As cold, still weather settled across Britain on January 8 and with coal-fired power plants turned off for good, the team in charge of keeping the country’s lights on turned to other power sources hundreds of miles away.
National Grid’s Energy System Operator paid up to £179 per megawatt hour — more than double the typical rate for electricity bought a day ahead — to import electricity from Denmark via the Viking Link, a 475-mile undersea cable that stretches between Jutland and Lincolnshire.
Denmark, in turn, had to pull in electricity from Germany. “It was a tight day,” said Fintan Devenney, senior energy analyst at advisory firm Montel.
The trade highlights Britain’s growing reliance on importing and exporting electricity from and to neighbours — which is set to increase as the country seeks to make wind turbines and solar panels the backbone of the electricity system, as part of its plan to decarbonise power by 2030.
Greater interconnection should make the system more resilient. Yet it also exposes electricity supplies to international political tensions. Some of those are already coming to bear: rising protectionism over electricity exports and complaints over post-Brexit barriers to British exports to the EU.
Prime Minister Sir Keir Starmer is expected to push for closer links with the EU’s energy and carbon markets as part of the much-anticipated EU-UK “reset” summit taking place in London on Monday.
“It’s all on the table currently [but] being held up by silly things like fishing negotiations,” said one government figure. “It has the full support of industry the UK-side.”
Britain’s electricity cables to neighbours have proliferated since the first to France came online in 1961. Ten now link Britain to France, the Netherlands, Belgium, Northern Ireland and the Republic of Ireland, Norway and Denmark.
In 2023, the latest year which for data is available, the UK imported a net 23.8 terawatt hours of electricity, or about 7.5 per cent of domestic demand.
Several more “interconnector” cables out of Britain are planned alongside the growth of wind and solar power, both in Britain and on the continent.
Along with zonal pricing and demand-side flexibility, they are a means of tackling the intermittency of renewables by, in effect, increasing the size and flexibility of the market.
Power can be imported when it is less windy in Britain, potentially at lower cost than turning on domestic supply, and exported on blustery or very sunny days when the country has more than it can handle.
The UK government wants to more than double Britain’s current 31.4 gigawatt wind capacity and almost triple solar power capacity by 2030, by which point interconnector is forecast to have risen by about 4GW.
If those goals are met, NESO estimates Britain would become a net exporter of electricity in five years’ time.
“In electricity terms we are not an island,” said Ben Wilson, president of National Grid Ventures, a division of National Grid, which owns the Viking and other cables and is developing others. “We are well connected.”
Greater interconnection between countries is also a key goal in the EU. Yet rising power prices and energy security concerns have started to test the limits of that ambition.
In January 2023, Norway set out measures allowing energy exports to be curtailed if there was a risk of domestic shortages, and shortly after refused permission for a new interconnector to Scotland.
The coalition government in Oslo collapsed in January because of opposition to EU energy policies by the Centre party, the junior partner.
But Norway’s ruling Labour party is also sceptical: it has asked Statnett, the state-owned electricity system operator, to postpone planning for any new interconnectors until 2029. It also wants to switch off two of three cables to Denmark when they come up for renewal in 2026.
Energy prices and interconnectors are set to feature prominently in Norwegian parliamentary elections in September.
Adam Bell, director of policy at consultancy Stonehaven and former head of energy strategy in the UK government, said: “I think Norway has now realised they have a very valuable resource that they are in effect giving away very cheaply, and it’s not unreasonable for them to want to create some scarcity.”
Britain has imported £2.9bn worth of electricity from Norway since the first cable between the two opened in October 2021, highlighting its reliance on the Scandinavian country for its own electricity supplies.
Pranav Menon, at Aurora Energy Research, said Britain could benefit if Norway cut capacity only to Denmark, owing to reduced competition for exports. But political rhetoric in Norway suggested it may not, he cautioned.
“A loss of interconnection with Norway is likely to significantly increase price volatility in the near term,” Menon added.
Exports are also coming under scrutiny in France, Britain’s largest source of imports. In legislative elections last year in which the far-right party won nearly one-third of the vote, Marine Le Pen’s Rassemblement National put forward proposals to take greater control of exports.
France and Norway are particularly important to Europe’s electricity system, since their respective nuclear and hydropower supplies help protect against the risk of simultaneously low or high wind supplies across the north of the continent.
Experts differ on the severity of that risk, although recent research by consultancy Wood Mackenzie pointed to a “wind drought” across northern Europe in March 2021, noting a “strong correlation” between onshore and offshore fleets in 2020 “across a broad geographic footprint”.
Analysis by the International Energy Agency shows that, roughly five or six times over the past 30 years, cold, low wind spells have simultaneously affected large parts of Europe for a week or more, including areas where most onshore and offshore projects are located.
Protectionist moves comes as Brexit has introduced new trading barriers, which are pushing up costs and threatening new investment, industry analysts and lobbyists warn.
Britain’s exit from the EU’s single energy market means that interconnector capacity between the two is no longer automatically allocated but needs to be expressly purchased by traders in separate auctions, resulting in a less efficient market.
Moreover, industry warns that Britain’s electricity exports to the EU will be heavily taxed from 2026 due to the combined effect of the EU’s carbon border tax and Britain’s split from the EU’s emissions trading scheme.
Simon Virley, head of energy at advisory firm KPMG UK, said there was a lot at stake as Starmer prepares to meet European Commission president Ursula von der Leyen in London.
Ministers hope to improve “market linking” between the UK and EU over interconnectors while also linking emission trading schemes.
“Harmonising energy trading rules, and removing current frictions, could help lower bills for consumers and ensure greater energy security and resilience,” Virley said.
In theory, taking more rules from the EU could be politically contentious, although ministers believe the issue is too technical to become a problem on the doorstep. “I doubt anyone would notice or care except [Nigel] Farage,” said the UK government figure.
A government spokesperson said “We are resetting our relationship with the EU to improve trade and investment and promote climate, energy, and economic security.
“We look forward to hosting the European Commission for the UK-EU Summit next week, where we hope to make real progress on these issues.”
Wilson at National Grid agreed there was an “opportunity” to re-link electricity and carbon trading, which would be “mutually beneficial”.
In the meantime, National Grid and others are forging ahead with new interconnector projects, including ‘hybrid’ projects connecting North Sea wind farms to markets on either side.
“Security of supply lies in diversity,” he added.
Additional reporting by Richard Milne. Data visualisation by Janina Conboye
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