Learnings

Outcomes

In phase 1, the project has provided insights into the future behaviour of interconnector flows in different energy scenarios, reflecting how GB will transition from being a net importer of electricity to becoming a net exporter, and highlighting the differences between the regions connected. 
 
In phase 2, the project has explored opportunities and challenges related to adequacy, flexibility and operability, providing the following key learnings: 
 

• Adequacy: Interconnectors will remain an important source of energy into GB in periods of highest needs. Imports into GB are mostly expected to grow in absolute terms during periods of system stress, and the correlation between coincidental net peak demand (residual demand after accounting for variable RES) in GB and interconnected countries is expected to decrease. However, the duration of peak periods may grow in the future as renewables displace conventional dispatchable generation. Interconnectors do not directly determine their own operating profile, hence they are not able to deliver firmness. Their ability to deliver during GB stress events will depend on:
  • The availability of excess generation capacity in Europe, which can be sensitive to some specific risks such as drought and nuclear outages
  • The markets’ ability to efficiently deliver price signals that allow interconnectors to support efficient flows that reflect system tightness. Maximising interconnectors’ contribution to adequacy relies on efficient non-distorted price formation.
• Flexibility: Modelling results show that interconnector flows will remain dynamic, responding to the variability of renewable energy sources and the differing daily price patterns in connected countries across all scenarios. As interconnector capacity continues to increase, it is anticipated that periods of spare capacity will also grow, providing greater flexibility to the system. This is because the availability of unused interconnector capacity presents an opportunity to quickly respond to sudden shifts in market conditions on both sides of the connection. The research highlights however the current inefficiencies in the trading over interconnectors in the intraday timeframe impacting the possibility to maximise interconnectors’ flexibility capabilities.
• Operability: Interconnectors adjust their position in real time from day ahead scheduling to make sure that operability constraints are met at all settlement periods. These re-positioning actions are currently done through ESO trades, representing additional costs for the consumer. The analysis shows how scenarios with more interconnectors and RES capacity mean greater needs for re-positioning of interconnectors. The main driver for interconnector re-positioning is allowing thermal limits being met within the GB network.  The project demonstrates also how concentration and size of interconnectors can precipitate challenges for both stability and voltage of the network and the consequently importance of adequate network planning.  Finally, the analysis explores how interconnectors could provide operability services such as reserve, response or inertia if eligible to participate.  
   

The assessment of decarbonisation, locational pricing and MPIs has provided the following insights: 

• Decarbonisation: Imports to GB often results in increased emissions in neighbouring markets. Around half the time (scenario/year dependant) the marginal plant is not in GB and is quite often a thermal generator in continental Europe. This demonstrates how decarbonisation ambitions of different countries are becoming increasingly interdependent. 
   
• Locational pricing: In a zonal market, redispatch volumes are expected to drop, as grid constraints are already to some degree being accounted for in the market scheduling. The pricing signals implemented by a zonal market would incentivise flows to be aligned between day-ahead and real-time, reducing the need for additional actions.  
   
• MPIs: The analysis demonstrates that flows on MPIs are still driven by relative price differentials i.e. towards the market with the higher price, with no significant difference between “Home Market” and “Offshore Bidding Zone” setups. MPIs tested have:
  • similar / lower incidence of flows at max,
  • reduced cases of zero flows, and
  • greater frequency of partial flows relative to the conventional interconnector used as reference 

Phase 3 of the project has identified 12 key issues that would need solving to maximise interconnectors’ full potential in supporting the transition to net zero: 
 
Adequacy

• Limited co-ordination with neighbouring system operators in network planning phase
• Absence of coordinated interconnector development framework
• Uncertain contribution & delivery in GB stress event
• Uncertain behaviour of interconnectors in mutual stress events 

Flexibility 

• Non-harmonised day-ahead market designs  
• Inefficient intraday market arrangements
• Onshore system constraints limit interconnector ramping potential 
   

Operability 

• Inability to fully utilize interconnectors’ capabilities for real-time response
• Inability to access available reserves in neighbouring countries in the balancing timeframe
• Planning of interconnector projects does not properly reflect operational needs
• Scheduling of interconnector flows does not account for system constraints in an efficient way
• Bespoke interconnector trilateral arrangements are inconsistent causing operational complexity 
   

Following the identification and definition of these key issues, the project has explored potential solutions that will need verification and refining in subsequent phases of the project to ensure recommendations for next steps can be made on solid grounds. 
 
The next steps for the project will be the further and deeper analysis of these potential solutions. We expect a prioritization exercise of key issues will first need to be conducted, to ensure resources are initially allocated to the areas that require strategic focus. Then the development of the solutions will be conducted through engagement with key stakeholders and the broader industry, with the aim of providing recommendations that will improve the effectiveness of cross-border flows in the net zero future. Finally, a well-structured roadmap will be prepared to outline a practical approach to effectively implement the proposed solutions. 
 
 

Lessons Learnt

The aim of the analysis conducted as part of this project was to understand what the future behaviour of interconnectors in GB might be and identify how to maximise their full potential to provide adequacy, flexibility and operability as we transition to net zero. 

An extensive range of qualitative and quantitative research was done in phases 1 and 2 of the project. Phase 3 built then on the findings of this analysis to provide a structured overview of the different issues identified. This included: 

• The definition of each problem statement
• A description of the “do nothing” situation: what would happen if current status quo is maintained while interconnector capacity keeps growing
• A description of the improvement potential
• The outline of possible options to solve the problems identified

Phases 1 and 2 were developed considering the inputs of external stakeholders, including interconnector developers that provided their views on the opportunities and threats for their operations that the future energy system may bring. 

Phase 3 on the other hand was developed through collaborative work between project partner Afry and the ESO. No external engagement took place to develop the long list of options. A subsequent step of this work will therefore involve gathering feedback from the broader industry and key stakeholders to verify, develop and evaluate the suggested solutions. More in-depth analysis might also be needed when the benefits and drawbacks of the options are unclear or when more technical understanding is required. 

This comprehensive consultation and evaluation process should provide the necessary inputs to conduct a short-listing of solutions and provide recommendations. A well-structured roadmap will then follow, outlining a practical approach to effectively implementing the proposed solutions. 

A key consideration and learning from this project that will be applied in future projects is the importance of allowing a degree of flexiblity in the approach, particularly in the extremely dynamic environment of electricity markets. Leaving flexibility to allow for a slight change of direction or a deep dive in a specific topic will always be useful to adapt to changes in the landscape and ensure the project remains relevant. This is of particular importance in long term projects with more than one year delivery period as this one is.