Brexit poses internal energy market risk

The UK’s exit from the EU raises risks for the UK’s voice in the internal energy market, MPs were warned today.

Paul Hallas, regulation and strategy director at Centrica, told the business, energy and industrial strategy select committee that there will be negative implications if the UK loses its say over how the internal energy market’s rules operated as a consequence of Brexit.

Giving evidence at the committee’s opening session in an inquiry into the implications of Brexit for energy and climate change policies, he said: “It would be quite risky to put ourselves in a position where we are a pure rule-taker and have to adopt rules which are made in Brussels and the UK has less influence than it does today.”

Hallas added that in a “rational world”, the energy industry would want to preserve as much as possible of the existing internal energy market arrangements.  

“We would not like current arrangements to be dismantled or undone. We want an outcome where the UK adopts the vast majority of technical internal energy market rules in order to make effective use of capacity and encourage investment.”

However, Hallas expressed fears that, although preservation of the internal energy market’s rules would be in the interests of consumers, energy policy risked being caught up in the politics of the wider Brexit negotiations.

Other evidence presented to the committee raised concerns about the future of energy investment in the UK following Britain’s exit.

Martijn van Gemert, electricity committee member at the European Federation of Energy Traders, warned that, “Uncertainty is quite killing for investors so if you have greater uncertainty there is a greater chance you will have less players in the market.”

Gemert added that Brexit would put at risk the development of cross-border intra-day energy trading platforms between the UK and the rest of the EU. “This platform will not be a reality between the UK and the Continent,” he stated.

On the issue of the UK’s future energy security, Ian Graves, director of business development at National Grid, said that the conditions for developing new inter-connectors remain “good” in spite of the prospect of Brexit.

Kevin Dibble, director of strategy and communications, Engie UK agreed, also saying that, even if the development of new inter-connectors is slowed down by Brexit, the UK’s energy supplies will not be at risk.

He said: “If cross-border inter connector projects don’t happen as quickly, the UK government would have to procure more UK generating capacity. We would find a solution. It may not be as efficient but I wouldn’t worry that there will be a fundamental risk to energy supply.”

Following prime minister Theresa May’s announcement that the UK’s exit from the EU would necessitate and exit from the single market, concerns were raised about the priority given to energy and environmental issues within the exit negotiations.

Tanuja Randery, zone president for technology and engineering firm Schneider Electric and also a member of the CBI’s Energy and Climate Change Board, said it is: “essential that energy remains high on the Brexit agenda as access to the single market is negotiated.”