We are on the brink of blackouts

In the still, frosty nights at the start of the second week of January, Britain came closer than at any time in recent years to running out of electricity.  On Wednesday evening, peak demand came within 580 MW (around 1 per cent of total demand) of overwhelming the available generation capacity. This would have forced the grid to impose emergency constraints on demand, which would have been experienced by at least some people as a blackout. 

The National Energy System Operator (NESO), the body which runs the national electricity grid, managed to squeeze through on this occasion. But it will not be the last time this winter that its nerves will be tested, let alone in the years ahead.  

This situation has come about as a result of older fossil fuel assets being taken offline, while the new capacity being added to the grid has mainly been intermittent, weather-based renewable generation. Under Ed Miliband’s plans, this process will be accelerated dramatically in the run up to 2030, by which time the Government hopes that 95 per cent of the country’s power generation will come from low-carbon sources. The government is not planning a massive expansion of nuclear power in the next five years, so this means that Britain’s power generation will be made up primarily from sources that can simply stop at any time, at the whim of nature. 

… much of the public still seems to be insulated from the fundamental change that is planned in the way that electricity is going to be created

I wrote back in October about the sobering thought that many members of Britain’s non-technical elite don’t understand the principle of balancing an electricity grid — the fact that the power which the nation consumes must be balanced by what is being produced, in real time. Given the enormity of the changes being planned, this is a concept about which the whole nation will be getting an unwelcome education in the near future. Yet despite last Wednesday’s near miss, much of the public still seems to be insulated from the fundamental change that is planned in the way that electricity is going to be created.

In this, Ed Miliband has been aided immeasurably by the fact that many of these plans had already been laid down by the Conservatives, and especially by Boris Johnson’s government. Not only the Net Zero plans themselves, but also bans on petrol and diesel cars, and rules encouraging heat pumps. Johnson announced a lot of these ideas for the purpose of political signalling; like a can he was dropping on the floor, to be kicked down the road by the uninterrupted Tory governments he saw stretching out in front of him for years to come, back in 2019.  But what Boris had intended merely as an ephemeral political counterweight to Brexit, Miliband now plans in deadly earnest. All he needs to do is tinker around the edges; a deadline brought forward here, a regulation amended there. 

One such bit of tinkering has been the decision within Miliband’s Department for Energy Security & Net Zero (DESNZ) to discontinue the work that had been commissioned by both his predecessor Claire Coutinho and himself earlier in his tenure to calculate the total system costs for renewable energy. These figures would have enabled officials — if they were so minded — to factor in the back-up, storage and constraint costs associated with intermittent generation when planning the future energy mix, rather than just the wholesale costs at times when there were fair winds or plenty of sunshine. The latter enable renewables advocates to make deeply misleading claims about wind and solar power being impossibly cheap, without lying outright. 

“Full systems cost”’ would have helped answer the question about why wholesale prices of renewables appeared to be falling, but retail prices paid by electricity consumers had risen steadily in the years while more and more renewables were being added to the grid.  That information will now not become available — either to policy makers or to the public.  

Whilst they wouldn’t have been captured directly by full systems costing for renewables, last week’s events should underline the expense associated with an unstable electricity grid. Under the system of imbalance pricing governed by the Balancing & Settlements Code, the day is divided into “Settlement Periods” of 30 minutes, over the course of which suppliers contracted to NESO are required to meet their agreed volumes of power. The trading of bids over an electronic platform is designed to calculate whether the Net Imbalance of power is currently positive or negative, and thus whether NESO should accept bids for additional generation.  

Suppliers who are in surplus to their contracted volumes over the course of a given Settlement Period are paid one particular price for their marginal capacity, while those suppliers in deficit are required to pay another for the volumes they failed to produce. The energy consultant Kathryn Porter, whose blog is essential reading to keep up with the madness of UK energy policy, detailed how, as the system strained every sinew to draw out additional generation capacity, the former maxed out at £5,500, and the latter rose to £2,900 at times. This cost NESO more than twenty million pounds — not for the energy itself, simply to balance the system — over the course of one single evening. 

