How will Brexit hit UK coal, nuclear and renewables?

Further analysis of the impact of the UK’s vote to leave the European Union has been provided by consultancy Frost & Sullivan.

Jonathan Robinson, the firm’s principal energy & environment consultant, anticipates stability in some areas but uncertainty in others.

He said that historically, “the energy sector is one where the EU has always struggled to find agreement, and member states have been given quite a lot of independence. Nuclear power and the use of coal in power generation are examples where member states have held radically different views”.Brexit and the UK power sector

Frost & Sullivan anticipates little change in relation to the UK’s pathway to cut coal from its energy mix. “The UK was already ahead of the rest of the EU on reducing its coal generation capacity and carbon emissions, with a commitment to close all coal plants by 2025, and there is no evidence to suggest that this will change. Equally it will continue to stick with the major carbon reduction initiatives, as this is part of a global drive to reduce them, rather than an EU one.”

But on nuclear ” and critically EDF’s planned Hinkley Point C new reactor ” Frost & Sullivan says that “new nuclear power has faced repeated delays and the Brexit vote will not help this, despite the official statements ahead of the vote that EDF and other players would remain committed to the market”.

“EDF has been moving at a snail’s pace anyway, but Brexit could make them re-examine the feasibility of the project.”

Indeed, this week representatives of the six French labour unions on EDF’s board pointed to a post-Brexit “weakening of the political environment in the UK” as well as “volatile public opinion” as further grounds for their opposition. But French economy minister Emmanuel Macron has said France continues to back the project.à‚ 

Some UK politicians have questioned Hinkley’s continued viability, with the SNP’s Callum McCaig saying in a parliamentary question-and-answer session on Wednesday that its “already dodgy economics have surely been fatally undermined” by the Brexit vote and suggesting that the UK should “pull the plug on this enormous folly”.à‚ 

However, Prime Minister David Cameron answered that “the logic and the economics on Hinkley Point C are that we need to have some baseload non-carbon energy in order to have any ability to meet the very challenging target we have for reducing carbon emissions in our country.

“I’m all for and have seen a massive expansion of renewable energy since I’ve been Prime Minister,” he added, “but solar power is by nature intermittent so you do need some baseload power, and I think that’s why the case for Hinkley Point C continues.’à‚ 

On decarbonisation targets, Robinson said that “the UK was unlikely to meet its 2020 renewable energy target, but Frost & Sullivan estimates that more than half of EU states will miss their targets, so there will be little change on this point”.

“Technically the UK would be free of any EU renewable commitments, but the UK had already cut its renewable subsidies and created uncertainty; this had reduced investment prior to the EU vote but planned projects are expected to go ahead, as most of the developers are already active players in the UK market and an EU exit should not radically alter that commitment.”

Frost & Sullivan expects Britain’s smart meter rollout to continue as planned and it does also not expect the UK’s interconnection trades with France, Ireland and Belgium to be impacted by the Brexit.

However, in the longer-term, Robinson said that “we could see an increase in capital costs for power infrastructure because of increased financing costs ” all this will depend on how well the UK can defend its reputation in the financial markets”.

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