(Montel) The establishment of “multi-region loose volume coupling” (MRLVC), linking the UK and Ireland to EU power markets, may not happen at all the longer negotiations take, a director at a European power exchange said.
Until a resolution was found, progress on the mechanism was likely to remain at an impasse.
EU and UK TSOs were tasked to set up market coupling for allocating implicit day-ahead capacity on EU-UK power links by April 2022, in line with the post-Brexit trade and cooperation agreement.
But the deadline is widely expected to be missed, with strained political relations between the EU and UK compounding technical challenges.
The trade agreement itself expires by the end of June 2026, a looming deadline that is stoking industry pessimism.
Since the UK left the bloc, a system of explicit trading has been in place whereby power traders must book physical capacity to trade on EU interconnectors and purchase power separately.
This has contributed to spiking UK power prices, less efficient trading across interconnectors and diminished interconnector flows.
Meanwhile, the delicate political climate meant a Norwegian-style model for implicit trading was likely to remain out of the question, Grafe said.
Power is traded implicitly between Norway and the UK on the new 1.4 GW North Sea Link (NSL) interconnector, given the former’s non-EU status.
Grafe said that although there was a desire among shareholders to find solutions linking EU and UK markets, which could include replicating the NSL model, they were also reluctant to appear to be working on a new market tool that could replace MRLVC.