Academics flag interconnector capacity risks

A panel of academics has warned the government that it is increasingly concerned about the “systematic risk” posed by the pattern of interconnector flows during potential stress events.

The panel, which scrutinises the capacity market reports of the National Grid Electricity Systems Operator (ESO) for the government, issued the warning within its 10th annual report.

The report covers the ESO’s reports for the proposed capacity market auctions T-1 and T-4, covering respectively delivery next year and for the period commencing 2027/28.

The panel accepts the ESO’s recommendation for 7.4GW in the T-1 auction and 44.5GW in the T-4 exercise.

While not suggesting that these targets should be reduced, the panel says it is concerned about potential over-procurement and the “consequent costs to society”.

It recommends there should be a re-evaluation, including risks surrounding the interconnectors, in the autumn when more information will be available.

The panel says evidence does not exist to justify substantially cutting the de-rating factors, which measure how much support an asset can offer to the capacity market during a system stress event, for the interconnectors with the UK’s neighbouring countries.

However it recommends cutting the de-rating factor from 70% to 65% for interconnectors with France, which is more highly correlated during tight hours with Great Britain than any other of the neighbouring markets.

Noting the ESO report’s finding that the percentage of total capacity delivered in tight hours has decreased, it says: ‘We are becoming increasingly concerned about the systematic risk posed by the correlations and bimodal distributions of potential interconnector flows at times of stress events.’

The panel says risks around capacity are spreading out from heavy load periods to when demand is lower but availability of resource is also dampened by correlated low wind and solar generation across Britain and Europe.

The panel recommends that the ESO should explore further the risks arising from correlated weather patterns across Europe, in particular on interconnections at stress times.

The panel’s technical advice is designed to inform the Department for Energy Security and Net Zero’s policy decisions on Capacity Market auction procurement.

Taking into account the ESO’s analysis and the panel’s advice, energy security and net zero secretary Grant Shapps has confirmed the parameters for the T-1 and T-4 auctions in line with the ESO’s recommendation.

Of the T-4 capacity, 1.5GW is due to be delivered as part of the T-1 auction, meaning 43GW will be procured during the later exercise.