LONDON, June 14 British power prices may fall
after its electricity market links more closely with others in
Europe later this year, increasing cross-border trading, one of
the project leaders said on Friday.
From November onwards, Britain's electricity market will be
directly linked to those of Germany, France, the Netherlands,
Belgium and the Nordic states via a mechanism that will
distribute power automatically and more evenly between major
delivery points as it is needed.
The so-called market coupling project aims to eventually
integrate all of Europe's power markets to create one price for
European energy consumers and to hedge against supply shocks.
Britain's power market has fewer connections to its
neighbours and is less liquid than most others in western
Europe, and its power prices have recently been higher.
For Britain, market coupling will bring a boost to the
number of trades on its short-term market, said Bente Hagem,
co-chair of the coupling project.
"Liquidity in the UK will increase for the day-ahead market
through coupling. That will be positive for the price
formation," she told journalists at a news conference.
Exposure to the wider market is likely to bring Britain's
prices more in line with those on the continent.
The Dutch, German, French, Luxembourg and Belgian
electricity markets were already coupled in November 2010, which
has helped their prices converge.
Closer ties will also mean, however, that British consumers
may be more prone to price changes in surrounding markets, for
example those caused by extreme swings in German renewable
The European Union has set an end-2014 target for Europe's
electricity markets to be fully integrated to distribute
renewable energy flows and prevent energy supply crises.
The complexity of uniting trading and capacity allocation
systems, however, has made meeting that deadline unlikely, said
Jean-Francois Conil-Lacoste, the second co-chair of the project
and head of European day-ahead power bourse EPEX Spot.
"We have a deadline of end-2014, which is very ambitious,
and we can probably safely say that unfortunately we will not
meet the deadline for all of Europe," he said at the same
Markets in central-eastern Europe have taken the first steps
to couple their regions, and south-eastern markets are also
gearing up to eventually join the creation of a Europe-wide
(Reporting by Karolin Schaps; editing by Jane Baird)