Brexit likely to harm UK power industry, Power Technology survey finds

Yoana Cholteeva 10 March 2020 (Last Updated March 10th, 2020 13:01)

After Britain left the European Union on 31 January 2020, we asked our readers how they thought Brexit would impact the UK power industry.

Brexit likely to harm UK power industry, Power Technology survey finds
As the UK imports about 12% of its gas and 5% of its electricity through the EU interconnector system, there are fears the country’s energy sector might become subject to tariffs for these power imports and exports. Source: Kai Stachowiak

Results from 3,802 respondents show significant concern with 32% expecting consequences to be strongly negative, 19% slightly negative, 24% strongly positive, 9% slightly positive, and 15% remained neutral.

Imposing tariffs on energy import and export spark fears

As the UK imports about 12% of its gas and 5% of its electricity through the EU interconnector system, currently used for free, there are fears the country’s energy sector might become subject to tariffs for these power imports and exports.

In order for the UK to keep using its interconnectors, the government has to negotiate favourable conditions during the 12-month transition period ending on 31 December 2020. Depending on new agreements, UK energy suppliers could be subject to substantial taxes which could be become a burden for both operators and customers with energy price surges trickling down the line.

In addition, as part of a 2018 report on energy security, Durham Energy Institute (DEI) warned that it is possible that the UK will become vulnerable to post-Brexit energy shortages. The report says that “the UK can no longer meet its own heat and power demands with indigenous supply” and the country could be further put at risk by fluctuations in international supply of energy.

For this reason, the institute has urged the UK Government to work with the EU to eliminate detrimental effects by reach beneficial agreements.

Strain on the nuclear industry

With 21% of current UK power being produced by nuclear reactors, the House of Lords’ report on the impact of Brexit on the UK energy security has questioned the consequences on the local nuclear industry.

A possible exit of the European Atomic Energy Community (Euratom), a regulatory treaty closely linked to the EU, has the potential to impact the UK’s future nuclear operations by jeopardising availability of skilled labour from abroad and impede research, protection of nuclear energy, cooperation with other member states and transport of nuclear materials.

More recently, at the IAEA International Conference on Nuclear Security in February 2020, MP Nadhim Zahawi sought to boost confidence by announcing plans to reinforce industry cooperation and contribute a further £1.6 million to the Nuclear Security Fund, which the country is part of, and urged other member states to do the same.

Despite that, the conditions of the future nuclear regime are yet to be negotiated and currently remain uncertain.

Opportunity to re-focus the industry according to UK values

On the flipside, many believe Brexit could be beneficial to the development of the power industry. A different point that the DEI report introduces is the opportunity for Britain to ensure increased UK policy emphasis and reinforce its focus on energy efficiency in buildings, industrial machines, electrical products, and strengthen commitments to already familiar demand reductions encouraged by the EU.

As UK energy policies and regulations are currently aligned with the European energy objectives, Britain has predominantly been part of the movement to increase the use of renewables and has led the way on new industry research. With the opportunity to take separate decisions for its development and progression of the energy industry, the UK may now have the chance to focus on its local priorities and could also establish new partnerships with foreign power investors and operators.

A report published by Baringa, a business management consultant, on Brexit’s impact on the UK Energy Industry has highlighted that the close alignment with EU countries is “unlikely to change” and the company expects that Britain will “continue to follow the wider Energy Union agenda, especially if the UK also remains part of the European Economic Area.” Whether many policies will change or not, there is also an optimistic outlook on the post-Brexit industry.