Power interconnector contingency for no-deal Brexit ‘straightforward’ – National Grid

Source: Heren

2018/10/31

LONDON (ICIS)--National Grid has a ‘relatively straightforward contingency process’ in place to ensure trading activity on the 2GW IFA interconnector between the UK and France continues as normal in the event of the UK and EU achieving no deal in Brexit negotiations, the company’s regulation manager for interconnectors has said.

National Grid, which owns the IFA cable, has previously said there is no legal basis for interconnector flows between the UK and mainland Europe to cease in the event of a no-deal Brexit .

‘Decent position’

“We are in a decent position with interconnectors fundamentally,” Mark Duffield said at a media briefing in Isle of Grain, Kent, on Tuesday. “There is nothing that prevents flow of electrons and trade in electricity between an EU and non-EU member state.”

“Because we’re only integrated [with the EU] at the day-ahead stage as of now, there’s a relatively straightforward contingency process albeit one we have to prepare for.”

Capacity allocation and trading on forward and intra-day products for the IFA is set to remain unchanged if the UK drops out of the internal energy market in the event of no deal, Duffield said. This is because National Grid has delayed migration from its Damas system to pan-European trading platforms including the single allocation platform (SAP) and the cross-border intraday (XBID) platform.

As a result, products would continue to be traded on an explicit basis, meaning capacity allocation and volumes are auctioned separately.

“We took the decision with XBID to delay implementation of that from the first phase because of Brexit,” Duffield said. “In a no deal world, we could have gone into it for a few months, then have to drop out and re-initiate with explicit capacity sales.

“If you’ve gone into it, and then later you’re kicked out, that’s a whole heap of disruption for no apparent benefit,” he added.

Duffield said National Grid’s longer-term plan was to integrate with the SAP and XBID initiatives if the UK remains part of the internal energy market.

Changes to day-ahead

In contrast, some changes to day-ahead trading on IFA will be necessary as this is currently conducted on an implicit basis by the power exchanges.

Duffield said the fact that day-ahead auctions were run on the Damas system up to 2014 was advantageous.

“That Damas system still has that functionality for selling day-ahead capacity within it. It’s ready to kick in at minimal notice if for whatever reason the implicit algorithm fails to clear.

“The plan is to have that reinvigorated in a no-deal and it would take up where it left off in 2014 and we move back to explicit capacity sales.”

National Grid has also invested in the new 1GW NEMO interconnector, which will link the UK with Belgium from early 2019, with the Belgian system operator Elia.

“NEMO is going straight into an internal energy market world,” Duffield said. “They’ll be selling capacity via the Joint Allocation Office (JAO) from day one and they are working with the JAO to ensure that they have means to sell capacity through their explicit auction platform.”