09 Sep 2022
Flora Biggins

Interconnectors: how will changing trends affect battery energy storage?

Interconnectors are high voltage cables that connect the electricity systems of two regions, typically countries. They allow power to flow between the countries, making use of excess intermittent generation that might otherwise be wasted. For example, if it's windy in Norway and not in Great Britain, excess wind power could flow across the North Sea Link. Both countries benefit from this shared connection, because:

  • It provides an extra layer of security of supply.
  • It allows for increased access to diverse renewable power, helping both countries meet their renewable targets.
  • The larger transmission capacity creates another avenue for international trade.
The Energy Academy: How do interconnectors work?

In this article, we take a look at:

  • What historical interconnector trading looked like.
  • Why long-established trends in interconnector trading have been flipped on their heads.
  • And how these changes will affect battery energy storage.

Active interconnectors

There are currently nine active interconnectors trading power with Great Britain, listed in table 1 (below).

Table 1 - Current interconnectors trading with Great Britain.

There are also more projects in the pipeline. One of the most exciting developments is the Xlinks Morocco-UK Power Project. It plans to use 3,800 km of high-voltage sub-sea cables to transport 3.6 GW of renewable power from Morocco to the UK. This will enable the UK to benefit from a low-cost, reliable source of solar power. Check out our podcast episode on the subject

Modo: The Podcast - Building a 3800km interconnector with Richard Hardy (Project Director @ Xlinks)

In the past year, massive changes in energy supply have shaken up electricity markets. This has caused prices to skyrocket across Europe. There is also now a sizeable gap between British and European power prices due to the post-Brexit uncoupling of their respective markets. As a result, long-established trends in interconnector trading have been flipped on their heads.

Historical interconnector trading

Historically, Great Britain has relied on electricity imports to help match demand. From 2009 onwards, the share of national demand met by interconnectors has steadily increased, as more overseas links have been commissioned (see figure below).

Figure 1 - National demand monthly average met by interconnector imports (%) (January 2009 - August 2022)

Net electricity imports reached a yearly high of 24.9 TWh in 2021, with interconnectors meeting 10% of national demand. This was mainly provided by French interconnector IFA, and the newly commissioned IFA2. It was driven by excess, (relatively) low-cost French nuclear power.

In April 2022, the directions of power flows from IFA and IFA2, BritNed (Netherlands), North Sea Link (Norway), and Nemo (Belgium) flipped. Great Britain went from being a net electricity importer to a net exporter.

Figure 2 - Interconnector power imports weekly average to Great Britain (January 2021 - August 2022)

What’s changed?

France’s nuclear fleet, previously so reliable, is in a poor state of health. Droughts, driven by a particularly hot summer, have lowered river levels and raised water temperatures beyond the safe operating limit for nuclear plants. Combined with an aging (and, in some cases, corroding) fleet, there is cause for concern.

In response, the French state utility EDF temporarily shut down 32 of France’s 56 nuclear reactors. Since nuclear power usually makes up 70% of the country’s electricity supply, France faces a major challenge. To cope with this power deficit, the country has now turned to exports from its European neighbours (amongst other, more stringent measures).

Against this backdrop of scarce supply and the wider gas crisis, market prices in France have soared. The price spread between Great Britain and France widened in April 2022, and increased again to a peak of €162.78/MWh in the week commencing 16th July (corresponding with the record-breaking heatwave experienced in Western Europe). This meant that interconnector exports to France became especially lucrative. On top of this, the price spreads between Great Britain and Belgium/Norway followed a similar (though less extreme) pattern - hence the power flow flipping.

Figure 3 - Difference between British and European prices, weekly average

While Europe is able to benefit from imports of British power, it will cause serious problems for Great Britain going into winter. Last winter, Great Britain imported over 3 GW at its peak. However, this winter it could be exporting a similar volume to Europe. If trends continue, we’ll see a 6 GW flip in available grid capacity.

The only reliable option to keep Great Britain’s lights on this winter is gas. But with record high gas prices and Russia shutting off a major pipeline, NordStream, it will come at a high cost.

How will this impact battery energy storage?

As we have seen recently, batteries are able to take advantage of high market prices. With a 6 GW drop in available capacity, Great Britain’s system margin is likely to be much smaller, more often - particularly at times of low wind output and thermal plant outages. These conditions will likely lead to significant price spikes for batteries to take advantage of.

Signal, the Modo battery revenue projection, uses system margin as an input to price volatility predictions and is forecasting very high wholesale revenues for this winter for the battery fleet. It will be able to provide short-term power to the system when needed, and help to balance demand when interconnectors are exporting to Europe.

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