Broad coalition of energy associations and TSOs calls upon political leaders to prioritise enhanced electricity trade between UK and EU to fully develop the offshore potential of the North Seas

BRUSSELS | A broad coalition of 20 European energy associations and transmission system operators (TSOs) sent a joint letter to the North Seas Energy Ministers calling upon them to prioritise a more efficient electricity trade between the UK and EU. The current situation is deemed unfit for the future, and investors are hesitant to commit without efficient mechanisms in place. 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. Therefore, all signatories call upon the North Seas Energy Ministers to discuss the proposed solution during their upcoming meeting on 24 October in Odense, Denmark.  

Supported by prominent EU and UK organisations within the energy sector, the joint letter highlights the critical importance of resolving inefficiencies that post a substantial barrier to achieving the full potential of the renewable energy resources of the North Seas. Since Brexit, the inefficient market mechanism of explicit auctions has been in place on several borders between the Internal Energy Market (IEM) and GB markets. Additionally, the foreseen target model in the post-Brexit agreement, the Multi-Region Loose Volume Coupling (MRLVC) mechanism is unfit for the specificities of offshore developments such as the hybrid interconnectors. Hence, we need price coupling as this is the only efficient market mechanism.

Boosting investor confidence for substantial investments in offshore grid infrastructure 

Efficient, transparent, and well-functioning electricity markets are essential for optimal operation and investment within the sector, particularly for the roll-out of future hybrid interconnectors. The letter acknowledges that the current market design and its foreseen evolution is sub-optimal and not fit for the future. In view of this, the signatories put forward a valid alternative to reach an efficient and well-known price coupling mechanism to be re-established between the UK and EU/EEA, in order to increase efficient market operations and provide the appropriate context for investments.

Without confidence that the infrastructure will be used fairly and efficiently, critical grid and renewable generation investments are at risk of delay or cancellation.

“To fully harness the offshore wind potential of the North Seas, it is essential to involve the UK. Market coupling and price convergence are prerequisites for successful UK-EU partnerships, as they will enhance efficiencies and generate greater social benefits. This improved collaboration will stimulate investments in offshore wind and hybrid interconnectors. As we progress towards decarbonisation, such cooperation will make our European energy system more independent, sustainable, and resilient. Ultimately, this represents a win-win scenario for both the UK and the EU.” 
James Matthys-Donnadieu, Chief Customers, Markets & System Office

Price Coupling is the only viable market mechanism

Call to action towards the NSEC Ministers