Brexit And The Energy Market

With Brexit scheduled to take place on 31st October, it is looking more likely that we will leave the European Union without an agreement in place and therefore be paying more for our energy.

If we leave the EU without a deal the pound will devalue and trading will become far more complex, pushing up the prices for energy contracts. But why?

SUPPLY ISSUES

• Almost half of the UK’s gas supply is imported from the continent, 40% of gas and 87% of natural gas being imported from Norway alone.

• The UK is set to become more dependent on imports as Britain’s gas production falls.

SHORTAGES

• The UK will be at risk during extreme weather conditions or when there are technical problems with power infrastructures, which could lead to power outages and increased costs.

• Reliance on gas imports could cause problems, where EU countries could restrict supply to cater for their own citizens or push prices up for the UK.

• Previously, during colder conditions, the UK has been heavily reliant on importing gas from Europe.

TRADING ISSUES

• If the UK leaves the EU single market and trading outside of the Internal Energy Market, trading will become much more volatile, potentially increasing the price.

VAT POST HARD BREXIT

• Once we leave the EU, we will require a new legal basis for VAT, which might not be determined until negotiations with the EU and discussion with the UK over the next months and years become clearer.

• This will increase the level of uncertainly, increase risk and could well end up with suppliers factoring in the extra risks in the form of higher costs.

SUBSEA PIPELINES

• Currently, there are 4 subsea pipelines connecting the UK to Europe and 11 more are planned/under construction and the free flow of energy across these interconnectors is vital to maintain a level playing field in the energy market and keep prices low.

GAS BURNED TO GENERATE ELECTRICITY

• Gas is burned to produce electricity and is the largest source of electricity, so with the increased uncertainty around Brexit, electricity will also suffer.

• Confederation of British Industry senior energy policy adviser Tanisha Beebee said in an interview “We’re assuming the cost of electricity will rise, but we don’t know by how much or when.”

The deadline is fast-approaching. So, sign a new contract now to avoid paying an added premium on your business gas and electricity bills post Brexit. You don’t have to be out of contract to be able to benefit.

See how much your business could save and give our business energy experts a call today on 03300 240223