Winter blackouts, industry knockouts
The National Grid is advising manufacturers to make plans to avoid electricity blackouts this winter. Hardly helpful to our energy intensive industries like steel and paper making already under pressure, and with manufacturing output falling for its third consecutive quarter.
The grid’s 2015/16 Winter Outlook report estimates that the UK faces a tighter energy crunch than last year. Yet more contingency measures are needed to ensure the lights stay on. This includes the government paying for diesel powered and highly polluting back-up generators, as Bryony Worthingon pointed out last week in a Lords energy debate.
So the power gap between total electricity generating capacity and peak demand (capacity margin) – see graph below – would fall to just 1.2% this winter without intervention – such as paying mothballed power plants to be ready to come online, and paying factories to be prepared to power down.
As a result 2.3GW of additional power balancing supplies have been contracted for times of peak demand. This has pushed the capacity margin to 5.1%. This winter’s 5.1% capacity margin is slightly lower than last year’s 6.1%, but is considerable lower than its peak of 17% back as recent as 2012/13.
Why are the UK’s electricity margins getting so tight? The shape of the UK’s generating capacity is changing as thousands of renewable sites are added to an ageing fleet large centralised coal, nuclear and gas power stations. Over the past year 10GW of coal stations have been closed as a result of European legislation. Many of the old nuclear plant have reached the end of its economic and permitted life.
On the plus side the UK has added 16GW of renewables since 2010 and 4GW of gas fired power stations. But renewables do not guarantee reliable power, for example because solar energy doesn’t work at night. So the National Grid has to rate the different types of technology to derive a reliable capacity figure. So despite the fact that overall capacity on the system is rising, the National Grid says useful reliable capacity is actually shrinking.
So in order to ensure the lights stay on the National Grid enters into auxiliary contracts to ensure the lights stay on. This includes contracting with large industry to shut down operations at times of peak demand – hardly ideal for productivity – and by trying to encourage generation to provide power at times of peak demand.
The government introduced a new Capacity Mechanism to help it out of this crisis: it lets energy contracts for power plants to be available in times of need. They hoped this would kick start new build gas power stations. However this has proved not to be the case. The price generation capacity receives is based on a ‘capacity auction strike price.’ But at the current low level of £19 per kilowatt hour the only new investment coming forward is in large fleets of open cycle gas turbine diesel units with their relative low efficiency and high and polluting emissions.
So as the days get colder and the nights get longer, politicians hope that National Grid has enough tricks up its sleeve to ensure that the lights remain on, otherwise we might just rue the day we forced all those coal stations to close when they were capable of providing a phased transition to the secure low carbon economy with carbon capture & storage (CCS) we all seek.
Presumably this energy crisis wasn’t part of the Chancellor’s economic plan “to build a stronger economy for the future.”