This guidance informs people working in the Great Britain and Northern Ireland electricity markets and other stakeholders about changes to the trading and supply of electricity from 1 January 2021.

The UK government has concluded a Free Trade Agreement with the EU to come into effect following the transition period, ending 31 December 2020. This agreement provides a framework for future electricity trading across interconnectors between the UK and the EU. The agreed model of trading will take time to develop and will not be in place for 1 January 2021. Previously developed and communicated alternative arrangements – which will continue to allow trade and mutual support for security of supply – will need to be implemented in the interim, enduring until the agreed trading model can be put in place.

Further guidance on the electricity trading arrangements agreed in the UK-EU Free Trade Agreement will be published in due course.

Summary of actions

Interconnectors, code administrators and market participants will need to implement the alternative electricity trading arrangements that they have previously developed and communicated for 1 January 2021, which will endure until the arrangements in the Free Trade Agreement can be put in place. 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 implement alternative trading arrangements and updated rules. They will need to provide each connected market with the necessary information to ensure trading under the alternative arrangements 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 the end of the transition period will not create any new domestic administrative requirements. This will apply for both
• 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, who want to trade in EU wholesale energy markets, undertake cross border trade, or trade within the Single Electricity Market, will need to register with an EU regulatory authority, under the EU’s Regulation on Energy Market Integrity and Transparency (REMIT)
• 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 will be alternative trading arrangements between Great Britain and the Single Electricity Market
• market participants in Northern Ireland will need to be registered with the National Regulatory Authority in the member state in which they are established, resident or active
• under the Ireland/Northern Ireland Protocol, Northern Ireland competent authorities may be treated as member state competent authorities. The Utility Regulator (UR) should therefore be considered a National Regulatory Authority for the purposes of REMIT. This means market participants in Northern Ireland can stay registered with UR
• The European Commission has set out its consideration that all Northern Ireland market participants should be registered with the Commission for Regulation of Utilities (CRU) by 1 January. The UK government is seeking to resolve this issue with them
• 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 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 has concluded a Free Trade Agreement with the European Union to come into effect following the transition period, ending 31 December 2020. This agreement provides a framework for future electricity trading across interconnectors between the UK and the EU. The agreed model of trading will take time to develop and will not be in place for 1 January 2021. Previously developed alternative arrangements will need to be implemented in the interim, which will endure until the agreed trading model can be put in place. This section describes what will happen on 1 January 2021.

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 supporting the Department for the Economy in Northern Ireland to implement the Single Electricity Market 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. In accordance with the agreed UK-EU FTA, a new model of efficient electricity trading across interconnectors will be developed, including for trade between Great Britain and the Single Electricity Market. These arrangements will not be in place for 1 January 2021. Market participants should therefore be aware that alternative arrangements for electricity trading between Great Britain and the Single Electricity Market will be in place from 1 January 2021.

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. Existing REMIT prohibitions and obligations will be maintained and Ofgem will have the powers to monitor and enforce them. Ofgem published a letter on 13 October 2020 confirming the REMIT arrangements that will apply in Great Britain from 1 January 2021.

Market participants in Great Britain, who want to trade in EU wholesale energy markets, undertake cross-border trade, or trade within the Single Electricity Market, will need to register with an EU regulatory authority. The process of re-registration in the EU is managed by the EU’s Agency for the Cooperation of Energy Regulators (ACER). ACER published guidance on re-registration on 8 January 2019.

Market participants in Northern Ireland will need to be registered with the National Regulatory Authority in the member state in which they are established, resident or active. Under the Ireland/Northern Ireland Protocol, Northern Ireland competent authorities may be treated as member state competent authorities. The Utility Regulator (UR) should therefore be considered a National Regulatory Authority for the purposes of REMIT. This means market participants in Northern Ireland can stay registered with UR. The European Commission has set out its consideration that all Northern Ireland market participants should be registered with the Commission for Regulation of Utilities (CRU) by 1 January. The UK government is seeking to resolve this issue with them.

Changes will be made as necessary to domestic industry codes (the technical rules of the electricity system) and licences in Great Britain.

Ofgem published guidance on 6 December 2018 outlining the approach to licence and industry code modifications in Great Britain. Ofgem is currently consulting on licence modifications to ensure licences are fit for purpose after the transition period ends. This follows on from its January 2019 statutory consultation on licence modifications. It expects to publish its final modification direction in January 2021.

There will be a period between the end of the transition period and when Ofgem issues its modification direction. During that period, licensees are expected to conduct their operations and business in a lawful manner and in accordance with national legislation. Licence conditions arising from requirements under retained EU law will continue to have effect.

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.

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, and the impact should be minimal.

Further guidance on the electricity trading arrangements agreed in the UK-EU Free Trade Agreement will be published in due course.

Actions for businesses and other stakeholders

Interconnectors, code administrators and market participants will need to implement the alternative trading arrangements that they have developed for 1 January 2021, which will endure until the arrangements in the Free Trade Agreement can be put in place. 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 implement alternative trading arrangements and updated rules. They will need to provide each connected market with the necessary information to ensure trading under the alternative arrangements 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 who want to trade in EU wholesale energy markets, undertake cross border trade, or trade within the Single Electricity Market, should follow the steps set out in ACER’s January 2019 letter in order to re-register with an EU regulatory authority.
• 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 will be alternative trading arrangements between Great Britain and the Single Electricity Market
• market participants in Northern Ireland will need to be registered with the National Regulatory Authority in the member state in which they are established, resident or active
• under the Ireland/Northern Ireland Protocol, Northern Ireland competent authorities may be treated as member state competent authorities. The Utility Regulator (UR) should therefore be considered a National Regulatory Authority for the purposes of REMIT. This means market participants in Northern Ireland can stay registered with UR
• the European Commission has set out its consideration that all Northern Ireland market participants should be registered with the Commission for Regulation of Utilities (CRU) by 1 January. The UK government is seeking to resolve this issue with them
• 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
• Ofgem published guidance on 6 December 2018 outlining the approach to licence and industry code modifications in Great Britain. Ofgem is currentlyconsulting on licence modifications to ensure licences are fit for purpose after the transition period ends. This follows on from its January 2019 statutory consultation on licence modifications. It expects to publish its final modification direction in January 2021
• There will be a period between the end of the transition period and when Ofgem issues its modification direction. During that period, licensees are expected to conduct their operations and business in a lawful manner and in accordance with national legislation. Licence conditions arising from requirements under retained EU law will continue to have effect.

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.