Brexit - What could it mean for UK Non-Domestic energy supply?

Andrew Green, Head of Regulation at TGP sets out potential impacts

Irrespective of whether we reach an impasse in negotiations with our EU counterparts resulting in a “no deal” situation, one thing is for sure – everybody would be better off if the UK remained inside the Internal Energy Market. An interconnected, tariff-free wholesale market would be of benefit to all parties. Why would anyone not want to continue to trade energy as efficiently as possible?  On paper, this shouldn’t be difficult to achieve given that on 31st March we will be starting off fully aligned with EU harmonised market rules.  If common sense doesn’t  prevail and cross border tariffs are imposed (both ways) then UK and remaining EU nations could see a rise in wholesale energy costs and price volatility during cold weather or network constrained circumstances which is likely to impact both energy suppliers and their customers. Of course, this could have a knock on effect, especially if the UK economy takes a knock. Businesses may consume less energy and Suppliers may increase  credit cover requirements to limit their exposure to debt and insolvencies.  This could also lead to a less secure supply offering with fewer suppliers in the market with reduced innovation and consumer choice. 

Perhaps more importantly, for the good of the planet, the UK and the EU must continue working together on tackling climate change. The Government has indicated it will continue to recognise imported EU green certificates (GoOs and Rego’s) and will continue participation in the EUETS.  It is currently unclear as to whether this will occur but we live in hope that we all continue to collaborate on climate change.

In summary, whilst we may lose our voice in determining how the EU energy market rules evolve, we are starting from the same place and a common set of rules of engagement.  Irrespective of the final flavour of Brexit, I do not anticipate any significant immediate impact to the current non-domestic retail gas and electricity arrangements that apply to the GB market.  

 

Andrew Green is Head of Regulation at Total Gas & Power and a Director of ICoSS, the non-domestic energy trade association.  The ICoSS paper here  assesses the potential impact of “Brexit” on the GB non-domestic gas and electricity retail market in more detail.