An excellent article from the Economist (Jan 25th 2014) on the state of the UK’s power generation, grid connections and the increasing risk of blackouts.
For most people Britain’s rebounding economy, now growing at its fastest for three years, is cause for cheer. Not, however, for those who manage the country’s electricity grid. For them swift growth means faster progress towards a crunch.
Ofgem, the energy regulator, has long warned that the margin between peak electricity demand and available supply is falling. In June it said the buffer would shrink from 14% in 2012 to just 4% in the winter of 2015, increasing the risk of blackouts should the weather turn cold or a power station or two break down.
Since that report Britain’s economy has barrelled along. Ofgem’s assessment assumed that Britain would grow by about 1.6% in 2014. The Bank of England now expects 2.8% growth. This will push up consumption. Over the past decade an increase in peak electricity demand of 0.5% accompanied each additional percentage point of economic growth. John Feddersen of Aurora Energy Research thinks the capacity margin will therefore sink to 2.6% by 2015 unless action is taken. That translates into a one-in-seven chance of shortages, up from the one-in-twelve chance that was thought most likely last summer.
Falling coal prices—in part a consequence of America’s shale-gas bonanza—have kept Britain’s coal-fired power stations running at full blast. That means many will have to close sooner than was anticipated because European environmental laws limit the total number of operating hours left to them. At the same time cheap coal has made electricity from gas uncompetitive, forcing operators to mothball some gas-fired plants. Renewable capacity cannot yet make up the difference.
The simplest solution would be to keep coal stations alight. But that would be bad for the environment and would mean abandoning Britain’s international commitments. Two alternatives remain, both unappealing. The first is to reduce demand by paying big factories to switch off when usage risks outstripping supply, probably between 4pm and 8pm on the coldest winter evenings. The second is to pay generating firms to reopen mothballed gas plants. The National Grid, which manages Britain’s electricity transmission network, is considering both options.
Such measures ought to keep the juice flowing. The situation will improve after 2016, as more wind turbines and wood-burning stations come online, but will then worsen again in 2018 as the country’s old nuclear plants are decommissioned. But it would have been better to deal with the problem earlier—few of Britain’s neighbours face such a crunch. Some say government forecasters are at fault for underestimating the scale of Britain’s industrial recovery and overstating the impact of energy-efficiency programmes. Political bickering over the Energy Bill, particularly its overhaul of Britain’s subsidy system, and over Labour’s promise to freeze electricity bills for 20 months if elected have made things worse by delaying investment. Those uncertainties are one reason operators have kept gas turbines offline. A dim performance, overall.