Fears Brexit will result in rise in energy costs
HOUSEHOLDERS and businesses face higher energy prices in the event of a hard Brexit.
Consumers could lose out on cheaper electricity if the UK leaves without a deal because the State will effectively be cut-off from trading power with other EU member countries.
Currently, electricity is supplied from generators located in the Republic and Northern Ireland, the so-called single electricity market (SEM), and through two high-voltage power lines called interconnectors – one linked to Scotland, and the second to Wales.
Generators bid to provide power on a daily basis, and national grid operator EirGrid dispatches renewables and then the cheapest available.
But from October 1, Ireland will join the European Integrated Single Electricity Market (I-SEM), which aims to lower prices.
This allows generators across 20 countries to supply power to Irish consumers north and south of the Border, leading to more competition and downward pressure on prices.
The energy will flow through the interconnectors, but if there is a hard Brexit and no deal on energy, it means that cheaper power cannot be transmitted because there is no direct connection between Ireland and the European mainland.
While EirGrid is planning a sub-sea link with France called the Celtic Interconnector, which would provide some security of supply and allow energy for some 450,000 homes to flow, this will not be completed until 2025.
EirGrid director of markets Rodney Doyle said if the UK left the EU without a deal, it would also leave itself exposed, but there was a risk.
“If there was a really hard Brexit which impacted on how we trade with Britain, if people are lacking sense in terms of the approach, any market that isn’t aligned with the I-SEM isn’t going to be as efficient.
“If it’s a very bad one, there’s potential for that [higher prices],” he said.
“It would be counter-productive for both economies. Britain gets a benefit from trading with Belgium, Holland, France and other countries. It’s not just about Ireland.
“Their system is designed to align perfectly with the market. Any departure is less efficient for us and them.”
Ireland is also heavily dependent on fossil fuel imports from the UK to generate electricity and provide home and motoring fuels.
Figures show that last year, some €4.7bn of coal, oil and gas were imported, most of which came from the UK.
If the UK is not subject to EU trading rules, it is not clear what system will take its place.
Experts warn that in the event of an acrimonious Brexit, where tariffs on energy end up being imposed, it could also lead to higher prices, both for Ireland and the UK.
However, this is not expected to happen.
“It would be counter-productive for both economies,” Mr Doyle said.
‘The UK system aligns with the market, but if it is not aligned it isn’t going to beas efficient for us or them’