The countdown to Brexit has begun – how will the UK’s departure from the EU affect your business energy costs?
Businesses and individuals across the UK depend on having a reliable and affordable supply of energy, but how will the provision of this essential resource be impacted by Brexit?
A House of Lords committee has warned that the UK could face a post-Brexit energy shortage as well as hikes to household gas and electricity bills as well as business energy costs.
According to the committee, Brexit will cause energy trading to become less efficient, diminish Britain’s influence on energy rules, and cast uncertainty over future European investment in UK energy infrastructure. The result is a significant impact on energy prices for both households and businesses.
Over the last few years, the UK has become increasingly reliant on energy imports. Currently, around 40% of the UK’s gas supply comes from Norwegian and other European pipelines, and about 5-6% of the country’s electricity comes from France, Holland and Ireland. In the past, this reliance hasn’t posed a problem due to the frictionless, harmonised trade in energy with European partners. Post-Brexit, however, trading outside of the EU will likely be less efficient than trading inside it, causing consumers to pay more for a less reliable energy supply.
Solidarity principle no more
Pre-Brexit, the UK has worked in partnership with the EU and the other Member States to make cross-border trade in energy easier and cheaper. However, it remains unclear how this can be achieved when the UK leaves the single market along with the Internal Energy Market (IEM) the other bodies charged with developing and implementing the EU’s energy policy.
After March 2019, the UK will leave the EU’s single market solidarity principle for gas, an agreement which implies that if one country were to experience a problem with energy supply, member states would be obliged to help each other maintain supplies.
Being outside the EU means that the UK may be more vulnerable to supply shortages in the event of extreme weather or unplanned generation outages in the subsea pipelines or electrical interconnectors linking the UK to other EU countries.
Whatever the final detail of the EU exit terms, the UK is likely to be more peripheral to EU energy markets, which will mean higher prices and more unreliable supply for consumers.
Get the best post-Brexit business energy deals
More than ever, with increasing prices of gas and electricity looming, businesses need to shop the market and compare business energy quotes to get the best deals.