This week you may have seen Electrical Review publish an interesting article suggesting that Brexit may already be causing electricity prices to increase in the UK. This information comes from EnAppSys, which found that prices in the first three months of this year have been higher than at anytime before in the last six years.
It’s quite easy to blame Brexit for many of our problems, but as many of our followers on Twitter have suggested, the reality may not be so simple. So, we’re going to break down the information that we’ve got and let you make your own decision.
The UK has left the European Union and thus has also left the Single Day-Ahead Coupling, which links all the countries within the EU together into a common power market. This means that when countries within the EU run their power auctions, countries with more demand and less generation will receive power from nations with more generation and less demand. This is meant to lead to cheaper electricity.
Leaving the single market alone shouldn’t lead to higher electricity prices, as the UK simply no longer uses the EUphemia algorithm but can still participate in power auctions, however, there are some ways we could be impacting our prices.
The UK has decoupled the auctions, so the process is now more complicated than the single auction that used to take place with the EUphemia algorithm. While this could potentially lead to lower prices for electricity, it could also lead to higher prices.
So far, EnAppSys’ data is showing that the UK is paying more for electricity at the beginning of this year than it has in previous years, and of course a major thing that has happened this year is – Brexit.
However, Brexit isn’t purely to blame, in fact the energy transition that we’re currently going through is also responsible for the higher prices. Previously we had a rather stable energy network thanks to the use of coal, oil and natural gas, but as renewables come online, our capacity for energy generation fluctuates. If the wind stops blowing, we need to plug those gaps, which could mean higher priced electricity from abroad.
Some on Twitter have suggested that the rising price of the pound vs the euro could be to blame, although the pound is still lower than what it was before Brexit, with EnAppSys comparing the previous six years, which should account for that.
This isn’t the first time in recent months that we’ve received backlash for an article that we’ve published, with our ever-popular Gossage column coming under fire on Twitter and on the website for backing the new West Cumbria mine.
Gossage is a column written by a regular columnist and that columnist has been given a platform to share their views. We’re not always going to agree with what’s written, nor will you, but Electrical Review always stands by not being an echo chamber and for the sharing viewpoints from across the industry.
We will always back our editorial, but make no mistake, if we are wrong we will hold ourselves accountable. One thing we will not do is control the editorial within Electrical Review because it doesn’t align with our opinions or those of our readers. In fact, we want to share both sides of the argument – so if you’re against the West Cumbria mine or think that Brexit has nothing to do with increasing power prices, let us know.
This editorial originally appeared in the Electrical Review Newsletter dated March 11, 2021. To ensure you receive these editorials direct to your inbox, subscribe to the newsletter now.