The unexpected Brexit result has opened up a period of great uncertainty as politicians grapple with the election of a new party leader and the associated decision of when to trigger Article 50 of the Lisbon Treaty, which officially commences the two-year period of negotiations to an exit from the EU.
While these decisions impact the economy as a whole, what specific energy and climate change policy changes can be expected? Electricity Market Reform is the UK’s central piece of policy to address the trilemma of: security of supply, minimising the cost of electricity, and decarbonisation. It has two main support mechanisms: the capacity market supports fossil fuel generation and Contracts for Difference supports renewables. However, added to this, the UK relies heavily on overseas investment, the most obvious example being the planned nuclear generation plant at Hinkley Point, which is based on investment from both France and China. While negotiations are being conducted with the EU and a period of uncertainty persists, a delay of crucial investment decisions can be expected.The UK independently chose to phase out coal-fired power stations by 2025 so is unlikely to backtrack in order to allow longer lifetimes to ageing coal-fired plants when it exits the EU. There is also speculation that the adherence to planned closures of coal-fired plants could in any case be a condition set by the EU as part of a negotiated exit agreement.