Twenty European energy groups have called for changes to the UK and EU’s trading relationship to make it easier to trade electricity in an open letter published by Elia Group.
The letter was signed by associations and transmission system operators (TSOs) and sent to energy ministers in countries in the EU’s North Seas Energy Cooperation (NSEC), as well as the UK. It comes ahead of a meeting of NSEC energy ministers in Denmark on 24 October.
‘Unfit for the future’
The UK and EU’s current trading arrangements on electricity, as set out under the post-Brexit Trade and Cooperation Agreement (TCA), are “unfit for the future,” the letter states, arguing that investors are “hesitant to commit without efficient mechanisms in place” for electricity trade.
“While some projects may still progress, Europe will be missing out on investment opportunities to fully develop offshore wind projects in the North Seas while we should, in fact, be aiming towards a European energy system that is more independent, sustainable, and resilient.”
The letter calls for the implementation of a price coupling mechanism to replace the mechanism of ‘explicit auctions’ at borders between the EU’s Internal Energy Market (IEM)and GB markets.
A pricing mechanism known as multi-region loose volume coupling (MRLVC) is included under the TCA, but technical challenges have held back its implementation.
‘European green power hub’
The letter also emphasises that, without reform and “confidence that the infrastructure will be used fairly and efficiently”, new projects crucial for the development of green energy are at risk of delay or cancellation. There is also a call to transform the North Sea into a “truly European green power hub”.
While the letter calls for closer cooperation between the UK and EU on electricity trade, it notes that “the UK does not need to join the IEM for a solution to be found”. This solution, it says, “would need to be accompanied by operational agreements between parties, guaranteeing coordinated and harmonised operations”.
Cooperation
The UK and EU issued a joint statement earlier this month which said that prime minister Sir Keir Starmer and European Commission president Ursula von der Leyen had agreed to “continue to work closely” on energy prices, as well as a host of other issues.
Agreeing an “agenda of strengthened cooperation”, they also named climate change as an area for shared effort.
A senior Whitehall official told the Independent yesterday (15 October) that the ‘reset’ in relations with the EU being pursued by Starmer’s government could have “an important knock-on effect” on investment into the UK, which they suggested “would be that other countries, not in the EU, offer us enhanced trade deals”.