Britain’s interconnector links are ‘Europe’s most expensive’, say consultants
Porting utility volumes of power to or from the UK incurs fees which now stand as the highest in Europe, according to consultants EnAppSys.
The analysts found €19.42/MWh, the continent’s highest price, was the standard for exports from Belgium to Britain commanded over the Nemo cable from Zeebrugge to Richborough, for contracts sealed in monthly auctions on the Joint Allocation Office (JAO) trading platform.
Not far behind, the IFA1cable to France was attracting fees of €18.53/MWh in May across the same platform. Co-owned by National Grid ESO and its French sister RTE, the wire runs from near Caen to Solent Airfield, near Portsmouth.
The burden on British generators compelled to meet more in transmission costs than their continental peers, plus an imbalance in carbon accounting, with support set at £18 per tonne equivalent, create a structural asymmetry identified by the analysts.
EnAppSys director Phil Hewitt explained further,” The merit order determines which fuel source will deliver power to the grid and is ranked by the price and amount of electricity generated,” he continued.
“Solar and wind are often at the top of the merit order due to no fuel cost for generation. They’re followed by nuclear generation. Fossil fuels such as gas are often at the bottom of the merit order”.
Britain’s fuel mix is still influenced by a high amount of gas generation. In May, Hewitt remarked, 48% of Britain’s energy demand was covered by gas.
“As gas is the marginal plant in GB and operators of gas plants are spending around £8 to £9 more on carbon than their counterparts in the EU, alongside an average of £4 to £5 for balancing costs, this means that the price for interconnector capacity can be explained by the interconnectors capturing the regulatory divergence price between the two markets.”
More on EnAppSys’ findings here.
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