UK Law and Practice Contributed by: Tom Sprange KC, Andrea Stauber, Martina Antosova and Lucy Pearson, King & Spalding International LLP
to the relevant settlement periods and the submission deadline. In order to achieve liquidity, Great Britain’s major energy suppliers have committed to trade a pro- portion of their power station output in the day- ahead market (where power is sold for use the next day). As DNOs own and operate the local distribution systems within their allocated areas, they have a monopoly. Regulation of DNOs is achieved through price controls, which limit how much DNOs can charge the supply companies. Price controls also limit how much TOs (who have a monopoly over the transmission system) can charge DNOs. The price control regime for elec- tricity distribution from 1 April 2015 to 31 March 2023 was known as RIIO-ED1. The current price control regime (RIIO-ED2) applies from 1 April 2023 to 31 March 2028. The RIIO-ED2 price con- trol periods are five years – rather than eight – and companies can submit proposals for allow- ances for specific longer-term items. For electricity TOs, the first RIIO period (referred to as RIIO-ET1) ran from 1 April 2013 to 31 March 2021 and the second period (RIIO-ET2) began on 1 April 2021. The SO has a separate incentive regime. For electricity suppliers, the licensing regime provides Ofgem with a means to implement consumer protection measures (including retail price controls and appointing a supplier of last resort) and industry-wide schemes such as feed- in tariffs (FITs). The UK has a capacity market (CM), which was introduced in 2014 as part of a wider programme of reform (known as Electricity Market Reform, or EMR – itself part of the Energy Act 2013). Fol-
lowing the end of the UK–EU Withdrawal Agree- ment Transition Period (the “Transition Period”) on 31 December 2020, the CM operates under new trading arrangements with the EU under the terms of the UK–EU Trade and Cooperation Agreement (TCA). The CM is governed by the Electricity Capac- ity Regulations 2014 (“the Regulations”) and the Capacity Market Rules (the “CM Rules”). The Regulations provide the overarching policy and design, including the powers the Secretary of State holds in overseeing the CM. The CM Rules provide the detail for implementing the operating framework set out in the Regulations. NESO is the EMR Delivery Body responsible for admin- istering key elements of the CM. 2.2 Electricity Imports and Exports Imports and exports of electricity to and from other jurisdictions are permitted in the UK. Cur- rently, there are interconnectors linking Great Britain to France, the Netherlands, Belgium, Northern Ireland, Ireland, Norway and Denmark. The latest interconnector to start commercial operations was Greenlink in January 2025, con- necting the UK with Ireland. The UK plans addi- tional interconnectors to Germany, France and Morrocco by 2030. Great Britain’s electricity market currently has 9.8 GW of electricity interconnector capacity: • 4 GW to France (IFA, IFA2 and ElecLink); • 1 GW to the Netherlands (BritNed); • 1 GW to Belgium (Nemo Link); • 500 MW to Northern Ireland (Moyle); • 1 GW to Ireland (East West and Greenlink); • 1.4 GW to Norway (NSL); and • 1.4 GW to Denmark (Viking Link).
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