Energy deals are important when it comes to running a business. Securing the right one can help you keep productivity levels high and overheads low. This will allow your business to operate in an effective and profitable manner.
However, as the deadline looms for the UK to exit the European Union (EU), there are new concerns that companies face when it comes to their energy supply. What will happen if the UK loses its place within Europe’s Internal Energy Market (IEM)?
In recent years the reliance from the UK towards other countries has grown. This could have major implications if we can’t secure a harmonised energy trade deal – with UK businesses (and homeowners) facing potential power shortages matched with increased energy costs.
Despite a promise by the government that they’ll deliver a ‘green Brexit,’ some experts think that there could be serious environmental implications. By leaving the EU, the UK would effectively no longer be legally bound to meet EU climate change targets. This means current measures to build a greener, more efficient energy landscape could in turn slow, or stall.
While we sit and wait for the final Brexit agreements to be outlined, gas mains specialists, Flogas Energy, take us through what the deal could mean for the UK’s energy infrastructure, and how businesses should prepare in order to futureproof their energy supply.
What is the Internal Energy Market (IEM)?
The IEM was founded in 1996. It was set up to facilitate energy trading between EU states and it enables European countries to trade energy quickly, cheaply and easily – allowing them to respond to peaks and troughs in demand and supply. Effectively, countries in need of more energy can access it, while those producing more energy than they need can trade it in a common marketplace.
It is also responsible for making the tax and pricing policies, as well as setting norms and standards to make sure the environment and public’s safety are protected.
What does the IEM do for businesses?
The goal of the IEM is to ultimately protect the rights of all customers – whether that’s individuals or businesses. They aim to tackle energy poverty by guaranteeing the availability of affordable gas and electricity. One way it does this, is by developing pan-European supply networks that transport energy between countries. It’s also responsible for defining the roles and responsibilities of the key players in the energy market, and acts as a regulator to ensure the security of our energy supply.
What does Brexit mean for my business?
To keep it short, Brexit for businesses could mean that it’s a lot more expensive to keep their lights and heat on. Why? It’s all to do with interconnectors, which enable a cheap and easy flow of energy across borders. Interconnectors form a big part of the UK’s energy mix, and without access to them, the country could experience shortfalls, pushing energy prices up at the same time.
Will energy become more expensive?
Unfortunately, Brexit means that everything will get more expensive, including energy. The point of being in a trade bloc is to reduce prices, so by leaving, prices will go up. This is bad news for both producers and consumers and may mean more people have to choose between heating and eating. Whilst there are cheaper ways of heating a home (many in the US use Discount Propane, for example), the increasing cost of energy will drive up the cost of everything else too. Everything from food to clothes requires energy to produce, so if the cost of energy goes up, so does the cost of everything else.
Will exiting the IEM change businesses’ eco obligations?
The EU member states have worked tirelessly together over the past decade to set in motion the shift towards cleaner energy. However, reports suggest that once the UK exits the single energy market, UK businesses will cease to be subject to the same EU rules, regulations and targets surrounding renewables and energy efficiency. While the UK government is adamant it will continue its unwavering commitment to tackle climate change, Brexit has the potential to delay or suspend current energy efficiency measures, pulling us further away from meeting 2030 carbon reduction targets.
How can businesses prepare?
From April 2019, the UK may not be able to rely on state members to help keep the lights on in the event of an issue with its own energy supply. With this in mind, experts expect the UK to become more vulnerable to power shortages – whether that’s due to extreme weather events, or generation outages in the pipelines or electrical interconnectors.
With this in mind, it’s important for UK businesses to start shopping the market if they would like to secure the best energy deals post-Brexit. The silver lining is that you can keep the switching process straightforward by moving to a dedicated business energy supplier who will manage everything (including contacting the existing supplier) on your behalf.
