buried, so the visual impact of the project is limited to extra buildings on the existing Eurotunnel site.

There have been at least two fires in the tunnel. The cable is exposed to that risk, but, says Moore, “Eurotunnel has installed some fire-safety zones, so its ability to deal with a fire and respond to it has improved hugely over the years.” Full risk analysis is needed to satisfy the Channel Tunnel’s regulator – the Intergovernmental Commission and the various committees that sit beneath it.

A key issue was signalling and communications, and the effect of EMF from the new cable. “We had to prove that the introduction of a new high-voltage cable does not have an impact on the existing systems.

On the other hand, the cable does not face marine hazards. Moore says: “We can monitor our cable very carefully. It sounds flippant – but we know where it is. Undersea cables can move with the current and be quite difficult to find. Our cable also has a set of fibre optics so it’s very well monitored and managed, and we know everything about that cable that there is to know. If there is ever a fault, we know where it is and what the problem is – and we can identify it.”

Financial risks

From the technical, we turn to project’s financial aspects. It was planned before Ofgem offered its “cap and floor” mechanism that guarantees a return for qualifying interconnectors. Even if that had been in place, “we wouldn’t have chosen it,” says Moore. “It makes it easier to justify the investment, but at the expense of giving up some of the upside.” He is proud that Eleclink has “no public money” and was the first “private” interconnector that is not linked to a transmission network owner.

In operation, he says the merchant model “shouldn’t make a difference to trading”. “I see it more as an incentive to invest in the development. Cap and floor allows others to have some certainty so it is easier to get funding. One reason we went down the exempted route was that one of the exemptions we have is the ability to sign long-term products rather than just focus on the short term.”

Moore won’t be drawn on how much capacity may be offered for long-term contracts, saying only that the commercial decision will be made at auction time. There is a limit of 800MW of the project’s total 1,000MW capacity. He also won’t say when the capacity auctions will be held: “We are just over a year away from the start of commissioning and testing, so some time next year we will have to think about how the auction will be held.”

Developing through Brexit

The issue of Brexit has been in the background throughout our discussion so far, so I ask Moore about its impact. He says: “We were fortunate to have all the regulatory rules and everything ready, but I know there are some issues there for potential developers now. The French regulator has said it won’t authorise or approve any new interconnectors between France and GB until there is a resolution on Brexit issues.

“It is obviously challenging. In any traded market you can manage price risk and all kinds of uncertainty. The one thing you can’t ever completely manage is political uncertainty. Brexit has introduced a lot of political uncertainty into what was already a very complex market. But the fundamentals of the requirement for increased interconnection haven’t changed. The structural requirement for interconnection if anything is becoming more urgent.”

But, he says, a potential problem is the IT and the system and processes: “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.”

Moore’s fear is that rule changes and divergence between GB and Europe will demand changes to the systems being written. “If you have a new set of requirements, that is not 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 of incurring big IT system costs over again 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.”

Security of supply

Moore has already said that security of supply is one of the main benefits of interconnectors. “Up until a year or so ago, the UK was a net importer of energy from France. Now if you look at the way the flow works, it is much more variable. Earlier this year in France, there was a combination of events and the flow went from the UK to France.”

In future France will import more often, he believes. “I think you will see more intra-day swaps, but that is what interconnection is for, it’s coming into its own. You are avoiding the need to build big new generation units because you can match supply and demand over a bigger area and you are helping in the growth of the low-carbon economy and taking a lot of carbon out of the energy generation sector. An interconnector’s flexibility and ability to switch direction in a very short period of time is what’s valuable.”

Others argue that in fact the ability to switch limits interconnectors’ contribution to security – with exports during the cold snap earlier this year a case in point.

Moore says: “That’s an argument that could be made by generators. But when you look at the wider picture, rather than just being myopic and looking at the England and Wales market from a power generation perspective, we have to look at wider interconnected markets where security of supply is a wider market issue.

“Power will flow where the highest price is and that is where the highest demand is. It’s a very efficient economic model and we have seen higher prices in the UK when demand is high.”

He rejects the suggestion that the ability to switch to export means interconnectors should be derated further in the Capacity Market (CM), or even excluded from it. “The interconnector owner doesn’t dictate which way the power flows. I don’t generate or decide where it goes. It’s a completely transparent process, I just facilitate it,” he says.

As for excluding interconnectors from the CM, he says: “Even if they can’t participate they would still be factored in. National Grid would just want less [capacity]… and the price would clear at the same level.”

A separate argument over the Capacity Market says that instead of the interconnector, it should have direct participation from generators overseas. Moore argues that the CM is sourcing capacity, not energy. He says interconnectors are just one of a range of different types of capacity providers that include storage or demand-side response. “The purpose of the auction is not to build big new power stations, it’s to make sure there is enough capacity when the country needs it. All these different things are effectively bringing capacity to the system.”

In contrast, “building a big new CCGT, to me, doesn’t seem like the way to decarbonise; it’s a bit of an archaic and antiquated argument”.

He also dismisses the argument that interconnectors should be subject to the Carbon Floor Price – largely because he says the energy coming across the interconnectors is low-carbon so it would not incur a carbon cost anyway.

“Purely from an interconnector point of view, I don’t understand why those arguments are levelled at me. I’m not providing energy, I am providing capacity and the ability to carry energy from one market to another,” he says. That’s also his response to suggestions that interconnectors gain an advantage from the way transmission use of system charges are levied. “We own the cable that connects the two grids. I don’t see how we can be liable for TNUOS,” he says.

What is the optimum?

Finally, I ask Moore what he sees as the optimum amount of interconnection. He says: “That will be tested by the appetite for development. All the modelling we did still stands. There are some Brexit risks but the business case remains very strong.”

He acknowledges that the investment case becomes more difficult as the amount of interconnection grows, but he says it’s a long game. “Eleclink took almost five years to get to the point it is at, and with all the regulatory and political uncertainty it will take longer to develop a new interconnector. It’s uncertain whether or not any private investor or non-TSO would look at the market right now and think it is an attractive proposition. We have seen evidence of that, where projects that have applied for cap and floor or exempted routes have announced delays in their development.” In the long term, however, he highlights especially offshore wind in the North Sea to illustrate the need for more interconnection. “The power has to go somewhere,” he says.

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