Risk of energy sector being denied entry to Europe’s internal energy market looms large – with Brexit also likely to exacerbate industry skills shortages

This article is more than 3 years old

This article is more than 3 years old

Vital energy projects including the £18bn Hinkley Point C nuclear power plant and interconnectors used to import cheap electricity from Europe are under threat due to Brexit, energy experts have warned.

They said the projects, which are key to efforts to keep the UK’s lights on, could be at risk if the energy sector is denied entry to Europe’s internal energy market.

That looks increasingly likely, after the European parliament passed a resolution on Wednesday opposing “piecemeal or sectoral provisions” for individual UK industries.

Speaking at an event organised by the Energy and Climate Intelligence Unit, experts said plans by French power firm EDF to build two new reactors at Hinkley Point C could be affected.

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Antony Froggatt, senior research fellow at Chatham House, said EDF was already concerned that Brexit will make it harder to import skilled EU nationals to build Hinkley, which is slated to provide 7% of UK electricity.

“I was at a conference recently where EDF were saying their main concern about skills was specialised steel fitters for the construction of Hinkley,” he said.

“They said there were not enough in the country to build Hinkley and therefore this is the main area that they’re concerned about.”

He added that the staff shortage could be exacerbated by the building of the HS2 high-speed rail link, which will be competing with Hinkley to attract steel fitters.

EDF did not return requests for comment.

Froggatt and his fellow panellists at the ECIU event also raised concerns about the impact on plans for interconnectors, wires connecting the UK with the European electricity network.

Interconnectors are considered increasingly important as Britain turns to renewable energy, because they allow electricity to be imported to make up for shortfalls when the wind doesn’t blow or the sun doesn’t shine.

Plans are in place to build 14GW of interconnectors between the UK and countries including Norway, France, Belgium and Iceland.

But building them could prove less attractive to investors if the UK cannot remain part of Europe’s internal energy market.

This is because the agreement allows electricity to be automatically traded on a short-term “intra-day” basis, improving efficiency and making it more lucrative to build interconnectors.

Energy lawyer Munir Hassan, of CMS Cameron McKenna, said anything that deterred investors from building them could force the UK to spend on other projects to provide electricity at short notice.

“We would have to provide for more homegrown capacity, which means more investment in spare idle capacity. That is at a cost and the cost goes to customers,” he said.

“It [loss of access to the internal energy market] would tend to have a chilling effect,” added Prof Michael Grubb from University College London.

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The panellists also warned that an inability to access the lower energy prices offered by intra-day trading, coupled with any new tariffs on energy imports could also drive up energy prices for UK consumers.

Grubb said it was vital that Britain’s Brexit negotiators realise the importance of securing energy cooperation with Europe.

“The implications of Brexit for energy policy hasn’t so far been a talking point, but it ought to be,” he said.

“Get it wrong, bills will rise and energy security could fall; get it right, and UK consumers and businesses can enjoy the benefits of free energy trade with the continent, with Britain playing a key role in the continent’s continued energy development,” he said.

Froggatt also stressed the importance of drafting a successor to Euratom, the pan-European agency on nuclear safety.

“Achieving a timely but smooth exit from Euratom is essential as there is no ‘WTO’ agreement to fall back on,” he said.

“Brexatom without a replacement will lead to cessation of the movement of nuclear materials and no verification for the non-proliferation of nuclear material.”