Reliance on European power would bring extra costs after no-deal Brexit, say experts
The UK’s reliance on electricity imports has climbed to a record high amid fears that homes and businesses could face higher energy bills if the UK crashes out of Europe.
The latest government figures, released just weeks before Britain’s exit from the EU, show that the UK’s net electricity imports reached their highest ever level in the first quarter of this year.
The four high-voltage power cables linking the UK to Europe’s energy markets imported a sixth more electricity than the year before, after a new interconnector opened in January.
In total, European electricity imports made up almost 7% of the UK’s total demand, and the government hopes to increase imports to about 20% by 2025.
Although this is a small share of the UK’s electricity, experts have warned that higher import prices could lead to higher energy bills.
The government’s leaked no-deal planning report, Operation Yellowhammer, predicted a marked increase in energy prices for homes and businesses if the UK crashes out without a deal.
The market price for electricity could climb because of a fall in the value of the pound against the euro, but also because of potentially costly complications of severing ties with EU energy markets.
Gas and electricity bills rose by £2bn in the year after the 2016 referendum result because of the plummeting value of the pound, according to a report from University College London.
This translated into an average household’s bill increasing by £35 for electricity and £40 for gas, and researchers predicted bills would climb by a further £61 every year in the years following the referendum.
A report commissioned by National Grid before the referendum predicted that energy bills could climb by £500m every year by the 2020s if the UK left the EU’s internal energy market.
Kristian Ruby, the head of pan-European trade association Eurelectric, said a no-deal exit could mean the UK faces third-party costs to use the power lines connecting Britain to European power markets, which would raise the overall cost of the energy.
Ruby said the UK might also find it more difficult to trade if it were left out of the complex pan-European trading system, and this could place a “risk premium” on UK prices.
“When you throw all rules up in the air at the same time, this lack of clarity, predictability and rule of law is what is very concerning for us,” he added.
A spokesperson said the government had taken steps to make sure energy trading continued and that energy laws “work effectively and provide value for money”.
The Guardian understands that a pan-European network of energy system operators has agreed a plan for the UK to remain within the internal market on a voluntary basis which would offer the same commercial terms.
A spokesman for National Grid, which runs the UK’s power cables, said it was “not anticipating any additional charges for interconnectors in the event of a no-deal Brexit”.
However, the plan has not been agreed by the European commission and could be cast in doubt if the UK leaves without an agreement or without paying the £39bn exit fee.
Alexander Temerko, a major Conservative party donor, said he feared electricity market prices could jump by almost a third if the UK does not remain part of the EU’s internal energy market after a no-deal Brexit.
The Ukrainian-born billionaire, who is planning to build a new electricity cable between the UK and mainland Europe, said the price hike could mean higher bills and negative consequences for UK business.
Temerko publicly dropped his support for Boris Johnson during the Conservative leadership campaign earlier this year over fears he could steer Britain towards a no-deal Brexit.
“If we have a no-deal Brexit all existing regulations for the transmission of electricity will be terminated with immediate effect. I don’t know how quickly, or how high, the price of electricity would jump. My expert opinion is that prices could jump by 30%. But there are no scenarios for this. We are not ready,” he said.