Great Britain net exported over 8 TWh of electricity to EU markets over the summer, but flows are forecast to reverse over the coming weeks as a possible tug of war develops over scarce output, analysts at S&P Global Commodity Insights said in a report last week.
Great Britain net exported over 8 TWh of electricity to EU markets over the summer, but flows are forecast to reverse over the coming weeks as a possible tug of war develops over scarce output, analysts at S&P Global Commodity Insights said in a report last week.
GB, traditionally a net importer of power from the Continent on its 4 GW of interconnection, saw NBP gas prices fall to a steep discount to Europe’s TTF gas price benchmark over the summer. The NBP-TTF MA discount averaged €90.74/MWh in the third quarter, S&P Global pricing data showed. In addition, record-low French nuclear output saw French power prices swing to a premium over UK power. “While we expect GB to be able to pull on EU power imports from December, we acknowledge the potentially extreme upside price risk in the event that Britain needs to play tug of war for power with its neighbours,” said Glenn Rickson, head of European power analysis at S&P Global.
December, which will see a return to full capacity on the 2-GW IFA-1 interconnector after a fire in September 2021, could see UK net imports average 5.6 GW. That would balance 2022 UK power imports and exports at zero compared to 25 TWh of net imports in 2021. For December to March, S&P Global forecasts net imports into GB to average at a record 5.6 GW before slightly easing next summer.
The biggest variable beyond the weather is French nuclear availability, with less than half of France’s 56 reactors currently in the market. As such, UK imports from the Continent depend heavily on operator EDF’s success in returning some 20 reactors by early next year.
On UK links to continental Europe, meanwhile, market price signals differ radically from modelled outcomes as participants grapple with unprecedented levels of uncertainty. “This winter may see the impact of the UK’s exit from the European Union in 2020 play out in energy market terms for the first time,” S&P Global’s Rickson said.
In the context of the EU’s recent debate on a possible gas-for-power price cap, German Chancellor Olaf Scholz and EC President Ursula von der Leyen both said the financial impacts of a flow of subsidized electricity to non-EU neighbors needed to be analyzed.
