In the short term the UK may face various challenges. For example balancing the grid in the event that say, we are cut off from European energy supplies (due to a no-deal brexit, or because of a disagreement over the UK’s exit bill). Longer term there is the issue of not just meeting the UK’s rising energy demand, but also meeting the commitments it is legally bound by under the terms the Paris climate accords.
No Deal, No Gas?
The government does not expect gas supplies to be interrupted post-brexit even in a no deal scenario. Although their logic seems to be more based on the assumption that the EU will honour existing agreements (in a scenario where the UK might not be, worth reading the EU’s preparedness notices on energy on this point as that doesn’t seem to match what the UK is saying).
That said, if gas supplies were interrupted there’s not a lot that can be done anyway. The UK imports 56% of its gas, 47% of it via the EU or from Norway. Recall Norway is a member of the EEA (and a contributor to the EU’s budget and thus will be caught up in events if the UK refuses to pay its exit bill) and has already made clear they what to preserve the integrity of the single market.What about reserves? The UK used to hold 4.3 bcm (billion cubic meters) of gas in reserve (equal to about 14 days supplied at winter demand). However, the decision to close the Rough facility last year, cuts this back to roughly 1.3 bcm, only enough to meet a few days supply.
Therefore, any supply interruption, particularly if it occurs in winter, will have an impact relatively quickly. And recall, even in the event of the UK getting a good deal from Brussels, there are other things that can cause supply interruptions (e.g. a certain Mr Putin, putting the boot in). A UK that is not part of the EU club will find its gas needs put at the back end of priorities in the event of any supply interruptions. The UK’s will be a third party at the end of the pipeline, we’ll get what’s left when everyone else has had their share.
And its worth remembering that only does gas supply much of the UK’s winter heating but also 30% of its electricity. And that 30% is crucial to balancing the grid and supplying peaking power in winter, particularly in the south of the country.
As regards electricity, brexit could see disruption to interconnectors with Europe, with Northern Ireland being the worse effected. The government has talked about masses of diesel generators as a solution (in a no deal scenario), but the sheer scale of the problem means that this would be a drop in the ocean. The UK regularly draws 3 GW of power directly from the European grid via undersea cables in the South east of the country.This is not to say that power cuts (or gas shortages) are a certainty. They will only occur if there is an interruption to supplies and either a sudden jump in demand (e.g. a late winter cold snap) or a large power station unexpectedly goes offline. While I would personally rate the odds of any blackouts as medium to low, the trouble is that if they do occur, there is no short-term solution.
We are looking at a scenario where the country will just have to cope with rolling blackouts for days or even months. Which needless to say would be massively disruptive to the economy (oh and the worse effected part of the country will be the south east…as in London…where the financial markets are based!). Hence why, regardless of the risk, its a good reason to worry about it and take some measures to mitigate it (such building more energy storage…or maybe cancel this brexit business entirely!).
Longer term brexit will make it harder for the UK to maintain its energy security. For example, you’ll notice in figure 4 there are several new interconnectors planned. Well in order to get those built the UK would need some sort of mechanism to buy and sell the electricity with its neighbours. In the absence of a fully comprehensive free trade agreement with the EU that might prove problematic, meaning nobody is going to invest in such projects. And it seems doubtful they’ll get build (without government support anyway) until a trade deal with the EU is concluded. And its widely expected such talks will stretch well into the 2020’s.
No fracking unicorns
The UK’s oil and gas fields peaked in the late 1990’s and production has fallen by 58% since then. Fracking has been presented as one possible solution. While there is undoubtedly a large shale resource under our feet, there’s a big difference between “resources” and economically viable “reserves”. Proving the viability and developing fields will take time, at least a decade or two.
However, given that the UK will be in deficit as regards its carbon commitments post-brexit, committing to fracking will essentially require the UK to renege on the Paris climate accords. One has to question the political consequences of that, both internally and externally. The country could also face legal action, from green groups and/or the private sector.
The UK has only limited experience with fracking and would therefore need to bring in thousands of experienced “roughnecks” (rig workers) from overseas. But many of these would not meet the proposed post-brexit definition of “skilled workers” (they don’t have a degree, their wages fall below the income threshold and employment is rarely fixed). And it’s worth noting that the EU country with the most recent experience in fracking is Romania.Its also worth considering, that rig work tends to be employed on a journeyman contract basis. They’ll get work for a few months drilling a series of wells, then spend a period either out of work or doing something else (farm work, truck driving, etc.). This doesn’t fit in with the UK’s current immigration policy, which assumes that any workers will come in, remain in one specific job and then leave as soon as its finished (Corbyn in fact wants to go further and have them stick to one particular town or region). Within this context, its hard to see how these skill shortages will be met post-brexit. Thus its unlikely the UK can frack its way to those sunny uplands the brexiters promised.
Brexit also presents problems for the nuclear industry. Many of the UK’s nuclear power plants are scheduled to retire in the next few years, creating the twin problem of needing to bring in workers and investment to build and then operate new reactors. Again, quite a lot of these won’t automatically count as “skilled workers”. (not everyone who works at a nuclear plant it a physicist with a white lab coat!). And the UK has long had issues recruiting new talent to this ageing industry.
Furthermore, the UK’s decision to leave Euroatom exacerbates these problems. While the UK is setting up its own equivalent, a recent audit by the ONR rated the UK’s preparations as not fit for purpose in all of the 5 categories of assessment. There is concern that this might lead to shortages of nuclear fuel and isotopes for medical use.A Green Brexit?
Renewables would appear to be the way forward, as they’ve grown significantly over the last few years and we don’t need to worry about fuel supplies being cut off. However, renewables is a highly integrated industry (one that basically didn’t exist prior to the emergence of the EU), dependant on parts and labour from across Europe and the wider world. Brexit will create immediate problems within these supply chains.
There is no reason why the UK cannot develop its own renewables industry. However, for sometime now, the Tories have given very mixed signals on renewables, ranging from Trumpian anti-wind rants and rolling back of subsidies, to promising “a green brexit
So to get the industry on board, the government would have to signal a firm shift in policy, e.g. a moratorium on fracking, a new carbon tax (mind you, recall the consequences of that for Macron), or an energy transformation road map (similar to those in Germany or Sweden). In the absence of this, it will prove difficult to convince the renewables industry to invest in a post-brexit Britain.
All in all, brexit presents the energy sector with significant challenges, the UK’s fate may no longer be within its own hands. Whether the lights stay on or the country ends up dependant on imports. Or reliant on foreign owned, built and financed energy sources will depend on decisions made in other countries and capitals, notably in Brussels. As far as energy is concerned, the UK has opted not to take control, but to relinquish it.