A few short weeks ago, Secretary of State for Energy and Climate Change Ed Davey confidently promised no blackouts over Winter 2014/15.
Those words seemed ambitiously confident even then. Certainly Davey was in a minority in his assertive opinion, now though that confidence has as much as indeed been confirmed to look misplaced.
Whilst the talk had been of focusing on future winters after a ‘solution’ to 2014 had been quickly found, the reality has turned out somewhat differently.
DSBR
One element of the promise, the National Grid Demand Side Balancing Reserve pays intensive energy users to reduce their demand during the periods of biggest demand – usually winter weekday evenings, although increasingly challenging to predict.
Whilst this helps the businesses avoid punitive ‘triad’ charges, it hardly does wonders for plant efficiency and productivity.
However although the DSBR scheme was only intended as a back-up plank in the government’s strategy for the coming winter, it has suddenly seemingly become plan A.
That’s because the supply side measures confidently promised by the government and regulator have already begun to falter and in doing so the requirement for sacrifices to be made by those affected businesses has increased in likelihood.
SBR
Under the previous Plan A, the supplemental balancing reserve scheme (SBR), had expected three standby power stations to have been contracted to ramp up their generation capacity in the event of shortages to cope with demand spikes on cold winter evenings.
As part of the scheme, each of the three chosen plants, SSE’s Peterhead, RWE’s Littlebrook and Scottish Power’s Ryehouse (which are contracted at a rate of £250/MWH to provide winter energy cover) were required to undertake monthly tests to ensure operational readiness.
However, with the SBR contract beginning on 1st November this critical contribution to solving the capacity constraint has already been fundamentally weakened by the failure of the Peterhead plant to pass its tests for operational implementation.
Once again then the delicate capacity balance has been thrown into full view.
Failure
The 780MW Peterhead gas plant not only failed to produce the expected power levels during its routine pre-deployment ‘proving’ test, it allegedly failed to produce anything at all.
National Grid said:
“We cannot comment in detail on the proving test, but we will be discussing the results of the test with SSE.
“We are in the process of discussing what did go wrong.
“The reason to do tests is to ensure this kind of thing doesn’t happen when you actually need them.”
Dan Lewis, Senior Energy Policy Adviser at the Institute of Directors echoed the concerns of many saying:
“There’s just no margin for error. When we are up against tighter and tighter margins inevitably things start to trip up. You don’t need many cold days to put yourself in a difficult position.”
Happily for the SBR, however, the Littlebrook and Ryehouse plants have been operational more recently than Peterhead and so confidence in their capabilities to fulfil their contractual obligations are higher.
A spokesman for the Department of Energy and Climate Change echoed this sentiment saying:
“This Government has a plan to keep the lights on now, and into the future, thanks to the new powers we have given to National Grid and investment in the UK’s energy infrastructure.
“National Grid undertakes these proving tests in order to be certain that plants are able to provide extra generating capacity when called upon.
“Peterhead is one of three plants who have been contracted to provide extra generation over the winter months if needed, while a number of other power units which were previously out of service have also begun the process of resuming generation.”
But with capacity margin of 4%, including the SBR plants, this latest failure brings into sharp context the folly of recent energy policy and the threats that a cold winter poses to our brittle energy networks.
Peter Lilley, the former Conservative minister, responding to the latest bad portents, revealed concerns that had been shared with him by energy industry executives:
“They [the senior executives] have expressed worries not just about the total quantity of capacity but the quality. As the proportion provided by wind and solar rises, more and more reliance is put on back-up from gas-fired power generation.
“The industry is worried about whether we have the right sort of generators, because it is one thing to provide base load and another to ramp supply up and down because that can wear equipment out very rapidly.”
Tom Greatrex, the shadow energy minister, perhaps forgetting his own party’s culpability in decades of failed investment in the energy industry, said:
“Tightening margins in the UK are in part a consequence of a government too busy fighting with itself on energy policy to notice the effect in deterred investment. Mixed messages over the long-term trajectory of our energy mix have constricted the pipeline of new projects coming online, meaning we run the risk of relying on plant that is ageing. The arrangement this winter of tighter margins and supplemental balancing mechanisms need to be a temporary phase, not business as usual for the future.”
One thing is for sure, Davey won’t be so confident in his pronouncements now and with the first cold snap of Winter 2014/15 due we’ll soon find out the true health of the networks.