Brexit – an electric atmosphere?

Following the EU’s ‘Notice to Stakeholders’ letter back in April 2018, the energy sector continues to watch the Brexit negotiations with mixed emotions.

In its letter, Withdrawal Of The United Kingdom And The Internal Energy Market, the European Commission laid out its approach to compensation between Transmission System Operators (TSOs); Interconnectivity; Electricity and Gas Trading; Investments in TSOs and terms for hydrocarbon exploration and production.

In fact, the four page document directs stakeholders to a range of existing directives and explaining the potential impact of the UK’s departure from the EU on those directives and their wording.

Where are we now?

A couple of months before the EU’s missive to energy generators and distributors, Power Engineering International (PEI) magazine polled UK electricity industry professionals on their view of Brexit.  More than 60% of respondents felt that Brexit would not have a positive impact on the UK power sector, with nuclear power professionals the most concerned.

Four months after the survey, and with some time to absorb the EU’s position, PEI revisited the subject with the help of Energy and Climate Intelligence Unit (ECIU) Head Analyst, Dr Jonathan Marshall.  The overall summary: the key sticking points remain sticky, but the nuclear professionals perhaps have some cause for optimism.

The Ireland question

According to PEI and ECIU, imported and exported electricity will become more expensive as a result of the levied network charges that will be enforced as part of the Brexit agreement, with the European providers closest to UK shores jockeying for financial position.  According to Marshall, “That’s one of the main cruxes along with short term market and coupling arrangements which obviously can be quite a big deal as well. It is hard to know how much at this stage, until more detail emerges, how expensive it will be.”

Equally, as the debate over the physical, political and customs border between Northern Ireland and the Irish Republic continues, the impact of Brexit on the electricity network across the whole of the island also remains unclear.  What is clear is that energy supply is inter-dependent and fundamental to industry and domestic activity on both sides of the border.  In fact, Marshall goes as far as to state that: “It’s difficult to see how it can be separated that won’t end in total disaster.  In terms of UK discussions, there is a consensus across industries, across academia and onlooking NGOs that it should be maintained as it is.”

Going nuclear

According to PEI, there may be a slightly more positive outlook for the nuclear industry. Despite the UK Government’s decision to withdraw from Euratom, Marshall states that this may strengthen the resolve of UK legislators to take on more of the burden of risk in an effort to accelerate progress of the major UK nuclear projects already on the drawing board.  By implication, increasing state risk will reduce private costs of delivery. 

Along with Power Engineering International and the rest of the energy sector, Fundamentals will be keeping a close eye on progress of the Brexit negotiations.