Cross-border markets play a key role in GB’s wholesale electricity market. Reforming electricity markets through the Review of Electricity Market Arrangements (REMA) programme is vital to the delivery of a fully decarbonised electricity system.
The REMA reforms under consideration, the move to a zonal wholesale market and review of dispatch arrangements, aim at better aligning the wholesale market and the operational needs of the GB system. The various market design options could alter the interactions between cross-border markets and GB wholesale markets.
The impact of these potential reforms on and interaction with cross-border markets is uncertain. This assessment will provide insights into the potential changes and implications that market reforms could introduce, allowing for informed decision-making and effective management of the GB cross-border market.
Benefits
This project will explore how REMA reforms under consideration impact and interact with current and future cross-border trading arrangements. Insight into these interactions will allow for informed decision-making in REMA, effective management of the GB cross-border market, and potentially first-of-a-kind solutions to align REMA reforms with cross-border markets by including:
- A robust qualitative assessment of all market design options answering the questions as detailed in the scope in the form of a report, including comparisons between the different market design options and process diagrams to facilitate the understanding of the explanations provided.
- A report that also highlights any market arrangements that wouldn’t work in combination with any GB dispatch and locational pricing option and should detail the rationale behind this.
Learnings
Outcomes
- This project provided insights into the potential changes and implications that market reforms could introduce into GB cross-border market arrangements. It evaluated how different cross-border trading arrangements could be developed or adapted to be compatible with various market designs.
- Additionally, it assessed whether any of the market designs considered led to significant drawbacks when combined with certain cross-border trading arrangements.
- Furthermore, the project examined the potential benefits and drawbacks of different cross-border trading arrangements under the different market designs.
- This assessment aimed to support informed decision-making and effective management of the GB cross-border market. The results were part of NESO’s assessment of different dispatch options as part of DESNZ’s 2nd phase of REMA.
- Additionally, the results fed into several NESO cross-border workstreams, such as market coupling and the development of Offshore Hybrid Assets market arrangements.
Lessons Learnt
A comprehensive approach was employed to examine the interactions between potential REMA reforms and current or prospective cross-border trading arrangements.
Given the characteristics of the project – particularly the uncertainty and the various potential market combinations we learned that a structured and iterative approach was necessary. This involved defining which cases were of more interest and timing according to the times of the REMA decision process.
Key lesson was that taking enough time to prepare a clear project scope and obtain proper clarification with the consultant during the kick-off meeting was crucial. Clearly stating what was in and out of scope helped prevent misunderstandings, manage resources effectively, and keep the project on track.
We found that arranging for frequent interim deliverables and providing comments and change suggestions on time allowed the consultant to reflect on the feedback and make necessary adjustments. Additionally, we learned that it was essential to manage external stakeholders' expectations by setting clear expectations from the start and ensuring they understood the project's scope early on. Sharing a clear timeline of the project and agreeing on when their input would be needed was vital.
This project benefited from the expertise of market specialists within the consulting firm, NESO, DESNZ, and Ofgem through an iterative process. Proposals and findings were rigorously tested and evaluated. This assessment aimed to support informed decision-making and effective management of the GB cross-border market.
