Wednesday 19 December 2018

Brexit sparks risk of higher energy bills and power outages

Photo: Stock Images
Photo: Stock Images

Gavin McLoughlin and Colm Kelpie

Brexit means a higher risk of electricity bill hikes and power shortages in Ireland, a report published yesterday warns.

This is because of uncertainty over the future relationship between the UK energy market and its Irish counterpart.

The report by the UK House of Lords European Committee calls on the British government to clarify what its energy policy would be if the UK leaves the EU's internal energy market (IEM), of which Ireland is a member.

A departure from the IEM could disrupt the all-island market for electricity, raising the prospect of higher bills.

The Republic and Northern Ireland share an all-island market for electricity, which is due to take a new form in late May.

Under the new arrangements, Northern Ireland and the Republic are set to benefit from increased energy security and lower prices. However, the report warns that maintaining the arrangement will be tougher if the UK leaves the IEM.

In addition, a UK departure from the IEM risks tariffs being applied to energy sold by countries remaining within the EU to the UK.

Ireland imports much of its electricity from the UK and is currently only connected to the European market via the UK.

The report warns that after Brexit: "The UK may be more vulnerable to supply shortages in the event of extreme weather or unplanned generation outages."

It found that tariffs on electricity were unlikely, even in the event of a no-deal Brexit.

However, tariffs could be levied on the equipment needed to keep the UK energy system in operation, it warned.

Lord Robin Teverson, a member of the committee that produced the report, said it was "very unlikely" that the UK would be able to stay in the IEM.

He said: "That's a problem. After Brexit, you're going to have a situation where the Republic will still be in the IEM and the UK outside."

Industry sources said there was a possibility that the all- island market could become a negotiating point in the general UK-EU talks.

"Whether we are in the EU or not in the EU, it is in the interests of both Northern Ireland and the Republic to continue a shared electricity system," UK Energy Minister Richard Harrington told the committee.

Fergal O'Brien, director of policy and public affairs at Ibec, said Brexit "presents significant risks".

He continued: "UK withdrawal from the IEM would leave Ireland physically disconnected from the wider European market and undermine the functioning of Ireland's single electricity market (SEM).

"While negotiations have yet to begin, there are grounds for optimism. The UK has expressed the importance of the continued facilitation of the SEM and the need to prioritise discussions on North-south co-operation, including energy.

"UK commitments to protecting the all-island economy hopefully point to limited future disruption."

A spokesperson for EirGrid, which operates the Republic's power grid, said "any withdrawal by Britain from the IEM will have to be carefully reviewed and understood, such that any changes can be implemented with minimal impact".

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business