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Could Brexit scar Britain’s energy landscape?

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In this file photo taken on January 25, 2012 Power lines and pylons are seen with the financial heart of London, Canary Wharf, in the distance. Britain is set to leave the European Union on Friday, ending more than four decades of economic, political and legal integration with its closest neighbours. Britain says it is ready to start trade talks on February 1, but the other EU members states are still discussing what they want from the negotiations. Britain and the EU closely cooperate on security and law enforcement, education and energy among many other issues. AFP

Could Brexit scar Britain’s energy landscape?

Britain's exit from the EU, which will finally happen on Friday, has sparked fears of disruption to its electricity market, from higher bills to supply issues and stalled de-carbonisation efforts.

Enough current?

Britain depends on the EU for much of its electricity supply.

Its own generation fell in 2018 by 1.6 per cent, according to the latest available statistics.

This reduction stems from the gradual shutdown of coal-fired power plants, which is yet to be fully compensated by a rise in wind power.

Imports of electricity and gas have increased in response, predominantly from France, the Netherlands and Ireland, which now account for almost 40 per cent of Britain’s energy consumption.

Britain’s imminent departure from the 28-member EU and its single electricity market therefore represents a risk for an already fragile network, which suffered a big blackout in August.

It will continue to benefit from existing arrangements during a post-Brexit transition phase, while it seeks a new agreement on everything from energy to security cooperation with Brussels.

But it is not clear if these talks will entirely resolve the issue.

British industry regulator Ofgem has said “alternative trading arrangements will need to be developed”, without giving further details.

It insists that whatever deal is struck, it does not “expect Brexit to interrupt the flows of electricity and gas”.

But at times of peak demand, Britain may find itself at the back of the line for electricity.

“EU countries could get preference,” Weijie Mak, of research company Aurora, said.

As with other areas such as finance, agreeing so-called equivalence on things like CO2 emission rules – so countries who produce cleaner and more expensive electricity are not disadvantaged – will be key.

Price rise?

Uncertainty over equivalence and the possible return of tariffs or quotas if trade negotiations falter has left some sceptical that nothing will change post-Brexit.

“The electricity trade will become more expensive,” said Joseph Dutton, policy adviser at climate change think tank E3G. “It could mean higher bills for consumers.”

Trading in electricity across the Channel is currently based on an auction system, which could be upset by Britain’s EU departure.

Eurelectric, the association representing the industry at the European level, sees it as a “lose-lose situation” because of “less efficient gas and power trading”.

The hazy picture has seen the French government put on hold several interconnector projects aimed at better linking the electric power grids of Britain and the continent.

But they are seen as crucial for energy security on the English side of the Channel.

“[They] supply less than 10 percent (of electricity consumed) but allow you to balance supply and demand,” said Dutton.

“Interconnectors give you flexibility to build more renewables [wind mills in particular] because you can buy electricity when the wind is not blowing and sell it when you have more than you need.”

That could lead the government to postpone the closure of gas-fired power stations and delay Britain’s transition to entirely green energy sources, which it has vowed to do by 2050.

It could also mean easing a carbon tax currently levied on electricity prices to finance the transition if bills have spiked.

“If they [interconnectors] are not working, it has real consequences for the net zero targets,” concluded Dutton.

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