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Zhengzhou Aobest Electronic Technology Co., Ltd.
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Zhengzhou Aobest Electronic Technology Co., Ltd. [China (Mainland)]
Business Type:Manufacturer, Trading Company
City: Zhengzhou
Province/State: Henan
Country/Region: China (Mainland)
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News
Britain's electricity market is interconnected with France, the Netherlands and Ireland, and plans are being developed for projects linking to Belgium, Denmark and Norway.
Interconnectors are increasingly important in Europe's integrating electricity market as they allow excess production in one country, for example from wind farms, to flow easily to a neighbouring country that needs it.
Britain has now proposed electricity market reforms which include a so-called capacity mechanism that pays standby power facilities for producing extra electricity when required.
The proposals exclude power interconnectors from these capacity auctions because the government says the cables, which both import and export electricity to and from Britain, cannot guarantee that power enters the UK market when needed.
The suggestion has caused an outcry among the UK's neighbours who now say their future power cable projects will be uneconomic.
"I worry that such an exclusion will be disadvantageous for the economic viability of the interconnector project," Norway's Energy Einister Ola Borten Moe told his British counterpart Edward Davey in a letter seen by Reuters dated July 17.
Norway's state-owned network operator Statnett STASF.UL and Britain's National Grid (NG.L) plan to lay the world's longest electricity cable between their two markets by 2020.
Operators are concerned their cables will be less relied upon if they compete directly with capacity in the market that receives payments from the government through auctions.
Statnett said its cable's participation in the capacity market was important for its profitability and added that it believed an acceptable solution can be found through talks with Britain's Department of Energy and Climate Change (DECC).
DECC said it was trying to find a solution that would allow interconnectors to participate in capacity auctions after 2014, when the first auction will be held.
"Participation of interconnected capacity would increase efficiency by increasing competition in the auction, and provide appropriate incentives for additional investment in interconnection," DECC said in a document published last month that explains the setup of the capacity market.
In a letter to Norway dated July 1, Davey said his department's analysis had shown that even without capacity payments the price differential between Norway and Britain would be high enough to ensure the cable will be profitable.
Britain's National Grid, which is engaged in discussions with DECC on behalf of future interconnection projects, said it was important to find a solution before cable developers can make investment decisions, hinting at the fact that the current setup jeopardises future projects.
Belgium's grid operator Elia (ELI.BR), which with National Grid is planning a subsea cable between Britain and Belgium, said interconnectors should be treated separately from generation capacity and should instead be integrated into the wholesale market, for example through market coupling.
The European Commission said Britain had not given it any formal notification of its plans.
The Commission, the EU executive, is revising its rules on state aid and a draft seen by Reuters suggests it is reluctant to allow governments to support interconnectors unless there is a case for saving costs.
(Additional reporting by Barbara Lewis in Brussels)
