Alex Harrison, counsel at Hogan Lovells, expects fewer renewable energy opportunities following the outcome of the EU referendum. Image: Hogan Lovells.

Alex Harrison, counsel at Hogan Lovells, expects fewer renewable energy opportunities following the outcome of the EU referendum. Image: Hogan Lovells.

Following months of in fighting, confrontation and bitter debate, the UK is set to leave the European Union after Brexit drew 52% of the vote. It remains unclear at this early stage what immediate or indeed long term effect the decision will have on the UK and its energy market, not least the pledges made on climate change at last year’s COP21 summit in Paris.

However, there are looming question marks over a whole range of issues related to the UK and European energy markets as Alex Harrison, counsel at international law firm Hogan Lovells, explains.

What impact do you think the Brexit vote will have and how quickly will this be felt?

The first thing to say is that nothing has changed yet. We voted out but that obviously doesn't change any European legislation or anything that's been implemented into English law.

I would expect that we will end up trying to negotiate the terms of our exit before we formerly trigger the exit clause because if we don't do that we're up against a two year clock at which we're automatically rejected. So it will be a while before legislative change happens, not least because I don't think government has figured out what it would want to change and how and what it wants to change.

Are there any immediate consequences to the Brexit vote which may come into play?

In terms of what might change tangibly, anything that's got a state aid component to it you might find the government feels it can be much more aggressive or comfortable in its own view around that. In the energy sector things like Hinkley which have difficulties around state aid, this will probably get easier because if you reach the conclusion that you're out anyway then you're not going to be bound by those rules so what does it matter?

How will UK renewables be affected?

In the broader renewables context I don't think much is going to change immediately, I don't think the subsidy levels and tariff levels are going to change overnight. Much of our renewables is driven by binding EU targets around 2030 and elsewhere but obviously if we wanted to build more latitude in we could decide that we wanted to get to the same places more slowly or not at all. So part of the debate to be had may be to do away with some of those targets.

The European Investment Bank (EIB) provides significant funding to the UK for renewable energy projects. By exiting the EU, will the UK be shut out from this funding?

The EIB has a mandate outside the EU and we're one of the founding members so we're definitely not going to be cut off by the EIB but they've been pretty clear that they lend substantially less to countries that are not in the EU than countries that are. So one of the absolute certainties is that the EIB will not be lending to UK renewables in anything like the way it’s been doing it so far.

The UK energy market is very much linked to Europe; we are a net importer of energy and have 9GW of interconnectors planned by 2022. How will Brexit impact this arrangement and wider domestic renewable deployment?

Is there going to be less new renewables work, less subsidies, less opportunity? I think almost certainly. The priority I think is going to be to look at the interconnector position and say ' do we suddenly need to build a whole new load of generation if we think the interconnector position may not be what we think it was going to be?'

I think the priority is going to be around gas rather than building new wind farms or new renewables of other kinds, which I wouldn't expect them to stop but they might end up getting delayed or the budgets being reduced. I think the priority is going to be keeping the lights on and the renewables will come firmly second to that.



Is there going to be less new renewables work, less subsidies, less opportunity? I think almost certainly. – Alex Harrison, counsel at Hogan Lovells.

Leave campaigners have said they wish to leave the common European market altogether. Will this affect the UK dependence on the single energy market of Europe?

I think we might reach a conclusion that we like energy policy in the single energy market to continue as it is at the moment. So we might want the status quo to continue and in some ways we need that because we rely on interconnectors to give us the power that the new build CCGTs that haven't happened can't do.

So the question that cuts across all of this is to what extent will we be able to negotiate that deal, or to what extent will the EU feel it has to punish us for having exited as a means of deterring other people from thinking they should exit?

I'd be very surprised if the impetus to switch off or change the interconnector quality came from us, but you might find that the Europeans take a different view.

But if we decide not to take any power from Europe that leaves us in a bit of a hole.

Greenpeace said on Friday that the Brexit decision had strengthened the “climate change-denying wing of the Conservative Party”. Following David Cameron’s resignation, what is the likely future path for UK renewables under the current government?

I would've thought potentially all policy areas are up for grabs. Although Amber [Rudd, energy secretary] was very clear in her reset speech that we were not going to do coal, I would not be surprised in any way if somebody turned round and said ‘Brexit changes everything and we're going to have to relook at that decision and see if we agree with it’.

I would be very surprised and quite shocked if we did anything to undermine the grandfathering principles for existing projects. We've always been an open for business country and I don't think the EU vote should change that. I think that is an area I would hope there is no change and I think the markets would expect no change but we don't know.