Brexit to Have a Significant Knock-on Effect on UK’s Nuclear and Renewable Energy Projects

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The historic vote by the United Kingdom to exit the European Union has had ramifications for not just the United Kingdom and Europe, but the wider global economy. The UK energy sector is keenly watching events unfold, as Brexit has put a cloud of uncertainty over the future of nuclear projects, UK’s commitment to renewable energy and the costs of power infrastructureprojects.

A short opinion analysis from Frost & Sullivan, Top 10 Implications of Brexit on the UK Energy Sector, finds that barring some renegotiation of terms and conditions, Brexit might not affect the energy projects that have already been allocated funding. However, the future funding for UK interconnection projects could slide down the priority list or even be cancelled outright.

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Although the short-term impact of Brexit on the energy industry is likely to be benign, in the medium to long term, it could lead to challenges such as:

• a rise in electricity prices
• supply security issues due to the phasing out of coal plants
• delays in nuclear power coming online
• a slowdown in new renewable energy projects.

“It is important to note that despite Brexit, the UK remains a liberal and attractive investment destination,” saidFrost & Sullivan Energy & EnvironmentPrincipal Consultant Jonathan Robinson. “The withdrawal from the EU has caused some market turbulence, but the fact is that the UK’s ageing infrastructure needs to be replaced over the next 15 years and decisions on that have to start to happen”.

The coalition government of 2010-2015 had already set in motion a massive energy reform programme that offered a framework for incentivising investment. Assuming construction on new nuclear projects does happen, stakeholders all along the sub-supplier chain will benefit immensely. If the nuclear renaissance does not occur, it is likely to translate into higher investments in other forms of power generation, such as renewable energy and natural gas.

The outlook for renewable energy worsened after the 2015 election, as the new government has reduced subsidies and created market uncertainty. Nevertheless, there is continued investment in local energy generation and investment in energy storage is set to increase significantly. The many non-European firms that have offices in the UK remain committed to the energy market.

“There will continue to be uncertainty regarding the future strategies of the energy industry until the details of Brexit become clearer,” noted Robinson. “Assuming that the UK remains part of the single market, it will still have a role to play in the greater integration of Europe's electricity system.”

Top 10 Implications of Brexit on the UK Energy Sector is part of the Energy & Environment Growth Partnership Service program. Frost & Sullivan’s related studies include: Future of the Smart Grid Industry, Global Solar Power Market, Global E-house Market for Power Distribution, Global Outlook of the Energy & Environment Industry, Global Distributed Energy Outlook, Global Smart Gas Meters Market, Global Demand Response Trends and Global Smart Electricity Meter Market. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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