Project TERRE Facing French Delay

As the UK’s energy market interactions with the continent become ever more complex, Head of Regulatory Affairs, Colin Prestwich, explains the reasons for the delay to Project TERRE which were announced this week.

Project TERRE (Trans-European Replacement Reserves Exchange) proposes to create a Europe-wide balancing market, by allowing generators and demand-side actors to offer reserves to their respective Transmission System Operators (TSO).

TSOs will then be able to trade the TERRE product across interconnectors, to help ensure security of supply for neighbouring countries. Currently, the countries participating in TERRE are GB, France, Spain, Switzerland, Italy, Portugal, Poland and the Czech Republic.

I should emphasise that the decision to delay the introduction of Project TERRE has nothing to do with Brexit, but everything to do with knock-on effects from the continent; National Grid’s opposite number in France -- Réseau de Transport d'Électricité – better known as RTE, is understood to have had problems implementing the required controls and systems to enable Project TERRE. Consequently, the French TSO has had to request a 12-month derogation from its obligation to implement the project, which had been scheduled to go live later this year.

Given the list of countries participating (i.e. not including the Benelux countries), the UK’s only link to enable the physical trading of power over interconnectors required by TERRE, is France.

As a result, the UK will also have to request an exemption much like that of RTE’s until access to the TERRE market via France is restored. Current estimates suggest that June 2020 is now looking like the earliest go-live date for the product.

Whilst this delay is disappointing for GB, it’s good to know that international competitiveness will not be significantly affected, with only the Czech TSO still planning to go-live with TERRE in December – all the others have also decided to delay because of their connectivity with France.

In the meantime, National Grid have confirmed that work on IT systems and testing to allow for the deployment of TERRE will continue as planned – as will the work on enabling distribution connected assets to access the Balancing Mechanism, the go-live date for which has not changed.

Read National Grid’s letter here