What will happen to I-SEM in a hard Brexit?
The British and Irish governments have recently published details of their contingency planning for an Integrated Single Electricity Market (I-SEM) in the event of a no-deal Brexit. The overall theme is that both governments are committed to maintaining I-SEM, regardless of whether Brexit is hard or soft.
The British government has prepared emergency legislation for Northern Ireland (which could be implemented by Westminster via direct rule and by-passing Stormont), to ensure that I-SEM continues to operate in a no-deal Brexit.
Likewise, the Irish government has prepared a single "omnibus" draft emergency legislation, known as the Withdrawal of the UK from the EU (Consequential Provisions) Bill 2019. This could be implemented in the case of a no-deal Brexit and covers a number of areas, including making licence modifications, to ensure that I-SEM continues to function.
Nevertheless, the Department for Business, Energy and Industrial Strategy (BEIS) in the UK has confirmed that:
- Both governments are still seeking assurances from the EU Commission that I-SEM will continue even in a no-deal Brexit
- In a no-deal Brexit, the I-SEM day ahead market would be decoupled from the rest of Europe leaving it as an all island market only, with some interconnector trading with Great Britain in the intra-day market
- As a consequence of reduced liquidity electricity prices would be expected to rise
- SONI and Eirgrid would be required, through licence modifications, to apply the same rules in both jurisdictions (subject to any different legal requirements) but, this may not always be possible if laws begin to diverge
- In the event that it is not possible to continue to operate I-SEM following a no-deal Brexit, then it would take at least two years to replace it with two new markets. As such, there will be no cliff edge on the 29 March.
As with everything Brexit related there remains significant uncertainty, however there appears to be the political will to keep I-SEM intact regardless of what happens in the next few weeks.
For more information please contact Mark Stockdale, Mark Thompson or Ciaran McAlinney.
Date published: 28 February 2019