Time is running out for a long-term agreement to be reached to trade electricity between the EU and the UK, a leading energy law specialist has warned.
Speaking at a Cross Channel Institute event this week, energy law specialist and honorary professor at Queen Mary University Silke Goldberg said that there are “real time concerns” over plans to establish multi-region loose volume coupling (MRLVC), linking the UK and Ireland to EU power markets.
EU and UK transmission system operators (TSOs) were tasked with setting up a market coupling model for allocating implicit day-ahead capacity on EU-UK power links by April 2022, in line with the post-Brexit trade and cooperation agreement (TCA).
However, that deadline has come and gone and Goldberg warned that there is now a real concern that the model will not be ready before the existing TCA expires in June 2026.
“TSOs in UK and EU should have come together and made this MRLVC model work by April 2022. We’re now in April 2023 and it hasn’t happened,” Goldberg said.
“At the last meeting of Specialised Committee on Energy this was recognised and it was claimed that ‘information is missing’. A request was made that the TSOs on either side makes that particular information available by August. But we still won’t have the model working one and a half years after the original deadline.”
She added: “With provisions in the TCA scheduled to run out 30 June 2026 we are going to have a timing issue here very quickly.
“MRLVC sounds great because it is definitely progress compared to no arrangement but we are running soon into time issues here.”
Despite the time constraints, Goldberg said that recent progress on the Northern Ireland (NI) protocol has left her hopeful that similar headway can be made on energy policy.
“I was always under the impression that a lot of cooperation in the energy sector was reliant on the NI protocol and now that is in place I am hopeful that will improve cooperation on other policy, such as energy,” she said.
“Likewise the UK re-joining the North Sea Energy Cooperation gives me hope that it will lead to a form of momentum. I am hopeful cooperation will improve and lead to a better place.”
The existing TCA came into force after the UK left the European Union. It allows electricity to be traded between Britain and the EU, however it requires either party to order or reserve capacity when they think they may require it.
Goldberg said this “makes things much more complicated, a lot less efficient and costs a lot more”.
She explained: “Prior to Brexit, Britain was part of an integrated and coupled market. In Paris you could trade electricity with the North of Scotland and it came seamlessly as markets were coupled.
“Now you can still buy from the North of Scotland but to get it to Paris you would need to phone one of the energy cable companies, say IFA 1 or IFA 2 for example, and you have to reserve capacity to import from North of Scotland or vice/versa.”
She added: “A replacement for coupling needs to happen. Without it you have to book electricity and capacity on cables which costs a lot more money. Market coupling is a better, more efficient solution.”
Goldberg added that a clear regulatory framework between the UK and EU was also needed to give investors confidence to back new infrastructure projects.
She said without it, investors would be reluctant to put their money towards interconnector projects which are needed to assist with the green energy transition.
“We need many more of these interconnectors for one reason; as we go through energy transition we will see lots more solar, wind, offshore, onshore, all types of renewable energy sources. The majority are intermittent, the sun doesn’t always shine and the wind doesn’t always blow,” Goldberg said.
“It is easier to balance the system with lots of interconnections. That is why Ofgem has a target of 18GW of electricity interconnector between Britain and Europe. But for that to happen, to build these giant cables, we need a very tight regulatory framework.”
She added: “Companies investment in these would be £1.5 billion/ £2 billion pounds, there or thereabouts. For that it needs to be very clear on what is being invested. The EU has a very clear framework around projects of common interests, but now that the UK is outside the EU more cooperation is needed to make these projects happen.”