Emergency electricity measures ‘never used once’ but still cost £180m

Posted: March 14, 2017 by oldbrew in Energy, government
Tags: ,

UK taxpayers paid a high price to ensure the government didn’t get egg on its face over its agenda-driven electricity generation policies, as Utility Week reports.

The supplemental balancing reserve (SBR) cost a total of £180 million over the three years it was in operation but was “never once used”, a new report by the Energy and Climate Intelligence Unit has found. 

The think tank raised concerns that “fearmongering” about the “overblown” risk of blackouts led ministers to purchase an expensive insurance policy that was not needed. It has urged them not to spend “billions” more to bolster the UK’s capacity margin.

“The clear message from this report is that paying to boost spare capacity in Britain’s electricity system can be very expensive, and potentially unnecessary,” said Energy and Climate Intelligence Unit (ECIU) energy analyst Jonathan Marshall.

“The drop in the number of calls by the grid for extra power last winter also suggests that, in an era of smarter technology, balancing supply and demand is becoming easier and cheaper. This begs the question of whether calls to increase our capacity margins in the UK, for example by a new ‘dash for gas’, are sensible, given that doing so comes with a price tag in the billions of pounds.”

The SBR was introduced in 2013 as a stop gap measure to provide backup capacity until the introduction of the capacity market. Under the mechanism, mothballed power stations which may otherwise have closed entirely were paid to remain on standby outside of the wholesale energy market to ensure there were no blackouts.   

The report found that National Grid spent £23.5 million (£15.57/kW) on the SBR in the first year of its operation, £23.1 million (£12.95/kW) in the second year, and £122 million (£34.21/kW) in the third.

Not only was the mechanism “ultimately unused” but warnings to the wholesale market over potential capacity shortfalls also become “less frequent” during the period.

A notice of inadequate system margin (NISM) – now electricity margin notice (EMN) – was issued by National Grid on just three occasions over the last four years. Not a single EMN was issued during the recent winter.

The report said a decade ago they were common, but “now, they are not”. This was despite a “gradual decline” in the UK’s capacity margin in recent years, which fell from 16 per cent in 2011 to just 6.6 per cent in 2016. “The absence of problems relating to a declining capacity margin shows that a narrowing gap between supply and demand is not an issue,” the report said.

Continued here.

  1. tom0mason says:

    From the continuation link —

    “Moving ahead, as more capacity retires due to old age, measures that increase grid flexibility will ensure that a thinner margin can be realised without affecting security of supply,” the report added. The introduction of the capacity market for the coming winter should be “the final nail in the coffin for blackout fears in the UK”.

    Humm, that “increase grid flexibility” wouldn’t be due to the increase in unreliable wind and solar would it?

    If so then the future may have been Orange, now it better be cloudless and just windy enough too!

  2. oldbrew says:

    ‘sclerosis appears to have gripped Whitehall energy policy’


    The Brexit effect?
    – – –
    Green light for new pumped storage facility
    Welsh scheme could herald “many” more pumped storage schemes in the UK

    According to SPH, the UK could build some 50 GWh of pumped hydro storage using unconventional sites like ex-industrial quarries, coastal locations and existing drinking water reservoirs.
    “There are signs that the government is taking storage seriously,” said SPH managing director Dave Holmes.


  3. […] Source: Emergency electricity measures ‘never used once’ but still cost £180m | Tallbloke’s Talks… […]

  4. Tim Hammond says:

    But 2016 autumn/winter was pretty mild, and seemed to be reasonably windy. What would have happened if we had had a cold winter with lots of still days?

  5. oldbrew says:

    Tim H: re. ‘a cold winter with lots of still days’ — that’s what happened in Germany…

    Will Germany’s Winter Wind & Solar Power Collapse Mean the End of the ‘Energiewende’?

  6. Curious George says:

    Emergency resources never used – why is it bad? We should be prepared for the worst case. It did not happen yet – let’s be grateful.

  7. oldbrew says:

    Emergency resources never used – why is it bad?

    Because it was so expensive. If the government had confidence in its policies it wouldn’t consider spending that amount on ‘firefighting’ measures.

  8. Richard111 says:

    Happened to learn today that you need to burn 2 tons of wood chips to achieve the same energy level as burning 1 ton of coal.