The UK must be close to Europe’s regulated single market in energy

June 16 2023, by Professor Raffaella Ocone

I research and work in chemical and process engineering and I cannot remember a single day, in recent memory, when energy transition has gone unmentioned. Energy transition goes hand in hand with net zero, the only possible answer to the climate emergency. Current political events and the war in Ukraine have not helped the race to net zero and have accentuated the need for cooperation between countries. With the UK out of the EU continuous dialogue and collaboration with our neighbours are essential, even if the UK has pledged greater energy independence—powering Britain from Britain—by switching to  indigenous sources such as nuclear (projects in the pipeline for the first time in 35 years)  and renewables. Cleaner, cheaper and more secure energy cannot, however, be “home-grown” in any single country; cleaner, cheaper and more secure energy cannot be achieved by a series of sporadic interventions; cleaner, cheaper and more secure energy embraces not only generation but also efficiency, flexibility and reliability, new vectors (e.g. hydrogen), new energy sources, carbon capture and storage (CCS), energy storage.

The energy “system” is complex, with this alone often generating uncertainty about what is needed and what  should take paramount priority and helping to delay urgently required action. Complexity must be managed and power management is clearly fundamental to key decisions such as how to use different energy vectors and energy storage and how to provide the relevant infrastructures. Power management should include spatial (e.g., geography) and temporal (e.g., short, medium and long-term) options. It will require scale-up, an appropriate market and market regulation.

Energy storage and flexibility

The UK and EU share many of these concerns but the several and many aspects of this  complex energy landscape are often very different. Flexibility in the UK, for instance, relies on natural gas and storage has received less serious consideration than in the EU. The European Commission has recently published very detailed recommendations on energy storage both at the whole system level and at more granular levels.

With Brexit playing a critical role, the market cannot be ignored; there is a sense in the UK that the market can contribute towards decision making, hence deliver flexibility. However, there seems to be no market that encourages energy storage. The market, together with individual policies, might represent risks both in the UK and EU by, for instance, giving undue subsidy and promotion to one technology over another. Regulatory frameworks are needed to quantify these risks.

Both the UK and EU are pushing hydrogen from renewables as an energy vector; hydrogen could take a central role in energy storage. However, to unlock the full potential of hydrogen, proper infrastructures must be in place and cooperation between the UK and EU is required.

Hydrogen

Hydrogen has recently received great attention both in the UK and EU. But the plain fact of the matter is that  lack of cooperation between them would result in great disadvantages for the UK, both in terms of storage and flexibility. The EU has proposed the establishment of a global European hydrogen facility, the European Hydrogen Bank, which will create security for hydrogen production and attract businesses and investors. The Bank will establish an initial market for renewable hydrogen, offering new growth opportunities and jobs; it will facilitate the import of renewable hydrogen. Collaboration and partnership in this arena are essential for the UK; exclusion from the European Hydrogen Energy Network and EU hydrogen industrial and research and innovation initiatives will limit both sustainable production and the market for hydrogen in the UK; it will damage the ambition of producing hydrogen at scale. Partnership and collaboration will be necessary to assure the required stability and commitment to avoid disruptions [like the ones that we have observed for other technologies (e.g., bio-energy with carbon capture and storage or BECCS)].

A just transition

A just transition is boundary-less and cannot be restricted to a single geographical region. Market regulation is only one aspect of the extremely complex social system and its interactions with the energy sector. Workforce competency, skills mobility, commitment to up-skilling and re-skilling are only some of the requirements to assure a just transition. The current limits on freedom of movement and the absence of a common market between the UK and the EU represent huge deterrents to sustaining an inclusive economy. Just think how, e.g., a single electricity market on the island of Ireland got very little mention in the Windsor Framework; similar exclusions will inevitably hinder the delivery and access of inclusive and equitable energy. In a nutshell: exclusion from a single regulated market will generate inequity and limit business investments in the UK.