A lesson in spin from the energy markets.
As the capacity crunch for Winter 2014/15 nears and politicians, industry bosses and the regulator come under renewed pressure there have been some bold statements put out in recent days.
National Grid have announced that the margin over Winter 2014/15, the gap between the amount of electricity supplied and that which is demanded, is at a long term low, with a balance in a benign winter forecast to be just 58GW supply vs. 55GW demand.
That is low, uncomfortably low, and quite reasonably has raised the fear and prospect of black outs.
As Peter Atherton of Liberum Capital explained:
“[With] historically low [electricity] reserve margins as we head into winter. The nightmare scenario now is that we lose another large power station and we have another of those periods we have had in recent winters of a cold high-pressure system with no wind for several weeks. Then we are in deep trouble”.
But you would be forgiven for believing this is hyperbole driven by some alternative motive when placed in the context of what we are being told elsewhere.
With Rachel Fletcher, Ofgem’s Senior Partner for Markets, saying:
“There is no increased risk of blackouts.”
And even Secretary of State for Energy and Climate Change saying:
“There will be no blackouts. Period.”
So why the confidence?
It’s all in the terminology used.
As a National Grid spokesman explained, in times of power shortage:
“Often a slight reduction in electricity voltage will do the trick . . .”
That reduction in voltage is used to ‘manage’ the electricity network during peak periods.
A reduction in voltage is noticeable as lights dim and electronic gadgets such as computers, laptops and set top boxes are inoperable or run below their usage speed capacities.
This in industry parlance is called a “brownout” and is both a way of managing the prevention of a greater shortfall in the system but also a sure fire way to cause damage to sensitive equipment.
And it is this impact that most of us would rightly describe as a “power cut” or “black out” – our electricity supply failing, interrupting our ability to continue about our day normally and potentially causing lasting damage.
But this is not what the industry and politicians are increasingly categorising as a black out.
And that is why the likes of Fletcher and Davey can confidently claim “No blackouts” because when we do have one they will find a technical convenience to justify why it wasn’t one after all.
When is a black out not a black out – when Ofgem, National Grid and the Energy Secretary decide it’s not.