7 October 2024

EU and UK to strengthen energy cooperation - here's how to do it…

In the first visit to Brussels by a British Prime Minister since Brexit Keir Starmer has agreed with EU Commission President von der Leyen that the two sides should strengthen cooperation in a number of areas including energy and climate.

WindEurope CEO Giles Dickson said: "The agreement is good news for electricity consumers and Europe's wider energy security that the EU and UK want to strengthen their co-operation on energy. The EU wants to make the North Sea the renewable powerhouse of Europe - with a meshed offshore grid, cross-border electricity flows and hybrid offshore wind farms. The UK wants the same. Collaborating on it is a win-win no-brainer."

There are already close energy ties between the EU and UK. There are electricity interconnectors with a total capacity of around 10 GW between them. And the UK imports around 10% of the electricity it consumes from the EU.

The EU and UK are both working to decarbonise their energy systems. The UK wants to reach net-zero electricity by 2040, the EU by 2050. They both want a massive expansion of offshore wind. The EU wants at least 300 GW of offshore wind by 2050, with around half of it in the North Sea. The UK wants 60 GW of offshore wind by 2030. And they both want to coordinate offshore wind development in the North Sea, including through wind farms that have grid connections both to the UK and mainland Europe.

The EU and UK will now explore in more detail what strengthened cooperation on energy might entail. Here are some thoughts:

• The EU and UK should resolve their bilateral electricity trading arrangements as soon as possible. This would lower electricity prices for consumers on both sides. The model envisaged in the Brexit agreement hasn't been implemented - because it cannot be made to work in practice. Instead, the UK should be connected somehow to the EU's single day-ahead coupling.
• The EU and UK should co-ordinate their development of the grid infrastructure that is going to connect all the offshore wind farms they both want to build in the North Sea.
• The EU and UK should co-ordinate their maritime spatial planning - the North Sea is a single shared sea-basin after all. They should coordinate how they manage the biodiversity implications of offshore wind. And they should take a sea-basin approach to e.g. where is the best place to compensate for the possible impacts on nature of any wind farm.
• As part of this they should collaborate on the development of hybrid offshore wind farms - that have grid connections to more than one country. "Hybrids" save space and money by pooling generation and transmission assets. And they improve energy flows between countries. Having hybrids between the EU and UK is an obvious win-win. But they'll only happen anywhere when there is a clear business model to de-risk the investments - the EU and UK should collaborate on this.
• The EU, UK and other North Seas Governments should properly institutionalise their arrangements for collaboration on offshore energy. The UK should become a full member of the North Seas Energy Cooperation again.
• The EU and UK should align their approach to CO2 emissions trading and the Carbon Border Adjustment Mechanisms (CBAM).

Background:

As a result of Brexit the UK left the EU's internal energy market on 31 January 2021. Since then the EU-UK Trade and Cooperation Agreement regulates energy-related interactions between the two sides. The Agreement is due for renewal in 2026.

Energy trading through electricity interconnectors between the EU and the UK is no longer managed through existing single market tools, such as EU market coupling. And the UK is no longer participating in the EU's energy bodies such as ACER, ENTSO-E and ENTSO-G.

In 2020 the UK also had to leave the North Sea Energy Cooperation, the intergovernmental forum supporting and facilitating the development of offshore grid and renewables development in the North Seas.

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