UK Steel briefing note on Energy Interconnectors

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The electricity and gas interconnectors which link Great Britain to the continental European energy markets are set for expansion. These links have become increasingly significant in terms of their impact on security of supply and wholesale energy prices – a significance that is likely to increase in the 2020s.

 

Generally, interconnectors are positive for security of supply. They enable energy to be imported when indigenous production fails to meet demand, provide flexibility (e.g. to provide backup for, or absorb excess supply from, erratic renewables) and encourage wholesale prices between connected markets to converge. They facilitate the pooling of expensive resources (e.g. lightly utilised backup generation, or gas storage capacity) which enables security of supply to be maintained at a lower average cost to consumers than can be achieved within separated markets.

New interconnector capacity will increase security of supply and help GB wholesale power prices fall towards the levels of other European markets, reducing the competitiveness gap in electricity supply prices that is currently disadvantaging UK steelmakers.

 

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