Survey reveals majority of UK power sector not in favour of Brexit

A strong majority of professionals working in the UK electric power industries do not believe Brexit will be positive for the sector. 61 per cent of respondents to a Power Engineering International survey answered ‘No’ to the question, ‘Do you think the UK power sector will be positively impacted by Brexit?’

Brexit Power Engineering International Survey Results

However, despite pessimism towards the decision of the British public to depart from the European Union, appetite for another referendum is weak. The reluctance for another referendum appears surprising given 77 per cent believe inadequate information was provided as to the implications of the decision for business prior to the June 2016 vote. The survey, taken in January, was entitled, ‘What does the electric power sector think about Brexit?’ 36 per cent of respondents believe Brexit will be beneficial with 3 per cent of those polled unsure. The results of the survey, which attempted to gauge feeling on the ground across the spectrum of power industries, from fossil, nuclear, renewables to grid and decentralized energy interests reveal a sizeable divergence from the result of the overall 2016 referendum.

Nuclear Power Sector Express Greatest Concern

Respondents were also given the opportunity to comment on the rationale for their response to the survey. While myriad reasons were given for unease at the prospect of Brexit, nuclear power sector professionals are most troubled about the post-EU future. The British government has decided to leave Euratom (European Atomic Energy Agency) and the sector appears to be nervous about declining influence, implications for the country’s nuclear research, and the ‘burden of administration’, as a result of the decision. Those involved in power transmission and distribution revealed concerns about re-negotiation of interconnector agreements, with ‘no guarantee the terms will be as good,’ according to one response.

Members of that industry also pointed out that tenders have already been postponed on EU-UK interconnections, impacting business, and creating further uncertainty. Concern about that uncertainty involved is shared across sectors, and there was also plenty of mention of the European companies, who dominate the UK power sector, and what a hard Brexit might mean for their businesses, and subsequent repercussions for employees. As one respondent put it, “If no beneficial trade deal or incentives are agreed between the UK and EU, these companies would like to shift their base to Europe. This would impact the UK power sector negatively.” Other reasons for gloom included potential damage to cross border trade of power electronics, restriction on free exchange of skills and knowledge, general ease of access to EU market, and the persistent lack of investment in the power sector due to regulatory uncertainty. “Brexit will only prolong this problem while the government tries to get on top of the vast challenge of implementing new legislation,” another respondent claimed.

Positive Perspectives From Pro-Brexit Power Interests

Those who see Brexit as a positive move, were equally diverse on their sunnier motives. But there is an overarching belief that the UK will benefit by not being restricted by policies set in Brussels. This exhibited in such responses as ‘Free from EU policy drivers, trade will be more open’, ‘Reduced regulation based on what the UK needs and not what supports integration’ and ‘It offers a chance for the UK to break away from EU-mandated targets for intermittent and unreliable renewable energy and will focus investment towards demand-following thermal generation.”

By and large Brexit supporting industry respondents see the decision as good news for the country’s manufacturing and construction industries. Some typical responses on that theme included, ‘In terms of new construction, there will now be potential for more UK suppliers’, and ‘more power requirement which will be supplied by UK plants and not imported’. Another response offered, ‘Network self-sufficiency and durability will become more important.  External power producers will not simply be able to “dump” energy here to the detriment of long term generation investors.’

An overwhelming number of those surveyed (87 per cent) did not believe their companies would relocate as a result of Brexit, but those who were negative cited downsizing was likely and research interests threatened. Even those who think Brexit is a good thing are unimpressed about the level of information surrounding what a post-European future looks like. 77 per cent of those polled said ‘No’ to the question, ‘Do you think you have been adequately informed about the implications of Brexit for the UK power sector and your business?’

Some supporting arguments to that question included, ‘I already had a good idea of the complexity through an understanding of European policy and legislation, as well as the position of Norway, Switzerland and the Energy Community candidate countries. The people who were not informed were the politicians who failed to understand the huge risks. And they failed to inform, or misinformed, the electorate.’ Contrary positions to that verdict, included, ‘Future doubts and queries are always present, Brexit is no different from say the 2008 collapse at worst’ and ‘Successful businesses will always manage to handle uncertainty.’

