Analyzing Brexit: Implications for the Electricity System of Great Britain

Abstract

The UK’s exit from the European Union (EU) has potential ramifications for the country’s electricity sector, given its increasing interlinkage with other EU electricity systems. Brexit could hamper the development toward higher market integration and the realization of new interconnector projects. Moreover, a fall in the value of the Pound, resulting from Brexit in the medium term, could also affect the electricity trading structure. Combining a European electricity market model and a multi-criteria decision analysis tool, this study assesses the implications of Brexit for the electricity market of Great Britain (hereafter GB) for 2030, from the perspective of (i) political decision makers, (ii) electricity consumers, and (iii) producers. Results indicate that the implications of Brexit depend on the future development of the GB electricity system and on the objectives of the respective stakeholders. Possible opportunities brought by Brexit under a low-carbon trajectory contrast with greater challenges and tradeoffs between stakeholders under alternative power system development paths. Despite increased British autonomy in energy and climate matters, there remains interdependency between British and EU energy policy.

Information transmission in regional energy stock markets

“…Lin and Li ( 2015 ) applied VAC-MGARCH approach to study the spillover effects across natural gas and concluded that oil and natural gas markets are co-integrated across the European market within the first and second moments. The information transmission is expected to have multiple possible impact on the energy integration including the availability and cost of finance, energy market and security of supply, nuclear power, and supply chain of all energy markets across Europe and energy efficiency policy (Egan 2019 ; Mayer et al 2019 ).…”

On the Role of Regulatory Policy on the Business Case for Energy Storage in Both EU and UK Energy Systems: Barriers and Enablers

“…These interconnectors usually provide valuable services to the UK's electricity network by managing intermittent RESs. In the case of a Brexit agreement that does not involve electricity market integration or interconnector share, there is a significant need for ES and other flexibility options to mitigate RESs intermittency [109]. Therefore, it seems that Brexit can raise the deployment of ES devices in the UK.…”

The further economic consequences of Brexit: energy

“…The additional carbon tax on electricity production in the UK still distorts cross border trade in electricity. Mayer et al (2019) model the potential impact of Brexit on electricity as a combination of a devaluation, a reduction of interconnector capacity and higher carbon prices. With high renewables, high carbon prices and no reduction in interconnector capacity Brexit could be positive for consumer welfare, however with reduced interconnector capacity and less domestic renewables production it could be quite negative for consumer welfare (up to an 8bn Euros loss) by 2030.…”