William Cash

The Government continues to attach high priority to the reduction of unnecessary EU burdens on business, including barriers to overall competitiveness; starting a company and employing people; expanding a business; trading across borders; and innovation, as set out in the Business Taskforce report.

A report will be published later this month, outlining the progress that has been made in delivering the Taskforce recommendations.

As set out in the Clean Growth Strategy, 4.4 gigawatts of new interconnector capacity is currently under construction, and regulatory assessments indicate the potential for at least 9.5 gigawatts more.

Import and export flows on interconnectors are determined by prices in the connected markets. Power should flow from the lower priced market to the higher priced market. This determines the levels of exports and imports on existing interconnectors.

According to National Grid, the average transmission network use of system charge for a GB generator is £5.98 / kW (2018/19 tariffs). The actual tariff is dependent on the location of the generator, the historic load factor of the generator, the type of generator and details of its specific connection.

As interconnectors are part of the transmission network, they do not pay use of system charges for the network. Generators and consumers in different countries are liable for charges in those countries.

The electricity supplied over interconnections is traded by commercial parties, and we do not hold the information requested on the details of these trades.

The proportion of electricity that will be supplied by electricity imports by 2020 is expected to be 7.4%.

The power supply sector is projected using the reference case scenario from the Energy and Emissions Projections 2017 (published January 2018), which can be found here: https://www.gov.uk/government/publications/updated-energy-and-emissions-projections-2017

Up to 2020, the reference scenario reflects current power sector policies. Beyond 2020, the reference scenario includes assumptions that go beyond current Government policy. The results do not indicate a preferred outcome and should be treated as illustrative.

The UK has a pipeline of interconnector projects that are expected to play a role in providing reliable, affordable, and clean energy.

Based on current project timelines and assuming all projects are able to complete, 3GW (3000MW) of new interconnector capacity is due to be operational by the end of 2020. A further 1.4GW (1400MW) is also currently under construction for delivery after 2020 but before 2025. There are a further 9.5GW (9500MW) of projects which are seeking regulatory approval and which if constructed could be complete by 2025.

Between 2012 and 2017 (inclusive), GB imported 67.85 TWh of electricity via the IFA interconnector from France, 42.88 TWh of electricity via the BritNed interconnector from Netherlands, and 2.99 TWh of electricity via the East-West interconnector from Ireland. In addition, Northern Ireland imported 1.97 TWh of electricity from Ireland as part of the all-island, shared Single Electricity Market.

Source: Energy Trends, National Statistics, table 5.6 (published quarterly) available here: https://www.gov.uk/government/statistics/electricity-section-5-energy-trends.

The share of UK electricity generated domestically plus net imports, by each fuel source in a) 2012 and b) 2017 was:

Source: Digest of UK Energy Statistics, tables 5.6 (generation by fuel), 6.4 (wind & solar) and 5.1 (net imports) https://www.gov.uk/government/statistics/electricity-chapter-5-digest-of-united-kingdom-energy-statistics-dukes

The total gigawatt hours of electricity exported from the UK through interconnectors in (a) the 12 months from the start of the third quarter of 2017 to the end of the second quarter of 2018 was 3,023.6 GWh, and (b) 1,910.39 GWh in 2012.

Source: Energy Trends, National Statistics, table 5.6 (published quarterly) available here: https://www.gov.uk/government/statistics/electricity-section-5-energy-trends

In the 12 months from the start of the third quarter of 2017 to the end of the second quarter 2018, 20,485.12 GWh were supplied by interconnector imports.

In the 12 months from the start of the third quarter of 2016 to the end of the second quarter 2017, 16,933.35 GWh were supplied by interconnector imports.

Source: Energy Trends, National Statistics, table 5.6 (published quarterly) available here: https://www.gov.uk/government/statistics/electricity-section-5-energy-trends

The most recent electricity consumption figures available cover the twelve month period from the start of July 2017 to the end of June 2018. During this period, total UK electricity demand was 355.1 terawatt hours. Subtracting energy industry usage, as well as transmission and distribution losses, the final electricity consumption by industry, business and domestic users in the UK was 301.7 terawatt hours during this period. These figures can be found on the National Statistics website here:

https://www.gov.uk/government/statistics/electricity-section-5-energy-trends.

The UK has a pipeline of interconnector projects that are expected to play a role in providing reliable, affordable, and clean energy.

