As the weather settled throughout the UK on January 8th, and coal-fired power plants were turned off forever, the team responsible for keeping the country’s lights turned to other power sources hundreds of miles away.
National Grid’s energy system operators paid up to £179 per megawatt hour (more than twice the typical rate of electricity purchased a day ago), and thus imported electricity from Denmark via Viking Link, a 475-mile submarine cable spread between Jutland and Lincolnshire.
Denmark had to draw electricity from Germany. “It was a tough day,” said Fintan Devenny, a senior energy analyst at Montel’s advisory company.
The trade highlights the growing reliance on imports and exports of electricity from the country to try to make wind turbines and solar panels the backbone of the electricity system as part of its plan to decarbonize electricity by 2030.
The greater the interconnect, the more resilient the system. But it also puts the power supply under international political tensions. Some of them have already come to the bear: complaints about rising protectionism against electricity exports and post-Brexit barriers to UK exports to the EU.
Prime Minister Kiel or Prime Minister is expected to promote close ties with the EU’s energy and carbon markets as part of the highly anticipated EU-UK “Reset” summit to be held in London on Monday.
The power of the UK
This is the final part of a series on the future of the UK power grid
“What’s currently being lifted up by stupid things like fishing negotiations is now all on the table,” one government figure said. “We have full support for the UK side of the industry.”
Power cables to British neighbors have been spreading since France first came online in 1961. 10 links France to the UK, the Netherlands, Belgium, Northern Ireland, the Republic of Ireland, Norway and Denmark.
In 2023, the latest year when data is available, the UK imported electricity of 23.8 terawatt hours, or about 7.5% of domestic demand.
Several more “interconnector” cables from the UK are being planned in both the UK and the continent, with the growth of wind and solar power.
In addition to zone pricing and demand-side flexibility, they are effectively a way to tackle renewable energy intermittent by increasing market size and flexibility.
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It is windy in the UK, potentially importing at a lower cost than turning on domestic supply, and there is more than the country can handle, or it could be exported on a very sunny day.
The UK government wants to more than double the UK’s current wind capacity of 31.4 gigawatts and almost triple solar capacity by 2030, with interconnectors projected to increase by about 4GW by that point.
If these targets are met, NESO estimates that the UK will become a net exporter of electricity in five years.
“Electrically, we’re not an island,” said Ben Wilson, president of National Grid Ventures, a division of the National Grid that owns Vikings and other cables and develops other cables. “We’re connected very well.”
The size of the interconnections between countries is also an important goal for the EU. But rising concerns about electricity prices and energy security are beginning to test the limits of its ambitions.
In January 2023, Norway set up measures to allow energy exports to be reduced if there is a risk of a domestic shortage and shortly after it refused to allow new interconnects to Scotland.
The coalition government in Oslo collapsed in January after it opposed the EU energy policy by its junior partner Centre Party.
However, Norway’s ruling Labour Party is also skeptical. We have asked Statnett, a state-run power system operator, to postpone plans for new interconnections until 2029. We also hope to switch two of the three cables to Denmark when it is updated in 2026.
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Energy prices and interconnections are set to stand out during the Norwegian parliamentary elections in September.
“I think we’ve realized that Norway now has a very valuable resource,” said Adam Bell, policy director at consulting firm Stonehaven and former head of energy strategy for the UK government.
The UK has imported £2.9 billion worth of electricity from Norway since the opening of the first cable between the two, which opened in October 2021, highlighting its dependence on the Scandinavian country on its own power sources.
Pranav Menon of Aurora Energy Research said that the UK could benefit if Norway cut its capacity to Denmark alone as competition for exports fell. But Norwegian political rhetoric suggested that it may not be the case, he warned.
“The loss of interconnection with Norway is likely to significantly increase price fluctuations in the short term,” Menon added.
The exports are also being scrutinized in France, the UK’s largest source of import. Last year, in a legislative election in which the far-right party won nearly a third of the vote, Marine Le Pen’s rassemblement National proposed a proposal to better manage exports.
France and Norway are particularly important for European power systems as their respective nuclear and hydroelectric supplies help protect against the risk of simultaneously low or strong wind supply in the northern part of the continent.
Experts vary in risk severity, but a recent study by consulting firm Wood Mackenzie pointed out “wind droughts” across Northern Europe in March 2021, focusing on the “strong correlation” between land and offshore fleets across the 2020 “wide geographic footprint.”
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An analysis by the International Energy Agency shows that, approximately five to six times over the past 30 years, cold, low wind spells have simultaneously affected most of Europe for more than a week, including areas with most onshore and offshore projects.
Brexit introduces new trading barriers, creating protectionist movements. This is driving costs up and threatening new investments, industry analysts and lobbyists warn.
The UK’s withdrawal from the EU’s single energy market means that the interconnection capacity between the two will no longer be automatically allocated, but will become a less efficient market as traders must explicitly purchase at another auction.
Furthermore, the industry has warned that UK electricity exports to the EU will be strongly imposed from 2026 due to the combined effects of the EU carbon border tax and the UK’s split from the EU emissions trading scheme.
Simon Virley, energy director at Advisory Firm Kpmg UK, said that many are at stake as priorities prepare to meet with Ursula von Der Leyen of the European Commission in London.
The Minister hopes to improve the “market link” between the UK and the EU over interconnectors while linking emissions trading schemes.
“By harmonizing energy trading rules and removing current friction, it could help lower consumer bills and increase energy safety and resilience,” Virley said.
In theory, taking more rules from the EU could be politically controversial, but the Minister believes that this issue is too technical to be a problem at the gateway. “I think everyone will notice or care except for (nigel) Farage,” said a British government figure.
A government spokesman said, “We are resetting our ties with the EU to improve trade and investment, and to promote climate, energy and economic security.
“We look forward to holding the European Commission for the UK and EU Summit next week, and we hope to make real progress on these issues.”
Wilson of the National Grid agreed that there is a “opportunity” to relink electricity and carbon trade.
In the meantime, National Grid and others have moved forward with new interconnection projects, such as “hybrid” projects that will link North Sea wind farms to markets on both sides.
“Supply security lies in diversity,” he added.
Additional report by Richard Milne. Data visualization with Janina Conboye
