INTRODUCTION

Following the referendum on 23 June 2016 and the subsequent General Election in June 2017, the nature of the UK's future relationship with the EU remains uncertain. It seems more likely than not, however, that the status quo of remaining within the internal energy market is unfeasible.

Yet, the prevailing mood in the UK energy sector seems to be that a divorce of sorts, ie a complete physical separation of the UK and EU electricity markets, is undesirable. Commercial incentives to sustain, and nurture, further market integration between the UK and the EU by way of interconnectors (both in the electricity and gas industry) seem to remain strong; as are concerns about the knock-on effects of Brexit for the security of energy supply and regulatory uncertainty.

The current negotiation timetable, however, does not seem likely to produce anything tangible for the sector until later in the Brexit negotiations as energy is not one of the high priority areas to be dealt with early on in the negotiations.

This is likely to result in prolonged – and unprecedented – regulatory uncertainty across the energy sector. Comments from some EU companies have suggested they too hoped that pragmatism might trump politics in the energy sector.

This chapter will provide a brief overview of key themes for the energy sector which are likely to be affected by Brexit as well as a brief outlook for the immediate future as the Brexit negotiations take shape in a more tangible way:

The areas discussed in this chapter include:

By necessity, as the negotiations are a moving feast, this chapter comments on general themes affecting the Brexit negotiations and the likely post-Brexit relations between the EU and the UK as applied to the energy sector, rather than providing a detailed commentary on the progress, or otherwise, of the ongoing Brexit negotiations.