Based on current project timelines and assuming all projects are able to complete, 3GW (3000MW) of new interconnector capacity are expected to be operational by 2020. A further 1.4GW is also currently under construction for delivery after 2020. There are a further 9.5GW of projects which have sought regulatory approval.

The Government routinely publishes total import figures from interconnectors in the annual Digest of UK Energy Statistics (DUKES), and the quarterly National Statistics Energy Trends data.

The latest available 12 month period of data spans 1 April 2016 to 31 March 2017 and shows a gross import of 17,228 GWh through interconnectors.

In the 12 months ending March 2017, the total UK electricity demand, which includes energy industry use, losses and final consumption by end users, was 354.5 TWh. This is down 0.7 per cent on the same period a year earlier.

Source: Energy Trends table 5.2 - https://www.gov.uk/government/statistics/electricity-section-5-energy-trends

The UK currently has 4GW (4000MW) of operational interconnection capacity:

• IFA (Interconnexion France-Angleterre); 2GW (2000MW) from Folkestone, Kent to Calais, France, operating since 1986;
• Moyle; 500MW between South Ayrshire, Scotland and County Antrim, Northern Ireland, operating since 2002;
• Britned; 1GW (1000MW) from the Isle of Grain, Kent, to Rotterdam in the Netherlands, operating since 2011;
• East-West (EWIC); 500MW connecting Barkby Beach, North Wales to Dublin, Ireland, operating since 2012.

The Government routinely publishes total export figures in the annual Digest of UK Energy Statistics (DUKES), and the quarterly National Statistics Energy Trends data.

The latest available 12 month period of data spans March 2016 to March 2017 and shows a total export of 2,782 GWh through interconnectors.

On 15th June National Grid released the capacity market timetable for 2017/18 and within it they have indicated that the T-4 auction will start on 6th February. Please find a link to the timetable document here: https://www.emrdeliverybody.com/Lists/Latest%20News/Attachments/109/Capacity%20Market%20Operational%20Plan%202017.pdf

National Grid Electricity Transmission plc (NGET), in its role as system operator, have informed us that the average transmission network use of system charge for a GB generator is £5.77 / kW (2017/18 tariffs). The actual tariff is dependent on the location of the generator, the historic load factor of the generator, the type of generator and details of its specific connection.

As part of the overall transmission infrastructure facilitating the wider market, interconnectors do not pay use of system charges for the transmission network. As producers and consumers are liable for charges in their own countries, additional charges for using the interconnector, to allow imports and exports, would amount to double charging and may hinder the ability of GB producers to export electricity to other countries.

The Government routinely publishes total import figures from interconnectors in the annual Digest of UK Energy Statistics (DUKES), and the quarterly National Statistics Energy Trends data.

Electricity imported to the UK from January 2012 to end March 2017 amounts to the following:

• IFA (Interconnexion France-Angleterre) (France-England): 59.7 TWh;
• BritNed (Netherlands-England): 37.7 TWh;
• EWIC (East-West Interconnector) (Ireland-Wales): 2.3 TWh;
• NSI (North-South Interconnector) (Ireland-Northern Ireland): 1.1 TWh.

In addition, 1.26 TWh were imported into GB from Northern Ireland.

The proportion of electricity that will be supplied by electricity imports by 2020 is expected to be 7.6%.

The power supply sector is projected using the reference case scenario from the Energy and Emissions Projections 2016 (published March 2017), which can be found here: https://www.gov.uk/government/publications/updated-energy-and-emissions-projections-2016

Up to 2020, the reference scenario reflects current power sector policies. Beyond 2020, the reference scenario includes assumptions that go beyond current Government policy. The results do not indicate a preferred outcome and should be treated as illustrative.

The Government does not hold prices on electricity imports over interconnectors. This is commercial information held by market participants.

As regards the average price for other electricity generation, the average UK power price in the day ahead market, the most commonly cited trading time frame, was £45.01 over the past 12 months. This is an incomplete picture as power is sold across a number of time frames, from year ahead through to intraday trading, and it would be inappropriate to extract wholesale prices from one time frame and use it to infer prices across other time frames. The Government does not have visibility of longer term time frames, which is commercial information held by market participants.

Details of charges and how they are applied are available through National Grid’s website: http://www2.nationalgrid.com/bsuos/. However National Grid does not provide a public breakdown of the costs of individual Black Start and SBR contracts.

