How Will Brexit Impact Gas and Electricity Supply?
Updated: Sep 16, 2020
Brexit indecision is certainly a hot topic for businesses right now. As we wait to find out what comes next, one issue of concern to many is how leaving the EU will impact our energy supplies.
At the end of March, National Grid sought to reassure businesses that a no-deal Brexit outcome would not result in an energy shortage. According to media reports, measures are in place for all scenarios.
According to Reuters, National Grid stated that electricity and gas flow from continental Europe would not be impacted.
Imports of electricity via interconnectors currently account for five to six per cent of British supplies. But if the UK leaves the EU with no deal in place, energy trading would default to World Trade Organisation rules. The National Grid said this would apply “for the majority of countries”.
Importantly, electricity and gas shipments between EU and WTO countries are not subject to tariffs.
According to recent reports, several new power cables between France and the UK have been put on hold while the Brexit deal plays out.Construction of two interconnectors is in progress, but talks on three more have been paused and this has the potential to impact prices.
“As the U.K. often benefits from low power prices from France, less interconnection with that country can inadvertently translate to higher power prices,” said analyst Andreas Gandolfo commenting on the situation in this article from Bloomberg.
Britain sources a large percentage of gas in the form of liquified natural gas. The gas comes from countries such as Russia, the US and Qatar. There is no anticipation of problems meeting demand.
Rules and Legislation
There are other issues for the energy industry to tackle though. If we leave without a deal, European energy law will not apply in the UK. In the aforementioned scenario, we will need new trading arrangements for electricity interconnectors and new access rules.
The government stated it will “ensure the UK’s energy laws continue to work after the UK leaves the EU.”
Some experts think that leaving the EU may impact on energy policy in the longer term. But, for now, it would seem that cross border supply isn’t expected to alter significantly in the immediate future.