No-Deal Brexit Seen Breaking Up Ireland’s Power Market
Ireland’s Single Power Market Seen Breaking Up in No-Deal Brexit
(Bloomberg) -- The island of Ireland faces a “rapid” breakup of its Single Electricity Market should the U.K. leave the European Union without a deal, according to a list of warnings published by the British government.
The single market covering Northern Ireland and the Republic of Ireland would probably keep working the day after a no-deal exit, yet a “rapid SEM split could occur months or years” afterward, the government said. The document was headlined “reasonable worst case planning assumptions” and dated Aug. 2.
A no-deal Brexit would potentially leave the market without any legal basis. Northern Ireland is part of the U.K., while the republic plans to stay in the EU. The split would not necessarily spur electricity supply outages, but “there will likely be significant electricity price increases” and wider economic and political impacts, the government said.
“If we drop out of the internal energy market we move from an almost frictionless system to one with friction and prices will go up, but not by much,” said Simon Ludlam, a partner at consultants Etchea Energy Partners. “It’s a bit like having the latest BMW and then getting one that’s a few years older, it’ll be less efficient.”
There are currently three electricity interconnections linking the Northern Ireland grid and the Republic of Ireland in the internal energy market and one subsea connection between County Dublin and North Wales.
A 500-megawatt underwater link between the south of the country and Wales is in planning stages with construction expected to start at some point next year. A cable between the Republic of Ireland and France is also in development but at a much earlier stage.
“A split would introduce unnecessary inefficiencies on the exchange of electricity between two markets that are well integrated physically,” said Andreas Gandolfo, a power analyst for BloombergNEF in London.
To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net;Jeremy Hodges in London at jhodges17@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Rob Verdonck, Lars Paulsson
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