National Grid Electricity System Operator (ESO) has published an open letter giving an update on its plans for implementing the Trans European Replacement Reserves Exchange (TERRE) within Great Britain.
It comes after Ofgem ordered the ESO to create a new implementation plan and workgroup for the project in November following multiple derogations to the go-live date, which was originally scheduled for January 2020.
According to the letter, the workgroup developed draft implementation plans for three scenarios that it considered credible:
- Great Britain operates a “TERRE-like” mechanism in “standalone mode”. As there would no cross-border trading, interconnector agreements would not need to be revised.
- Great Britain accesses European replacement reserves through bilateral agreements. Existing interconnector agreements would need to be revised whilst a new agreement would also need to be made with the French transmission system operator RTE.
- A trade agreement between the UK and the EU on balancing market arrangements grants access to TERRE as well as the Manually Activated Reserves Initiative (MARI) – an equivalent exchange being developed for frequency response.
The ESO said the trade agreement signed by the government with the EU at the end of 2020 indicates that the UK is likely to find itself in the first of these three scenarios.
“During the early part of 2021, we will work with the group to recommend the optimal course of action, including a cost-benefit analysis on a TERRE-like mechanism operating in standalone mode,” it added.
National Grid also noted that it has convened an interconnector subgroup to consider technical details such as operating protocols and commercial arrangement, with representatives from companies including National Grid Ventures, ElecLink and RTE.