Achieving the aim of a single European market in electricity requires sufficient physical transmission links between Member States, and efficient market based mechanisms to utilise this transmission capacity. To fulfil this aim Ofgem works actively on:
- GB interconnector policy
- North Seas Offshore Grid Initiative
- European Framework Guidelines for electricity markets
- Electricity Regional Initiatives project
GB Interconnector Policy
Our work within this area splits into two main directions – promoting the efficient use of electricity interconnectors and developing our regime for regulation of new interconnector investment.
The overall aim of our work is to maximise the efficient use of existing and planned interconnection by ensuring that users can respond efficiently to differences in energy prices across different countries. To optimise use of existing capacity, our work focuses on removal of barriers to trade, promotion of competition and appropriate allocation of rights and responsibilities between market participants. We aim to create arrangements capable of sending clear investment signals for efficient levels of additional interconnection, thus facilitating further development of interconnections between GB and other European countries.
In order to consult on proposed policy models with market stakeholders, Ofgem published a public consultation on electricity interconnector policy - link opens in a new browser window - in January 2010. This link also takes you to the summary of responses to this consultation (which closed in MArch 2010) and a letter outlining the next steps. The latter expresses our committment to explore further the cap and floor approach for the regulation of interconnector investment.
A joint Consultation on the Cap and Floor regime led by Ofgem and the Belgian Regulator, CREG, was published in June 2011. The consultation focuses on the drivers, principles and design parameters of the proposed regime. The consultation closed on 2 September 2011, the responses can be accessed via the link above. Ofgem and CREG are considering the responses and will publish the conclusions on the cap and floor principles and design by the end of the year.
North Seas Offshore Grid Initiative (NSOGI)
The NSOGI forms part of a broader EU goal to develop a European Supergrid. Under the initiative EU Member States are encouraged to work together, with energy regulators, the Commission and the industry to engender the coordinated development of offshore grids in the North and Irish Seas. Ofgem chairs the regulators group which supports this initiative.
European Framework Guidelines and Network Codes
Ofgem contributes to developing European Framework Guidelines for electricity markets, which will then provide a basis for the upcoming European Network Codes. Our team is currently involved in drafting Framework Guidelines for Electricity Balancing and System Operation. Framework Guidelines on Capacity Allocation and Congestion Management (CACM) and on Grid Connection have also been finalised. The CACM network code is now being developed by ENTSO-E and is to be submitted to ACER by September 2012.
For further up to date information on all of the guidelines please refer to the CEER website and the ACER website.
Regional Initiatives
Ofgem plays an active role in Electricity Regional Initiative Project that was initially launched in 2006 as an interim step to spped up the integration of Europe's national electricity markets. The implementation of the Third energy package and the strong commitment by the Member States to complete the internal energy market by 2014 adds further impetus to the project.
The UK is part of the France-UK-Ireland (FUI) region. Ofgem is the lead regulator of this initiative. We are working closely with other NRAs, Member State representatives and Transmission System Operators to identify specific barriers or distortions to trade, and introduce practical improvements that will contribute to removing them. A key priority for the region is the implementation of the CACM FG Target Model for electricity, which sets out the vision for intraday, day-ahead and long-term trading, cross-border balancing and capacity calculation.
The Electricity Regional Initiatives also cover interconnection. Three interconnectors with the UK currently exist, connecting GB with France, the Netherlands and Northern Ireland, with overall capacity of 3.5 GW. The development of another 500 MW of interconnection capacity between Ireland and Wales is ongoing. Additional interconnectors with France, Belgium and Norway have also been proposed.