Britain and France are currently in a disagreement over the costs associated with new power cables that will facilitate electricity trading across the Channel. Ofgem, the UK’s energy regulator, has rejected the French regulator’s demand that British consumers cover a larger share of the expenses, calling this stance “unacceptable.”
Both nations already share power through three existing cables, and there are plans to enhance this interconnection to further strengthen their energy markets. They aim to add another 1 gigawatt of capacity. However, a recent announcement revealed that the project has hit a snag, as both regulators indicated they had not yet reached an agreement on cost-sharing.
After a year of discussions, Ofgem stated, “We have not resolved how to allocate costs and revenues across British and French consumers.” The French regulator, known as CRE, has long insisted that UK consumers should pay a greater share of the building and operating costs while receiving a smaller percentage of the revenues from exports. Ofgem emphasized that this approach could harm energy security and unfairly burden British consumers.
This deadlock occurs alongside ongoing discussions between Britain and the EU to align their electricity and carbon trading systems in the wake of Brexit. The goal is to streamline power trading and minimize differences in carbon pricing.
As both nations increasingly rely on renewable energy sources, the importance of electricity trading between Britain and France grows. For instance, France predominantly uses its extensive nuclear power plants for electricity generation, occasionally importing from Britain during peak demand.
Future interconnector projects include the 1.4GW GridLink initiative and a 1GW Eleclink proposal that passes through the Channel Tunnel. Phil Hewitt from Montel Analytics mentioned that while there is some resistance to interconnector projects in French politics, the commitment to continue discussions is a positive sign.
CRE has indicated that studies suggest a new interconnection may not be profitable for France if costs are shared equally between the countries. Therefore, both energy regulators have agreed to initiate a joint study aimed at reaching a consensus for future negotiations.