The precise impact of the result of the referendum on the energy sector is unclear at this stage. This is mainly due to the fact that there is a wide range of possible outcomes from post-Brexit negotiations, leading to a number of regulatory and market options for the UK’s relationship with the EU.

Possible post-Brexit arrangements include the continued membership of the Internal Energy Market (IEM) (similar to Norway’s current arrangements, ie implementation of the EU’s energy market regime, payment into the EU with no voting rights on the relevant legislation); tracking the EU legislative and regulatory regime without any formal arrangement; and a series of sector specific bilateral arrangements similar to the EU-Swiss arrangement as alternatives to or in addition to free trade agreements with specific jurisdictions outside the EU. Each of these options will have different implications for the energy sector depending on the policy choices of the UK Parliament.

Although UK Government pronouncements to date have not commented specifically on the prospect of remaining in the IEM, this seems less likely in view of its firm opposition to arrangements that involve acceptance of EU legislation such as the relevant European Energy Directives and Regulations, and remaining part of the institutions (such as ACER, ENTSO-E, and ENTSO-G) or the CJEU having superior jurisdiction to that of national courts. However, the use of inter-connectors between the UK and Ireland and between France and the UK mean a level of interdependency in relation to electricity supply which will need to be taken into account.

Finally, there would be significant long-term funding implications for new projects given that access to European Investment Bank loans may be cut off by Brexit.

In the immediate future, we are unlikely to see any major changes to the current systems and regulation as the terms of Brexit will take a significant amount of time to negotiate.

The Government has announced its intention to withdraw from the Euratom Treaty. Although this is not a legally necessary consequence of serving notice under Article 50, and will require separate notice to be given under the Euratom Treaty, it has become a political reality. Because of the critical importance of the Euratom Treaty to the UK’s and the remaining EU Member States’ nuclear industry (including to the UK’s security of supply of electricity) it can be assumed that achieving a seamless transition to new arrangements, for example through continued membership during the proposed phased implementation process, will be given a high priority in negotiations. This will be relevant to supply chains both between the UK and Euratom members as well as to all the other countries with whom the UK’s trade in the nuclear sector is currently reliant on Euratom membership.