The House of Lords EU Environment sub-committee has released a new report, in part detailing its views on electricity pricing and trading post-Brexit.
The sub-committee is urging the government and the EU to focus on improving cross-border electricity trading arrangements across the market timeframes, stating it is concerned that consumer electricity prices could increase due to the inefficiency of the initial cross-border electricity trading arrangements between Great Britain and continental Europe and the island of Ireland, as well as the uncoupling of GB’s two power exchanges.
GB left the EU Internal Energy Market as the end of the Brexit transition period, with this having contributed to a series of high prices over the last few months, including the maximum day ahead price in the first week of March hitting £683/MWh.
This has also led to a decrease in the use of interconnectors in Ireland’s single electricity market, with the average utilisation in January falling 150MW.
The House of Lords sub-committee said that while it welcomes the fact that the Trade and Cooperation Agreement (TCA) envisions a return to more efficient day-ahead cross-border electricity trading agreements, it is “disappointing” that these will be less efficient than the EU Internal Energy Market’s trading mechanisms.
The TCA is the free trade agreement signed between the UK and the EU on the 30 December 2020, and provides a new model for energy trading and interconnectivity.
The sub-committee said that success of the TCA depends “critically on implementation and further negotiation”, recommending that the UK and EU should jointly set out their ambitions, processes and timetables for delivering the TCA’s energy and carbon pricing commitments.
It also went on to state that it shares concerns voiced by the energy industry that the termination clause could undermine investor confidence in large energy projects, adding it is in the interests of both the UK and EU to maintain close energy cooperation further into the future and to swiftly implement the TCA’s energy and carbon pricing provisions in the meantime.