Negotiations are continuing between Brussels and London, but what does Brexit mean for the electric power sector? Dr Jonathan Marshall, Head of Analysis at the Energy and Climate Intelligence Unit (ECIU) spoke to Power Engineering International about the potential up and downsides.
Just a fortnight ago the European Commission released a document, which appears to clarify some details on how power interconnection will work between the UK and its soon to be ex-member state colleagues in the EU. Since the mid-2016 referendum, such clarity has been unforthcoming.
The ‘Withdrawal of the United Kingdom and the Internal Energy Market’ document includes a provision, with reference to compensation between transmission system operators, that brings home the realities of being outside the bloc for the newly independent UK – the EU’s Transmission System Use Fee will now apply to the UK as a ‘third country’.
“The main thing is the levied network charges on electricity imports and exports will obviously make it a lot more expensive but the point of getting to that will see a lot of wrangling and to-ing and fro-ing between French and Dutch and in the future maybe Belgian and Norwegian network providers on how much those costs are going to be.”
“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.”
That levy on interconnection might suit some of the utility operators in the UK.
“Yes, interestingly, if you have interconnect imports and network charges in source of origin, that is something some operators have been lobbying on for ages – they want to even up the playing field and (inadvertently) this system might realise it.”
Alternative power transmission arrangements with countries outside the Eurozone are limited, according to the ECIU analyst. Closer relationships with Iceland and Scandinavian countries will not provide the variety of power resources associated with membership.
“Norway is the same story- its electricity market is linked to common balancing between Norway and Denmark and that Baltic region. While Iceland not bound by EU riles, the issue of it being far away means interconnectors prove really expensive. “
“Also consider the fact that you’re only linking two systems together, so you don’t get the advantage of pooling a wide extent of sources such as solar power from Spain, hydro from Switzerland, wind from the Baltic. If just the UK and Iceland, there’d be a weird mix of our wind and gas heavy system and the Icelandic geothermal heavy system and it’s hard to say how well they would complement each other.”
Effect on Ireland’s Single Energy Market
Political analysis of the negotiations is under no doubt that the EU cannot afford to allow the UK be out of the club, with all the benefits of the club, so harsh decisions look likely. While a lot of focus has been placed on the Irish border question in the mainstream, the implications of Brexit for the island’s united electric power system are somewhat overlooked.
“With the UK red lines of no oversight by the European Union it is hard to see how the current arrangement would continue as all the international bodies are subject to the jurisdiction of the ECJ.”
“On a macro level the discussions are stuff like ‘where are the Irish borders going to be electricity wise?’ On land or down the middle of the sea in order to keep the Irish Single Electricity Market intact ?”
“The border question is one of the main sticking points at the very top of the negotiations before you even get to sectors like electricity and energy- these much more high level discussions will dictate how the various sectors of industry under UK PLC fall into line afterwards.“
Are the implications for the energy system being underestimated in the main? All other industry considerations require electricity as a starting point. Whatever about the larger negotiation, its importance is certainly felt in Ireland, says Marshall.
“In Ireland the single electricity market has featured in speeches by Leo Varadakar (Irish Taoiseach/ Prime Minister) and senior Irish figures and obviously it’s a feature there because of how inter-dependent north and south are on each other and how well developed and integrated this (island) single market is. 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.”
Room for Positivity – Innovation and Nuclear
There is room for positivity, according to Marshall, firstly with the resilience of the UK’s academic and industrial research and development sectors to withstand any drawbacks from loss of membership, such as the threat of funding withdrawal by EU-sponsored projects.
“The UK energy technology sector seems to be going strongly, as it has been for a while. There are more new companies popping up all the time doing innovative things like storage and demand side response and more. Because of progressive development these companies haven’t jumped ship and they are still here and still wanted by the likes of National Grid and other power responsive or distribution networks, who are trying to get these techs more embedded in the UK and more part of the business as usual going forward. There has not really been any notable change so far so its hard to draw any conclusions.”
The government’s decision to pull out of Euratom has caused a lot of fretting in some quarters but again, Marshall believes, this may work in the country’s nuclear power sector’s favour.
“In terms of nuclear regulation it seems to be one of the priorities and the government is not being as cavalier with this area as with other post EU policies. That’s one thing they might have in check.”
“Interestingly with nuclear one of the arguments put forward during the campaign about getting out of the EU pertained to state aid and the inability to use UK money to fund British projects.”
“One of the things the nuclear sector is lobbying very heavily for is to have more state aid or the state assuming more risk for supporting nuclear projects such as it did for Hinkley (Point C).”
“If you look at the main material coming out of the nuclear bodies it’s asserting that if we are going to crack on with Wylfa and Sizewell and Bradwell we need to get the costs down and the best way to do that is for the state to take on more risk.”
“This is something that would have caused more trouble with EU overseers due to State Aid regulation. If this sort of regulation no longer applies that has got to be one upside, as well as for all other parts of the power system that ned more explicit sources of subsidy.”
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