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Research Report / Energy

The UK Charging System on Interconnectors

Author(s): SAGUAN Marcelo, AHNER Nicole, DE HAUTECLOCQUE Adrien, GLACHANT Jean-Michel

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BritNed is a joint venture between National Grid and TenneT. Its goal is the construction and operation of an electricity DC cable between Great Britain (Isle of Grain, Kent) and the Netherlands (Maasvlakte,  near Rotterdam, see figure 1). The cable is under construction. It is meant to be operational by 2011 with a capacity of 1,000 MW and a length of 260 km. The cost of the project has been estimated at €600 million. Benefits are expected for both British and Dutch consumers by supporting security of electricity supply in both markets and by allowing customers to participate in European markets. Power will be transmitted in both directions driven by price differentials and demand patterns between the two power markets. The linkage is expected to facilitate competition and contribute to the creation of the European Internal Electricity Market (IEM).BritNed will be a “merchant” interconnector, funded and operated independently by National Grid and TenneT. Customers will have open access to the capacity via a combination of 'implicit' auctions facilitated by APX, and short term 'explicit' auctions. Under the current tariff systems in place in the UK and the Netherlands, BritNed and its users will be treated differently on the British and the Dutch sides. The cable connects two national networks managed by two different Transmission System Operators (TSOs). As a result, NGET (the UK transmission subsidiary of National Grid in charge of the GB transmission network) applies the British tariff regime whereas Tennet (TSO of the Dutch transmission network) applies the Dutch one. One of the particularities of the British regime is that interconnectors are considered as any other UK generator or consumer for the purpose of compensating NGET for the use of the transmission system and system operation services. Conversely, under the Dutch regime interconnectors are understood as part of the network. Accordingly, interconnector owners or users are not charged for using the Tennet network.