The UK Government is considering whether it should leave the EU Single Market for energy following Brexit.
The considerations come after a white paper was published highlighting the UK government’s plan for a future relationship with the EU once it leaves the trade bloc.
The white paper will form the basis of the UK’s negotiations with the EU ahead of an anticipated deal being drawn up later this year.
The document suggests if the UK was to leave the internal energy market (IEM), some form of trade over interconnectors will be maintained.
There are currently three interconnectors between Britain and EU member states – France, Netherlands and Ireland. The government is intent on preserving the single electricity market (SEM) between Northern Ireland and the Republic of Ireland.
The whitepaper states: “Negotiators have already made good progress on a legal provision to underpin the SEM in the withdrawal agreement and the UK will work with the EU to ensure that the SEM is maintained in any future scenario.”
The government intends to explore several options for the UK to engage in a future energy relationship with the EU. This includes the option of leaving the IEM while ensuring that trade over interconnectors can continue without automatic capacity allocation via the IEM system.
An alternative option, would be for the UK to participate in the IEM “to preserve the existing efficient trading practices” over interconnectors.
The document further states: “...the UK would need a common rulebook with the EU on the technical rules for electricity trading, such as the market coupling mechanism, as well as a consistent approach to carbon pricing necessary for the market to function, which for example, could be delivered by remaining in the EU’s Emissions Trading System".
Continued membership of the European Networks of Transmission System Operations for Electricity (ENTSO-E) and Gas (ENTSO-G) will also be part of the negotiations as it believes there are advantages to close co-operation on technical and regulatory energy arrangements.
The government is also seeking to leave the European Atomic Energy community (Euratom) but plans to negotiate a more broad and comprehensive relationship than the existing one.
The UK’s energy sector has called for the nation to continue to participate in the Single Market post-Brexit to ensure efficient gas and electricity, affordable security of supply and delivery on climate change targets.
The document states: “The UK is also putting in place arrangements so that, when trading after exit, businesses will have certainty that they will not face substantially different requirements compared to their current obligations under the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT).”