UK cannot join Project TERRE balancing market before year-end: National Grid

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Highlights

Free trade agreement needed before possible access

UK to be in same position as ‘third country’ Switzerland

EC closes out option of using TERRE for GB only


London —
Great British electricity market participants will not be able to participate in the trans-EU replacement reserve market (Project TERRE) before the end of 2020, system operator National Grid said Sept. 4.

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TERRE is a cross-border electricity balancing market scheme forecast to save UK consumers Eur17 million ($20 million) a year. The UK was due to join the market in June but technical projects delayed the launch.

National Grid had “experienced challenges with planned changes and maintenance to our core control systems” and the coronavirus had created resourcing issues, it said.

In effect, the window for British companies to participate in Project TERRE has closed because, from Jan. 1, 2021, the UK becomes a third party country outside the EU Single Market.

On July 9, the European Commission confirmed that as a third country, the UK would not be allowed to participate directly on dedicated EU platforms, but would be able to conduct energy trading with EU countries via interconnectors.

“To illustrate the position that the UK is in, Switzerland is already a ‘third country’,” National Grid said.

Access to TERRE’s platform “can only be resolved, for both GB and Switzerland, through ratification of free trade agreements on energy by the EU and the respective national parliaments,” it said.

Participation in TERRE would be of significant benefit to end consumers in Great Britain, the system operator said.

“With features such as interconnector controllability, it gives us a new tool for managing operational security issues using market-based solutions,” it said.

National Grid had hoped to use TERRE’s Libra platform purely for the Great British market, without trading with EU countries.

“Due to the position taken by the EC, it seems that this option may not be available without modifications to the legal agreements we have in place,” it said.

France’s transmission system operator RTE, meanwhile, was taking legal advice on UK participation in the Libra platform, National Grid said.

National Grid is dependent on RTE for trading via the IFA, IFA2 and ElecLink interconnectors.

The two companies had worked hard to be ready for TERRE, but believed joining the platform should be delayed until the legal position was clearer.

As an aside it said the delayed ElecLink project, running a cable through the Eurotunnel, was currently under construction, “and we understand that commercial operation will begin in January 2022.”

RTE had also confirmed it could not run the existing Balancing Inter-TSO (BALIT) mechanism and TERRE over the same border at the same time.

“RTE needs to maintain cross-border trade with GB over winter 2020-21, and must have access to BALIT on IFA over this period,” National Grid said.

TERRE’s Libra platform went live January 6. Eight system operators were involved in the launch but only CEPS (Czech Republic) has so far joined. Spain was to join March 3 with the remaining countries (France, UK, Italy, Poland, Portugal, Spain, Switzerland) joining in waves through 2021-22.

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