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‘Beast From The East’ Exposed Britain’s Energy Failings

Tony Lodge, The Daily Telegraph

The recent severe weather placed a huge strain on Britain’s energy networks. As well as a gas supply threat there were troubling signs that electricity supplies were dangerously exposed. Current policies are set to make the situation worse.

During the chill at the start of the month, despite high electricity demand here, almost 2 gigawatts of power was being exported to Europe CREDIT: IAN HORROCKS/GETTY IMAGES

Until recently, British power generators could supply all of the electricity the nation needed. A mixed portfolio of nuclear, gas, coal, oil and renewable plants kept the lights on and allowed for a balanced choice of fuels to generate power.

But chronic policy failures over a generation to get plants built as old ones shut, mean Britain is looking to import more electricity from Europe. Imports are set to make up to a fifth of supplies by 2025. The “Beast from the East” laid bare the risks of this approach.

Slanting the electricity market more in favour of imports exposes the UK’s energy security and undermines investment in new power plants at home. Billions of pounds of investment are now at risk, which will undermine future security of supply and threaten price rises. Policy needs to change. Energy security and more competitive pricing must become a priority as we prepare to leave the EU.

Firstly, it is important to understand our growing reliance on imported electricity, the plans to quadruple this dependency and the consequences for prices, competition and security of supply. Our new Centre for Policy Studies paper, “The Hidden Wiring”, follows months of research and analysis into plans for more undersea cables, called interconnectors, to import electricity and their negative impact on Britain’s electricity market and on investment.
Any assumption that imports can replace some power generators in Britain is naive

Interconnectors respond to price signals and electricity flows through them to where the price is strongest. Consequently, if there is a sustained period of little or no wind and sunshine across the rest of Europe, coupled with high demand, then the UK cannot rely on imports to keep the lights on. In fact, interconnectors could exacerbate a supply shortage as power would be exported out of the UK to the Continent when prices are higher there.

During the chill at the start of the month, despite high electricity demand here, UK supplies responded to higher continental prices and almost 2 gigawatts (GW) of power was being exported to Europe, and in particular France, where the majority of household heating is electric. Of further concern was our heavy reliance on elderly coal plants, which will be closed within six years, and weather-dependent wind farms.

Any assumption that imports can replace some power generators in Britain is naive. Imports from Europe increased by 52pc in the three years to 2016, and they are set to surge as new interconnectors are planned. Back in 2012, they were expected to account for just 6 terawatt hours (TWh) of supply per year in 2030. But four years later, the projection radically changed. The 2016 forecast sees UK electricity imports rising from 21 TWh today, to a peak of 77 TWh in 2025. That’s close to a fifth of supply.

Britain’s rising electricity imports are, in the short term, an easy way out for failed energy policies stretching back over a generation. But can they be guaranteed to deliver the flows we will need? Back in 2012, the Coalition had the right plans for a new generation of gas-fired plants that would be easy to switch on and off to accommodate the sporadic nature of weather-dependent renewable supplies.

It estimated that Britain would need 26GW of additional gas generation capacity by 2030 to plug any potential gap left by cloudy, windless days and to replace the electricity output from closing older coal, oil and nuclear plants. On current trends, however, the UK is on track to build just 12GW by 2030. This goes some way to explain the dash to build interconnectors. Declining electricity generating capacity on the Continent is key to our conclusions.

Both France and Germany are reducing their reliance on nuclear power without any clear policy for replacements. Europe still generates considerable electricity from coal, and these plants are increasingly vulnerable to new legislation and political factors. Holland is keen to close coal plants with plans for a new carbon tax.

Interconnectors enjoy a competitiveness boost from the fact that generators on the Continent don’t have to pay Britain’s high carbon price floor tax. This means they can undercut British generators even if their power comes from dirty coal-fired capacity in Germany. So instead of cutting carbon emissions, the UK is in some cases just offshoring it. Furthermore, imports don’t pay the transmission charges faced by UK generators.

In the meantime, consumers have been presented with a sham claim by National Grid that the UK is increasingly enjoying “coal free” days – a PR wheeze based on the point that no UK coal plants are generating any electricity at a certain time. The claim is flawed because the UK is increasingly importing electricity, and the grid cannot guarantee this electricity has not been generated from the many coal plants in Europe.

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