Brexit cuts buying and selling on GB-Ireland interconnectors fueling energy costs

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Britain’s exit from the EU has resulted in decreased buying and selling on the electrical energy interconnectors between GB and Ireland and elevated the frequency of maximum costs, knowledge consultancy EnAppSys stated.

The GB electrical energy market left the inner power market of the European Union (IEM) following the tip of the Brexit transition interval on January 1, 2021. As a part of the withdrawal settlement between the UK and the EU, the Northern Ireland protocol ensured that the one electrical energy market (SEM) of the island of Ireland would stay intact.

However, the impact of the GB electrical energy market leaving the IEM has nonetheless resulted in a lower in using the SEM’s interconnectors that hyperlink it with Britain, EnAppSys stated in an emailed notice.

Average utilisation in January was round 350MW, in contrast with 500MW previous to Brexit. The January determine was the everyday stage when one of many interconnectors suffered an outage earlier than the GB left the IEM.

EnAppSys stated this decreased utilization had led to a rise within the frequency of maximum costs as liquidity decreased.

“Before Brexit, the SEM was coupled with the IEM via the two interconnectors to GB, via a common day-ahead auction that ran at 11AM for the following day,” EnAppSys Director Phil Hewitt stated. This ensured that if costs had been larger within the SEM than in GB, power would circulation from GB to the SEM to scale back costs for shoppers within the SEM and vice versa,” he added.

With GB leaving the IEM, the 2 markets are not coupled throughout the 2 interconnectors that hyperlink each islands – the island of GB and the island of Ireland – for the widespread 11AM day-ahead public sale, he stated.

“As the interconnectors no longer participate in this auction, the liquidity pool is therefore reduced, both in the SEM and the GB market. This means that prices in both markets will be more extreme as they no longer share energy at the day-ahead stage,” Hewitt stated, including that for the 11AM day-ahead public sale, 11 of the 14 highest costs ever seen have occurred since Britain left the IEM with the height worth being €500/MWh equal to 50c per kWh unit.

“Also, because there is less volume than capacity in the IDA1 and IDA2 intraday auctions, which now are the only auctions that determine the interconnector flows between GB and the SEM, this means that the interconnectors are utilised less. In turn, this means that the SEM needs access to more indigenous generation which may be more expensive than in GB. In addition, when it is windy in Ireland there is less opportunity to push this excess wind energy over the interconnector to GB,” Hewitt stated.

According to that EnAppSys Director it’s probably that the discount within the potential to herald cheaper energy from GB or export cheaper energy to GB will lead to extra excessive costs sooner or later. “The current situation with lower-than-usual dispatch on the interconnectors will continue until SEM market participants increase their use of the IDA1 and IDA2 auctions,” he stated, including, “This also requires more participation on the GB side”.

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