If Brexit means the UK leaving the EU’s single energy market, it will have to invest more in new electricity generating capacity, pay higher prices – arguably with less security of supply – and accept a bigger role for the state in the energy sector, writes Philip Lowe.
Sir Philip Lowe is Executive Chair of the World Energy Council’s Energy Trilemma initiative, and former Director General of DG Energy at the European Commission. He recently authored a policy brief for the Centre for European Reform (ECR), a think tank based in London with an office in Brussels.
Withdrawal from the European Union raises key questions for the UK’s energy sector. Leaving the bloc’s single energy market will mean the UK will no longer need to co-ordinate or co-operate with its European neighbours in the sector or accept governance by its supranational bodies. But that independence is likely to mean the UK will have to invest more in new electricity generating capacity, and face higher prices, less security of supply, and possibly a bigger role for the state in the energy sector.
The level of physical interconnection between the British mainland and other European countries remains low at 6% of installed electricity generation capacity compared with an EU average of over 20%. Nevertheless, the UK has been at the forefront of efforts to create a single European energy market and has also been among those pushing to reduce carbon dioxide emissions to combat climate change.
The logic behind fostering greater EU cross-border activity is that solving energy issues is easier if a country’s network is bigger and covers areas with more varied sources of supply, different weather conditions and demand patterns.
An EU-wide interconnected, integrated network of national energy systems has the potential for countries to save on investment in generating capacity, reduce costs and strengthen energy security. There is an obvious link between the UK’s higher…