This guidance informs people working in the UK electricity market and other stakeholders about changes to the cross-border trading and supply of electricity from 1 January 2021.

Summary of actions

Interconnectors, code administrators and market participants may need to carry out contingency planning for 1 January 2021, depending on the outcome of FTA negotiations. Although it is a matter for individual businesses to work out what steps they need to take, the government anticipates these may include:

• interconnector owners/operators will need to continue to work with their stakeholders and regulators to prepare alternative trading arrangements and updated rules. These alternative trading arrangements will need to be as efficient as possible and provide each connected market with the necessary information to ensure the trades can be carried out
• interconnector owners/operators will need to continue to engage with the relevant EU national regulators to understand their processes for the potential reassessment of their Transmission System Operator certifications. Ofgem, and where appropriate, the Northern Ireland Utility Regulator will seek to support the interconnectors in this process. Government will retain existing Transmission System Operator certifications and will ensure that leaving the EU will not create any new domestic administrative requirements. This will apply for both Great Britain and Northern Ireland
• in Great Britain, the administrators of the various industry codes (the technical rules of the electricity system) will need to work with relevant industry parties to ensure that the codes are updated
• market participants in Great Britain will need to register under the EU’s Regulation on Energy Market Integrity and Transparency (REMIT) with an with an EU regulatory authority for the purposes of market monitoring to avoid a disruption to cross-border trade, trade within EU wholesale energy markets, or trade within the Single Electricity Market
• the Ireland/Northern Ireland Protocol provides the basis for the continued operation of the Single Electricity Market and trade of wholesale electricity across the island of Ireland
• in Northern Ireland, electricity market participants should continue using the Single Electricity Market processes and arrangements from 1 January 2021. However, market participants should be aware there may be alternative trading arrangements between Great Britain and the Single Electricity Market
• market participants should engage with their Regulatory Authority where their preparations identify significant concerns. Market participants should also check the status of contracts, and licences held in EU member states, which may be impacted from 1 January 2021

Before 1 January 2021

During the transition period, from 1 February to 31 December 2020, the UK’s electricity markets remain integrated (‘coupled’) into those of the EU, with common rules governing their operation. Significant cross-border flows of electricity take place:

• between continental Europe and Great Britain
• between Great Britain and the island of Ireland
• between Northern Ireland and Ireland

These flows, and the domestic markets, remain governed through EU legislation relevant to the functioning of the EU’s Internal Energy Market.

The Northern Ireland electricity market is separate from Great Britain. Northern Ireland shares a wholesale electricity market with Ireland, the all-island Single Electricity Market, an example of North-South cooperation that has benefited consumers and the economies of Northern Ireland and Ireland. The Single Electricity Market will continue to operate within the framework of common EU rules on electricity markets.

From 1 January 2021

The UK government is working to agree a Free Trade Agreement with the European Union to come into effect following the transition period, ending 31 December 2020. This section describes what will happen on 1 January 2021, subject to any electricity trading arrangements that may be agreed between the UK and EU as part of a Free Trade Agreement to take effect from that time.

In Northern Ireland, the Ireland/Northern Ireland Protocol to the Withdrawal Agreement provides the basis for the continued operation of the Single Electricity Market after 1 January 2021. The UK government is is supporting the Department for Energy in Northern Ireland to implement the SEM provisions at Article 9 and Annex 4 of the Protocol, which apply key elements of European energy law in Northern Ireland, which are largely devolved, to enable the effective operation of the Single Electricity Market across the island of Ireland.

From 1 January 2021 cross-border flows across electricity interconnectors will no longer be governed by EU legislation which provides for efficient trade and cross-border cooperation in operating the electricity system. Depending on the outcome of FTA negotiations, alternative trading arrangements will need to be developed, including for trade between Great Britain and the Single Electricity Market through interconnectors.

The EU’s Regulation on Energy Market Integrity and Transparency (REMIT) prohibits insider trading and energy market manipulation and makes provision for the monitoring of the market by regulators.

For Northern Ireland, the REMIT regulation will continue to apply as outlined in the Ireland/Northern Ireland Protocol to the Withdrawal Agreement.

In Great Britain, the majority of the existing REMIT regime will be maintained domestically with minimal changes. Market participants will need to register with an EU regulatory authority to avoid a disruption to cross-border trade, trade within EU wholesale energy markets, or trade within the Single Electricity Market. Ofgem issued an open letter on 27 September 2019 outlining steps to take for market participants in Great Britain. The process of re-registration in the EU is controlled by the EU’s Agency for the Cooperation of Energy Regulators (ACER). ACER published guidance on re-registration on 8 January 2019.

Changes will be made as necessary to domestic industry codes (the technical rules of the electricity system) and licences in Great Britain. For the Single Electricity Market, modification to industry codes and licences will continue under existing mechanisms, led by the Northern Ireland Utility Regulator, as part of the implementation of the Ireland/Northern Ireland Protocol to the Withdrawal Agreement even if an FTA covering electricity trading is not agreed.

In both Great Britain and Northern Ireland, respective governments will continue to work as normal with regulators and Transmissions System Operators to ensure existing measures are in place to deliver continuity of supply in all scenarios. Consumers need to take no action, but – depending on the outcome of FTA negotiations – trade on interconnectors may be less efficient.

Actions for businesses and other stakeholders

Interconnectors, code administrators and market participants may need to carry out contingency planning for 1 January 2021, depending on the outcome of FTA negotiations. Although it is a matter for individual businesses to work out what steps they need to take, the government anticipates these may include:

• interconnector owners/operators will need to continue to work with their stakeholders and regulators to prepare alternative trading arrangements and updated rules. These alternative trading arrangements will need to be as efficient as possible and provide each connected market with the necessary information to ensure the trades can be carried out
• interconnector owners/operators will need to continue to engage with the relevant EU national regulators to understand their processes for the potential reassessment of their Transmission System Operator certifications. Ofgem, and where appropriate, the Northern Ireland Utility Regulator will seek to support the interconnectors in this process. Domestically, government will retain existing Transmission System Operator certifications and will ensure that leaving the EU will not create any new domestic administrative requirements. The government will also make any small changes or clarifications necessary to the Transmission System Operator certification process to make sure it continues to function efficiently from 1 January 2021
• in Great Britain, the administrators of the various domestic industry codes (the technical rules of the domestic electricity system) will need to work with relevant industry parties to ensure that the codes are updated
• market participants in Great Britain should undertake the actions set out in Ofgem’s open letter of 27 September 2019 to ensure they are registered under REMIT with an EU regulatory authority for the purposes of market monitoring to avoid a disruption to cross-border trade, trade within EU wholesale energy markets, or trade within the Single Electricity Market
• the Ireland/Northern Ireland Protocol provides the basis for the continued operation of the Single Electricity Market and trade of wholesale electricity across the island of Ireland
• in Northern Ireland, electricity market participants should continue using the Single Electricity Market processes and arrangements after 1 January 2021. However, market participants should be aware there may be alternative trading arrangements between Great Britain and the Single Electricity Market
• market participants should engage with their Regulatory Authority where their preparations identify significant concerns. Market participants should also check the status of contracts, and licences held in EU member states

More information

Government and regulatory authorities will continue to work closely with businesses, trade associations and stakeholders and communicate information and updates online.

Ofgem has issued information to industry on licence and industry code modifications: Preparing for EU exit: licence and industry code modifications.