There is a case for greater independence for the system operator to promote more competition and flexibility in our electricity system. We are working alongside National Grid and Ofgem to this end, so that the electricity system continues to be operated in the best interest of consumers.

There is a case for greater independence for the system operator to promote more competition and flexibility in our electricity system. We are working alongside National Grid and Ofgem to this end, so that the electricity system continues to be operated in the best interest of consumers.

Whatever the source, and wherever it is from, we import electricity when the cost is lower than here in the UK, driving down consumer bills. Ofgem’s analysis of proposed interconnector projects shows that the carbon price floor is not the determinate of whether the projects are in the interests of UK consumers.

Following representations from the developer, as provided for under the Capacity Market legislation, an extension of 60 working days to 19 December has been granted for them to achieve the requirements of the Capacity Market progress milestone. The Secretary of State’s discretionary powers to extend a compliance period are designed to recognise situations where a little additional time can help a provider achieve a milestone, to the benefit of our security of supply.

There is a case for greater independence for the system operator to promote more competition and flexibility in our electricity system. We are working alongside National Grid and Ofgem to this end, so that the electricity system continues to be operated in the best interest of consumers.

Ministers and officials have regular discussions with Ofgem and National Grid on the outlook for generation including the relative profitability of coal and gas generation. DECC consulted National Grid and Ofgem when preparing proposals for an early capacity auction to ensure this would be deliverable and effective. This auction is technology neutral so open to all capacity providers but the prospect of success in this auction has been welcomed by coal plant operators who may otherwise have closed.

The following Combined Cycle Gas Turbine plants have closed within the last two years:

This excludes combined cycle gas turbine plants which remain available under National Grid’s Supplementary Balancing Reserve and/or plants which have converted to open cycle operation at reduced capacity or have otherwise reduced capacity.

These services are a matter for National Grid, and the appropriate documentation is published on their website. The contingency balancing methodologies are available here:

http://www2.nationalgrid.com/UK/Services/Balancing-services/System-security/Contingency-balancing-reserve/Methodologies/

These documents also include National Grid’s analysis.

And information on the procurement of the Black Start Service is published here:

http://www2.nationalgrid.com/UK/Services/Balancing-services/System-security/Black-Start/Black-start-about-the-service/

National Grid have not published their analysis of this as it is commercially confidential.

All interconnector projects apply to Ofgem to operate under a regulatory regime. Their regulation is compatible with EU rules and there are no state aid issues

There is currently one CCGT project under construction and commissioning. This has a connection capacity of 910MW and is located in Carrington, Greater Manchester.

The Department has discussed this issue with Energy UK and its members. The Government supports greater interconnection, and Ofgem’s assessment of the impact of importing electricity shows significant benefits to the consumer. The first round of new projects could deliver more than £11.8bn of consumer benefits over 25 years, primarily driven by reductions to the GB electricity wholesale price. Ofgem’s assessment also considered a scenario with no carbon price differential between countries and concluded that this would make no material difference to the business case for these projects.

The table below shows the net imports of electricity via interconnectors for 2013 to 2015.

1. Demand data available on the National Grid website at

www2.nationalgrid.com/UK/Industry-information/Electricity-transmission-operational-data/Data-Explorer/.

2. Data available on the SEMO website at www.sem-o.com/marketdata/pages/energysettlement.aspx.

Further details on imports, exports and transfer of electricity via the interconnectors are available in Energy Trends Table 5.6 at https://www.gov.uk/government/statistics/electricity-section-5-energy-trends

The Gas Generation Strategy [1], published in December 2012, set out a range of proposed measures, at that time, to support investment in new gas plant. The Government has made significant progress in delivering the measures outlined in the Strategy. Of particular importance was the introduction of a capacity market in 2014 which provides reliable capacity, including gas plant, with secure revenues. The Government believes the capacity market provides the necessary financial incentives to ensure new gas plant are brought forward as and when needed.

[1] https://www.gov.uk/government/publications/gas-generation-strategy

My rt. hon. Friend the Secretary of State has not had specific discussions with the Big Six or combined cycle gas turbine generators on this matter.

National Grid is responsible for maintaining a Black Start capability for the Great Britain national electricity transmission system. This includes ensuring that all plans are up to date and fit for purpose. The costs for National Grid to administrate the Black Start capability are included in its operating expenditure under the transmission price control managed by Ofgem (currently RIIO-T1).