The Impact of Brexit on the Infrastructure and Energy Sectors
Ireland’s energy markets are closely connected to those in the UK and to date the regulatory regimes in both countries have worked well together. This is largely because a significant amount of the applicable energy regulation, in both the UK and Ireland, derives ultimately from EU legislation. Brexit will not change this immediately, but over time we may see the regulatory regimes diverging, with implications for our energy markets.
Energy and infrastructure connections between Ireland and the UK, especially Northern Ireland and Wales, may be affected by Brexit, in particular because:
the electricity generated and consumed in Ireland and Northern Ireland currently passes through a common wholesale electricity market, the Single Electricity Market;
a 500MW sub-sea electricity interconnector has been built between Ireland and Wales;
EirGrid, the transmission system operator on the island of Ireland, is planning to build a 400MW cross-border transmission line across the border between Ireland and Northern Ireland, to supplement the small number of lower-voltage power lines that already cross the border; and
much of Ireland’s natural gas is imported through two sub-sea pipelines running from Scotland, and a “South-North pipeline” runs from Gormanston, Co. Meath, to Belfast.
Brexit, of itself, may not have an immediate impact upon the continued smooth operation of these energy markets and assets. Nor should Brexit disturb the extent to which the Irish elements of these arrangements continue to comply with European law.
Under the I-SEM project, the Single Electricity Market is currently being modified for the primary purpose of aligning it more closely with the “target model” that is favoured by the European Union. However, this project will also align the Irish wholesale market more closely with that of Great Britain, and will facilitate enhanced electricity exports between the two markets. The I-SEM project therefore has merit, even if Northern Ireland is no longer obliged to pursue it for reasons of compliance with European law. At this time, therefore, we do not expect that the I-SEM project will be a casualty of any Brexit.
If you have any questions on the impact of Brexit on the Infrastructure and Energy Sectors, one of our team below or our Managing Partner, Declan Black.