Tomorrow will be a historic day in our country’s history as we vote in the EU Referendum.
With many arguments flying back and forth about what a Brexit means for numerous industries, we spoke to our energy consultant, Paul Keeley from Energy Serve, about the impact a leave vote would have on the energy industry. With energy prices having a direct effect on data centre operational costs, a Brexit could have a big impact on our market.
Here’s what he had to say:
“As with everything when it comes to Brexit, there is no easy and clear answer. A recent survey carried out by the Energy Institute found that 80% of respondents thought a Brexit would be bad for the energy industry.
“I also witnessed a negative response to leaving the EU on an industry webinar. The company hosting the event asked the question: ‘Do you think a Brexit would be good or bad for the UK energy industry?’ and the result closely mirrored that of the Energy Institute, with 75% saying they thought Brexit would be bad.
“However, putting meat on the bones on those results is much harder as there are just too many unknowns.
“With the UK energy market closely intertwined with the European market and with more interconnectors in the pipeline the biggest question is: ‘would a Brexit mean a withdrawal from the Energy Single Market (ESM)?’
“If we were to withdraw from the ESM, I only foresee it having a negative effect on the UK’s energy prices. Energy security is already tight in the UK and if access to the interconnectors was taken away it would push up prices – especially in the winter as we import both gas and electricity through the interconnectors during the colder months.
“Even if access was not revoked, I would expect trade levies to be imposed if we were trading outside the EU and the ESM, which would only push prices higher. There is a school of thought that says we can pull out of the EU but stay within the ESM, thereby avoiding the above problem, but nobody really knows if that is feasible.
“There also appears to be a large acceptance that Brexit will negatively affect the pound, the argument is just about by how much and for how long. But either way, a weak pound will make all of our imports, including energy, more expensive.
“There are some counter arguments though. Some believe that if we were released from European legislation we would be able to relax our renewables and carbon targets, however most of the costs of meeting those targets over the next five years (with the notable exception of Hinkley C) are now committed to contracts.
“So, the short answer is no one can predict the definite outcome, but the overwhelming opinion is that Brexit would be bad for overall energy prices.”
No matter which side of the fence you fall, make sure you vote.
