Blog: EU hints at a Brexit ‘energy blockade’ – but power blackouts are a hollow threat –

Utilities are subsidised to maintain a safety buffer. Those able to provide dispatchable power are paid £8.40 per kilowatt through an auction process in order to keep spare capacity available for episodes of extreme weather or for a strategic emergency. 

If necessary, the power can come from the UK’s 45 gas plants or four surviving coal plants. The mechanism is regulated by price signals and therefore any shortfall from the Continent would rapidly tighten the markets and cause utilities to reactivate gas power stations. 

There are 46.4 gigawatts (GW) of dispatchable capacity in the UK - just about enough to cover peak demand even if wind and solar output fall to zero.  

The Department for Business, Energy, and Industrial Strategy said it has a safety margin of 4.8 GW. That is roughly the same as supply capacity from the interconnectors and therefore uncomfortably thin.   

It is possible to imagine a crunch, blackouts, and power rationing if everything goes wrong at once: if an EU blockade coincided with polar weather and a North Sea anticyclone that shut down much of the UK’s offshore wind power. But it is extremely unlikely.  

“We have one of the most reliable energy systems in the world. The UK’s exit from the EU will not alter the fact that our energy system is secure, and supplied from diverse sources,” said the Department for Business.  

Global natural gas prices have risen this year but remain cheap due to the shale glut and rising US exports of liquified natural gas (LNG). The UK has Europe’s biggest LNG storage depot at the Isle of Grain, able to meet 20pc of the UK’s gas needs for a while. Offshore regas ships can add more in extremis. 

Energy is fungible. If the EU dialled down power supply, the UK could switch to imported gas at minor expense. European power exporters such as France’s nuclear group EDF would lose their market share to Qatar or the US, and lose their UK export revenues. 

“They would be cutting off their nose to spite their faces. What this tells me is that the EU is getting very worried about the direction of Brexit talks,” said a trade expert close to the negotiations.  

As a bargaining chip, access to the EU energy market is an odd card to play. Energy is a commodity that countries usually strive to import at the cheapest possible price, and export at the highest price. It is unlike other traded goods that compete with home-grown producers, and therefore where issues such as state and the ‘level-playing field’ become relevant. 

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