Following the UK Prime Minister’s speech on 17 January 2017, in which Theresa May outlined hard Brexit, which would involve leaving Europe's single market when Britain leaves the European Union in 2019, there have been rising concerns related to the impact this could have on the UK energy markets.
Even though the Prime Minister made no specific mention of the energy markets in her speech, there are fears this move will slow the development of new links with the Continent, designed to help avert a supply crunch and also drive up the cost of imported European electricity and natural gas. Currently 38% of UK’s natural gas and 9% of electricity supplies are European imports, with new links already planned over the next decade.
New electricity interconnector capacity is intended to ease the upcoming supply crisis in the early 2020s as old nuclear power plants and coal-fired power stations close and to increase security of supply from diverse sources at reasonable prices.
For the interconnectors to be economically viable, they require efficient and robust trading arrangements between the UK and the EU. UK currently enjoys access to tariff-free electricity and natural gas trading with Europe due to its participation in the internal energy market, however leaving this market would make cross-border trade less effective, efficient and generally more difficult with the cost of delivering new projects and consequently the cost of the delivered energy rising.