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BREXIT: EU departure would undermine Irish energy infrastructure investment, warns expert

A move away from European energy integration because of Brexit would undermine the significant investment made in all-Ireland energy interconnection, an expert has said. 23 Sep 2016

And consumers in Northern Ireland would face higher energy bills if the UK is no longer part of European energy networks, said energy expert Richard Murphy of Pinsent Masons, the law firm behind Out-Law.com.

"The direction of travel for energy markets has long been towards further integration. This facilitates the efficient transfer of energy from generation points to demand, flattening out peaks and troughs on the system and allowing for smarter trading," Murphy told the Northern Ireland Energy Forum.

"If Brexit meant that we were to find ourselves moving away from this pan-continental network, we couldn't benefit from those efficiencies and costs would rise. The level of investment in the infrastructure that has delivered these integrated networks makes it a practical non-starter to divest ourselves from the European system," he said.

Ireland's integrated single electricity market (I-SEM) project was originally conceived to comply with the EU framework on integration, but it is clear that it also brings real savings to consumers, Murphy said.

"Brexit presents undoubted challenges and uncertainties for the Irish energy market. For the sake of businesses and consumers we must remain focused on the introduction of I-SEM and the necessary supporting infrastructure such as the proposed north-south interconnector. Brexit cannot disrupt this work," he said.

The north-south interconnector will link the Northern Ireland and Republic of Ireland electricity networks and help ensure the market operates efficiently with no restriction in electricity flow between north and south.

Being outside the EU could, however, allow more flexibility in support, Murphy said.

"In 2015 we painted quite a stark picture for local renewables development if Northern Ireland was to throw in its lot with Great Britain and the new contracts for difference (CfD) mechanism. However, being outside the political union could relax some restrictions and create space for support tailored towards different regions including Northern Ireland where the market response for increased renewables on the system has largely been with onshore wind," he said.

CfDs are a significant part of the UK government's programme of electricity market reform, through which it aims to incentivise up to £110 billion in energy investment over the next decade. The contracts provide guaranteed payments to operators of approved renewable generation technology, calculated with reference to a technology-dependent 'strike price' and a market reference price, and enable the system operator to claw back money when market prices are high.