July 23, 2026
When the UK voted to leave the EU, it created major implications for the operation of electricity interconnectors between Great Britain and the Integrated Single Electricity Market, or I-SEM.
In leaving the EU, the UK also left the EU Internal Energy Market and the Single Day-Ahead Coupling process at the end of 2020. As a result, interconnector capacity between the I-SEM and Great Britain can no longer be allocated in the day-ahead timeframe. Instead, under the current rules, this capacity is placed into the coupled intraday auctions.
In practical terms, this means that interconnectors are removed from the Day-Ahead Market — by far the most liquid market in I-SEM, accounting for more than 80% of transactions.
Why this impacts renewables
Renewables have zero marginal prices to run. This means they are generally the first assets to be accepted in the Day-Ahead Market. Because interconnector capacity is not available in that timeframe, the market clears as if the interconnectors do not exist. This can lead to higher day-ahead prices than would otherwise be the case if interconnectors were able to trade their volumes in that market.
The sequence broadly works as follows:
- Renewable generation is accepted in the Day-Ahead Market because of its low marginal cost.
- The Day-Ahead Market clears without interconnector capacity being fully represented.
- Interconnector capacity is then allocated later, through the first intraday auction.
- EirGrid and SONI must then make the resulting commercial schedule physically secure.
This final step is where the issue becomes particularly important.
Commercial schedules versus physical reality
Once interconnector trades are committed, they cannot be easily undone unless there is agreement between EirGrid/SONI and NESO in Great Britain. This creates a challenge. If EirGrid or SONI require specific conventional units for system stability reasons, such as inertia, voltage control or frequency control, they cannot simply adjust the interconnector volumes to solve the problem.
Instead, the system still needs to be made physically secure.
And in practice, it is often indigenous renewable assets that suffer.
A simplified example
Take the example of a trader without a physical asset. That trader may take a position in the Day-Ahead Market with the intention of closing out that position in IDA1, where GB electricity is expected to be offered into the market at a lower price. This creates a requirement for interconnector imports to fill the shortfall.
Commercially, those imports can undercut more expensive conventional generators. However, the electricity system still needs to operate securely. The conventional generators that were undercut economically may still be required physically, e.g. to provide voltage support or another system security service. At that point, the interconnector traded capacity is fixed and cannot easily be changed. So, the correction has to come from somewhere else.
In simple terms:
- Commercially, the import has replaced expensive thermal generation.
- Physically, that thermal generation may still be required.
- The system operator must bring the thermal generation back on.
- Renewables are then left to absorb the downward correction.
This is how renewable assets can win in the market but lose in dispatch.
The SNSP issue
There is another particularly important mechanism at play: HVDC imports consume the same System Non-Synchronous Penetration (SNSP) headroom as wind and solar. At present, there is a maximum allowable share of 75% of generation coming from these non-synchronous sources. This means that an additional megawatt of interconnector import can reduce the amount of wind or solar that the system can securely accommodate at that moment.
Who ultimately pays?
The resulting constraint and balancing charges associated with this inefficiency are ultimately recovered from Irish end consumers.
Why this matters more in future
Interconnectors are critical pieces of infrastructure.
In a perfect world, they support:
- security of supply
- competition; and
- renewable integration
However, the current market design can have the unintended effect of replacing indigenous Irish renewables. With further interconnector capacity expected to come online in the coming years, these existing policies and market design gaps need to be reassessed.
The objective should not be to undermine interconnectors, but they must operate in a way that supports, rather than displaces, the efficient integration of Irish renewable generation.