Fears of blackouts are overblown, report claims

13th March 2017

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  • Conventional


Madeleine Berg

A reserve power scheme that was introduced to prevent blackouts during winter cost more than £180m over three years and has never been used, according to analysis by the Energy and Climate Intelligence Unit (ECIU).

The supplementary balancing reserve (SBR) was introduced by the Energy Act 2013. It involved paying power plants to be on standby during the winter in case there was a shortfall in energy to meet demand from UK homes and businesses. The scheme was introduced in 2014 and was stopped at the end of February 2017 without being used, the ECIU said in a report.

Even during the winter of 2016/17, where there was a prolonged period of cold weather, low wind and reduced availability of imported energy from France, the system was not called into play, the ECIU said.

According to its analysis, the closest the National Grid came to employing contingency measures came on 31 October 2016, when the gap between supply and demand fell below 400MW. This aligned with the switch from British Summer Time to Greenwich Mean Time, and coincided with a number of plants being unavailable due to maintenance, it said.

At the time, the National Grid issued a capacity market notice warning of a pending stress on the system, but this was cancelled before it came into effect after higher than forecast wind levels boosted the margin above the 500MW threshold. Another notice was issued on 7 November, but was also cancelled before it was implemented, ECIU said.

The report also points out the creation of the SBR probably increased energy bills. In order to participate, power plant owners agreed not to bid into wholesale or balancing markets, which resulted in tighter margins and higher prices as older and more expensive power stations were fired up instead of those in reserve, it says.

Last month, a report from the House of Lords Economic Affairs Committee said the amount of spare capacity in the electricity system was too tight. But the ECIU said its analysis called into question such claims.

It estimated that increasing capacity margins to 10%, as advocated by some commentators, could cost up to £2.1bn if the additional power came from gas-fired power stations, or £12bn if it was supplied by nuclear energy. Last winter, the 6.6% capacity margin was ample, as was the 5.1% margin the previous winter, the ECIU said.

From the winter of 2017/18, the government will use the capacity market to buy generating capacity in advance.

‘Warnings of “Blackout Britain” come from those who just don't understand the changes in our energy system and how greater flexibility brings greater resilience,’ said James Heappey, Conservative MP for Wells, who is a former member of the parliamentary Energy and Climate Change Select Committee and sits on the ECIU’s advisory board.

‘This winter, it was around ten times more likely that you'd be struck by lightning than that the National Grid would fail to deliver a unit of electricity to its intended destination. And from next winter, the capacity market comes into play, effectively removing “Blackout Britain” risks from the agenda entirely,’ he said.

Previous analysis by the ECIU found that, despite annual warnings in the press of blackouts, the country experienced only one power outage related to insufficient generation between 2005 and 2015. This occurred when two large power stations suffered unrelated faults at the same time and left customers without power for around 20 minutes. Failures in transmission and distribution cause around a quarter of a million outages each year across the country.

A spokesperson for the National Grid said: ‘We believe the SBR was a prudent and efficient use of money to ensure we had extra power available to us in all eventualities.

‘The last two winters have been exceptionally mild but it is important that we have the tools and plans in place to help us deal with even the toughest winter conditions.’

The cost of the SBR to the average domestic consumer was around £1.50 a year, she added. ‘As with other types of insurance, even if you don't use it, it is still a sensible use of money.’


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