Ofgem has approved a request by a subsidiary of National Grid to implicitly allocate capacity for its North Sea Link interconnector through day-ahead auctions on the Nord Pool power exchange.
The 1.4GW subsea cable is the UK’s first interconnector with Norway and was developed as a joint venture between National Grid and the Norwegian transmission system operator Statnett. It is expected to become operational later this year after the installation was completed in July.
The approved arrangements will result in the coupling of the day-ahead markets for Great Britain and the NO2 bidding zone in Norway, with allocation of interconnector capacity being implicitly determined by the flows required to fulfil the results of a daily auction. The auctions will close at 9.50am UK time and cover a 24-hour period starting at 11pm on the same day.
National Grid will not directly charge market participants for use of the interconnector. They will instead be charged by Nord Pool through the prices they pay for electricity.
Ofgem said capacity will initially only be allocated through the Nord Pool exchange but said this is not discriminatory after the other power exchange covering Great Britain, EPEX Spot, declined to participate in the tender to provide the service.
National Grid said it will explore the possibility of offering capacity through multiple exchanges once it goes live with the approved arrangements. It said it will also consider the potential introduction of intraday trading and long-term capacity rights.
Ofgem noted that Nord Pool and EPEX Spot no longer share their day-ahead order books after the requirement to do so under EU regulations to create a single day-ahead price for Great Britain ceased to apply following Brexit.
The UK’s departure from the EU’s internal energy market resulted in the de-coupling of day-ahead markets in Britain and continental Europe and a return to explicit allocation of interconnector capacity, whereby market participants bid and pay for capacity separately from power.