The government has admitted that the all-Ireland electricity market risks breakdown, raising question marks over security of supply north of the border, if the UK cannot agree a Brexit deal with the EU.
The Department for Business, Energy and Industrial Strategy (BEIS) published papers yesterday (12 October) assessing the consequences for the electricity and gas markets if the UK exits the EU without a withdrawal deal next March.
They are part of the last batch of “no deal” papers to be published by the government.
It says that EU rules will cease to apply in Northern Ireland leaving no legal basis for key elements of the single electricity market (SEM), those governing trading with Great Britain and cross-border governance arrangements.
The SEM is the integrated electricity market for the whole of the island of Ireland.
The paper says: “There is a risk that the single electricity market will be unable to continue, and the Northern Ireland market would become separated from that of Ireland.”
It highlights that if the SEM cannot be maintained, contingency planning work is under way to establish a separate Northern Ireland market.
In the absence of reliable rules for cross-border electricity trading, the paper says the Northern Ireland transmission system operator SONI may need to rely on fall-back arrangements to ensure power flows over the Great Britain-Northern Ireland interconnector.
Alternatively, it says the Northern Ireland Utility Regulator will act to seek to procure adequate generation capacity using a mix of new and existing plant.
It says that because cross-border electricity flows across interconnectors will no longer be governed by EU legislation, alternative trading arrangements will need to be developed and new access rules approved by UK and EU regulators.
The paper warns interconnectors, code administrators and UK market participants that they must carry out contingency planning for a “no deal” scenario.
It says owners and operators of interconnectors will need to have new trading arrangements and updated rules in place by 29 March 2019 if there is no deal.
Gas suppliers have been warned that there will be changes to transmission system operator certification.
Responding to the paper former Liberal Democrat energy secretary Ed Davey, said: “As secretary of state I saw the electricity market in Ireland working extremely successfully, guaranteeing power to Northern Ireland and having a positive impact on energy prices.
“The fact that the prime minister is willing to gamble with the electricity which powers thousands of homes in Northern Ireland is deeply disturbing.
“The people of Northern Ireland should not have to wait and see if the lights turn on in April 2019. That is why the government must give the people the final say on Brexit with an option to remain.”
An Energy UK spokesperson said: “The latest batch of Brexit technical notices, further demonstrates just how important it is to achieve a withdrawal agreement.
“The papers set out security of supply issues in Northern Ireland and less efficient cross-border trading in a no deal scenario, which could lead to cost pressures that could impact upon customers’ bills. Energy UK strongly believes that a deal with a transition period, allowing for the current trading relationship to continue, remains the best outcome for the energy industry and UK energy customers.”
Emma Pinchbeck, executive director at Renewable UK, added: “The ability to trade electricity with EU countries makes the market more competitive and secure, helping the UK to move to a flexible, low carbon energy system that benefits consumers.
“Government guidance says that there would be barriers to electricity trading and supply here and in Northern Ireland, and uncertainties for the energy supply chain if there is no Brexit agreement.
“The renewables industry is a significant British infrastructure project, and a ‘no deal’ outcome as outlined in [the] guidance would mean uncertainty for industry and higher costs for consumers.”