The SEM Committee has today published an updated statement on the operation of the SEM after the end of the Brexit transition period on 31 December 2020. This confirms the position where the UK and the EU do not reach a trade agreement before the cut-off date.
The statement does not provide much in the way of new information and confirms what we know already:
- The SEM will continue to operate as an all-island market on the basis of the Northern Ireland protocol contained in the UK-EU Withdrawal Agreement.
- Trade between the SEM and the market in Great Britain, through the Moyle and EWIC interconnectors, will also continue although it may be less efficient. This could lead to higher electricity prices.
- The SEM will no longer be able to participate in EU markets, principally the day ahead market. This will likely mean more volatility in the day ahead market as well as possible higher curtailment as a result of loss of liquidity.
- The SEM Committee is encouraging more trading in the intraday markets between the SEM and Great Britain in order to move the focus away from the day ahead market. This could result in the intraday market price becoming the de facto market reference price rather than the day ahead market price (although not for the purposes of RESS or REFIT).
In addition, there is still no update on REMIT compliance for NI based generators. It is still possible that their registration with Ofgem or NIAUR will not be recognised by ACER and registration with an EU member state (probably CRU in Ireland) will be required.
Trade talks are still continuing between the UK and the EU and therefore a trade agreement is still possible prior to 31 December 2020. We will continue to monitor the position.
The SEM Committee statement is available here.