Keeping the lights on

Keeping the lights on remains a controversial issue with competing views on short term capacity against long sustainable generation.

A group of MPs in the British Infrastructure Group (BIG) argue that Britain could be facing nationwide festive blackouts next winter unless radical changes are made to the UK’s electricity network. They claim that UK government targets for closing coal power stations and expanding renewables to hit climate change goals have rapidly reduced the UK’s generating output. This means severely reduced capacity margins, which are “so tight that National Grid’s emergency power deals have become the norm”. Their report argues that margins have fallen from around 17% during the winter of 2011-12 to around 1% this winter – leaving households with a £30 bill, twice government estimates.

The group’s chair, Grant Shapps MP said:
“While nobody questions the noble intentions behind these interventions, it is clear that a perfect coincidence of numerous policies designed to reduce Britain’s carbon dioxide emissions has had the unintended effect of hollowing out the reliability of the electricity generating sector”.

Unsurprisingly, given the MPs and their funders, they support a market led solution. Shapps said: “A radical rehabilitation of electricity markets is required to bring both consumer prices and capacity concerns under control in the short term”. The government should “work to make it profitable for private companies to invest and innovate in our electricity markets once again”.

National Grid has published the 2016 Electricity Ten Year Statement (ETYS), based on the Future Energy Scenarios (FES), of future transmission infrastructure requirements.

They calculate that future changes will potentially require transmission development with new nuclear plants and high volumes of renewables — connecting towards the periphery of the network.
In contrast, the ageing, traditional plants are usually located close to the demand. This also means more interconnectors around the country. They conclude:

• Potentially higher north-to-south power flows, from Scotland to England, mainly due to future growth in both offshore and onshore wind generation connections in Scotland
• Potentially higher flows across the North of England and the Midlands border, mainly due to future growth in renewables and interconnectors within the North of England region and closures of generation in the Midlands
• Potentially higher power flows from the periphery of the network, mainly due to unprecedented growth in generation, particularly in East Anglia, Humber, the Scottish Highland, the eastern Scottish coastal network and Wales, coming from offshore renewables and Nuclear generation
When there are future high power exports into Europe from the South of England, the current capability of that particular transmission region will be stressed

They also say that the closure of ageing nuclear plants will lead to an increased reliance on renewable plants in Scotland. This will result in higher south-to-north power flows, across the North of England and southern Scotland transmission system, when intermittent renewable plants are unavailable.

In the short term, the latest capacity actions will result in a series of new battery power-storage plants and two small new gas power stations designed to bolster energy supply and head off the threat of shortages. However, hopes of an ambitious “dash for gas” were dashed when no new gas power station of a significant scale won a subsidy contract in the bidding process.

Analysts at Barclays banking group said: “Overall we believe the auction will largely be viewed as a disappointment by the UK government in terms of securing the significant levels of new gas generation capacity they hoped for in order to ensure security of supply”. The £22.50 per kilowatt price is well below the £35-£45 needed to encourage big new gas plants.

Dr Alastair Martin of Flexitricity said the auction results showed the government needed to rethink its push for new gas: “After three years, the capacity market has still failed to deliver a single new-build gas plant.”

Batteries took a much larger share than in previous years, with about 500MW awarded to new storage plants. They can provide a quick response to shortages.

This was welcomed by environmental groups, as dirty diesel generators won a smaller share than in previous years. However, they were disappointed that coal did well, despite the government’s promises to phase out the polluting fuel by 2025. Existing large coal, gas and nuclear power stations will provide 85% of backup power in 2020-21. A WWF spokesperson said: “I do think there is a real danger of coal continuing to linger round on the system, crowding out investment in the more flexible generation our system needs.”

ScottishPower’s Neil Clitheroe said, “Diesel was the winner last year, and coal is the winner this year. Clearing 20 times more old coal than new gas signals a willingness to sweat these assets until the bitter end”. Somewhat ironic after the company’s decision to close Longannet early!

Overall, the energy ‘market’ is still struggling to settle a long term solution to the UK’s energy needs. Generation changes will certainly require new transmission capacity. There is also little consistency in the type of generation needed to manage potential short term shortages.

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