Lack of Appetite for a Second Referendum

That disgruntlement over lack of information did not however translate to desire for another referendum. Almost 57 per cent of respondents said ‘No’ the question, ‘Would you be in favour of another referendum once more facts on the implications of Brexit are known?’ Respondents in favour of Brexit referendum 2 pointed to the benefit of there being more clarity on the effects on business and wages, avoided wastage of billions of government pounds in legal expenses, addressing the misspelling of Brexit in the first place. One particular respondent summarised the consensus from that perspective, stating, ‘In the referendum the public only chose to leave, but not the terms.  The terms should be subject to a democratic process. This time there has to be a full explanation of the benefits of both positions.’

The majority of respondents were equally adamant on why a second Brexit referendum is unpalatable to them. Comments accompanying those responses included:

“No – the UK electorate expressed their views in 2016 based on 43 years of EC/EU membership. Until there is a fundamental shift in the way the EU operates there is no reason to hold a further referendum.”

‘No. Another referendum won’t help as ordinary people won’t understand the intricacies of the power deals or the consequences. The people at the helm to make new policies should be highly capable and should make and implement correct regulations. Another referendum would only further create confusion.’

‘No. There can be no facts about the consequences of Brexit, only speculation. We will only know (maybe) in 20 years’ time.’

‘No. The people have spoken and before that referendum, there was no mention of the possibility of another referendum. Also, and more importantly it weakens the UK Government bargaining position.’

‘No, the UK has decided by an overwhelming majority. We must resist the temptation to choose which referendum results we like and dislike. Another referendum would only alienate voters and Brexiters more so.’

‘No. The people have spoken. Time to eat humble pie. The result of the Brexit vote really just summarizes the level of education in the UK is not what it is thought to be.’

‘No. The democratic decision should be delivered no matter what the implications are. Then if a case can be made to re-join, bring it on! The facts on the implications of staying are also not known.  The entity is continually changing and influence on direction is diminishing either way.’

Hopes and Fears of the UK Power Sector Post-Brexit

The question, ‘Summarise your main hopes and fears about Brexit as it affects your business, the power sector and the general economy?, also drew some interesting responses. The following is a flavour of those contributions:

‘Brexit will cause a loss of projects from mainland Europe. Best case- the UK power sector strengthens through its increased isolation leading to more skills developing locally.’

‘There should be opportunities to trade more widely but there is a danger that the UK will be less able to participate in EU R&D projects unless some arrangement is made to continue them. It will be opposed by some Brexiteers as there will be payments involved.’‘The UK will benefit from being able to negotiate its own trade agreements without the burden of other EU countries’ inertia to change and EU protectionism. There is hope the UK power sector can be reinvigorated as it will be easier to change the direction of UK energy policy towards security of supply and lower costs when we are no longer subject to EU energy directives and emissions regulations.’

‘I hope the UK still follows EU law to avoid unnecessary complexity and creating further administration costs in transactions.’

‘The power sector will be relatively immune, compared to some other sectors. It may well kill off nuclear (Hinkley Point C CfD price in sterling may hit EdF), but as long as the French taxpayer takes the hit – so be it.’

Brexit Power Engineering International jigsaw graphic‘My main hope is that new markets emerge. European companies dominate the UK power sector, perhaps this is an opportunity for UK industry to emerge from the ashes.’

‘EU needs the UK and UK needs the EU. Nothing changes at the end. I expect a solution like Switzerland.’

‘A challenge for the UK power industry will be gaining much needed infrastructure investment. At the moment, the UK is at the forefront of many low-carbon technologies. Being outside the EU has the potential to seriously damage our ability to continue developing our knowledge and capability.’

‘ The only hope is that it isn’t as bad as I fear. Best case scenario is that things are either the same or only slightly worse (for my business, power sector and the general economy) and we’ll be asking what was the point of it all. However, the actual best case is if it never happens.’

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