Of course, it would not be fair to lay all of this expense at the door of weather-based renewables alone. There are other failures — particularly the forecasting errors that underestimated peak demand so substantially. Furthermore, other vulnerabilities such as Britain’s lack of gas storage capacity — a result of so-called “Treasury brain” that equates redundancy with waste, as well as with highly restrictive land use policies — also leaves the country vulnerable to seasonal fluctuations in gas prices.  However, the expense of balancing the system over just one night should serve to underline the huge costs of instability in the grid – and in terms of grid stability, the optimal amount of intermittent generation is zero. 

With or without realistic assessments about what the full costs of renewable generation actually are, their supporters do not have any alternative strategy other than keeping almost all of the existing gas fleet on as back-up for periods of cold, windless weather. Notwithstanding Dale Vince’s comments about gas power stations “holding the country to ransom”, what we experienced in the second week of January is the long term plan. It is the other five percent, beyond the “95 per cent clean power” promised (although it’s likely to remain stubbornly higher than that). This is, obviously, very difficult to reconcile with Miliband’s other ambition, which is to shift the burden of road transport and domestic heating on to the electricity grid as well. 

One supposed benefit of having a large number of electric vehicles plugged into the grid is that, along with the “smart meters” that successive governments have been desperate to roll out, they can be used to manage unpredictable levels of peak demand. As EV’s come to account for an ever greater share of electricity demand, the amount of charge that they take from the grid can be restricted at times of heightened demand, allowing retail suppliers to “flatten the curve” of peak demand to forestall blackouts. Obviously, this is not convenient for those hoping to charge their car in a hurry — and there is even speculation that the batteries of millions of cars all plugged in overnight could even act as emergency back up for the system itself. This effectively transfers the resilience and flexibility that a tank of fuel gives the individual motorist, especially in an emergency, to the grid collectively.

Whilst this would help with issues around demand unpredictability and forecasting issues in the very short term, it does not answer the question of where all this additional power is going to come from generally.  If there isn’t going to be additional generation, what else is going to have to come off to make room for all the EVs and heat pumps? The answer to this has been clear for some time, but was spelled out this week particularly clearly by Sir Jim Ratcliffe who explained how industry was being squeezed out of Britain, and was being shifted to countries with lower energy costs. Ratcliffe spoke specifically about the chemicals sector, which is particularly affected, but there are vast swathes of British industry that will simply cease to be viable in Britain.

To most normal people, this is a catastrophe … But to true believers in the “energy transition”, this is the solution

A lot of British industry is currently in a moment of relative calm, and even quiet self-confidence. The acutely high energy prices we endured initially in 2022-23, as a result of the market shock caused by sanctions on Russia, have been easing off. Even now, many industrial firms, those that survived at least, are only just coming to the end of contracts that were signed up to in 2023 at far higher pricing (from which domestic consumers were protected). They are now breathing a sigh of relief as they enter into pricing in line with more benign international conditions. This has obscured the underlying trend that the price of commercial energy is only going in one direction in this country; as are the cost of materials such as chemistry, whose manufacturers also have to absorb those costs.

To most normal people, this is a catastrophe; for workers, for consumers, for taxpayers. But to true believers in the “energy transition”, this is the solution. This is where space is going to be found in the national grid, to accommodate electrical vehicles and heat pumps, whilst switching electricity provision to windmills and solar panels, backed up by gas for use only in emergencies. It will come from industry moving abroad. Of course, this doesn’t alter the global balance of carbon emissions, as the goods and services still have to be produced somewhere. In fact, those emissions are likely to rise as manufacturing shifts to countries who use more coal rather than gas, and as more goods have to be shipped further.  But this is to misunderstand the ethical framework of western climate politics, which is moral rather than practical. Carbon emissions are sinful in and of themselves, but they do not view themselves as being morally responsible for carbon emissions coming from India or China — only those coming from Britain.  

The politics of it don’t make any more sense than the economics or the atmospheric physics, but Miliband and those who think like him are not thinking of electoral success either. Even if they are hurled out at the next election and Labour are never elected again, by shifting a substantial percentage of British industry out of the country, Miliband can make himself, in his view, the most morally consequential British politician of his generation. And he can do it simply by maintaining or reinstating policies that the Tories themselves announced as a casual political gesture.