Blackouts on the way in Britain?
It started with a report from the Office of Gas and Electricity Market (Ofgem ) that warned of power shortages in the coming few years. Since 2012, Ofgem reported in its June 2013 capacity assessment, the risk of blackouts in the U.K. has doubled. Energy margins could shrink to as low as 2 percent in 2015 and 2016, according to Ofgem.
Ofgem said power outages are by no means guaranteed, but the risk is growing and the government needs to act swiftly to address the problem. Ofgem is calling for more government investment in power generation , as it places the blame for the potential power shortfalls mostly on the power generation sector.
Some factors that could increase the risk of power interruptions include a particularly cold winter or a higher than expected level of industrial activity.
Also at issue is the size and speed of Britain's decarbonization efforts. To comply with E.U. carbon-cutting goals, the U.K. is shutting down coal-fired power plants.
Some numbers: Since last year, more than 2 GW in installed capacity has gone offline in the U.K., and further shut-offs and retirements are expected. The economic situation in Britain and the E.U. is making new investment in new generation sources difficult. No new power plants are expected to be built until 2016.
The same economic downturn that is making power plants difficult to build is also making power plants less necessary — because of the downturn and investments in energy efficiency, peak demand has fallen an estimated 5 GW.
With such few new power sources in the pipeline, Ofgem is working with transmission authority National Grid and the Department of Energy and Climate Change (DECC) to come up with ways to depress demand. National Grid has a scenario that anticipates power demand to fall an additional 3 to 4 GW by the end of the decade in part due to demand-side management.
This puts the U.K. government in the awkward position of having to root against an economic recovery. Because if factories start humming again, the country's power grid and its generation capacity will be that much more strained.
In 2008, the U.K. set its own greenhouse gas emissions limits and agreed to cut emissions by 80 percent by 2050. The U.K. is also a signatory to the E.U.'s 20/20/20 plan, which calls for a 20 percent reduction in E.U. greenhouse gas emissions from 1990 levels.
This month, members of Parliament debated the creation of quantitative targets for cutting carbon in the energy sector, effectively speeding up the country's decarbonization process. The proposal (an amendment to a wider energy policy reform bill) was struck down following a close vote, pushing energy policy into the headlines of U.K. news outlets.
Given the country's shrinking energy margins, rapidly approaching decarbonization goals, aging power generation fleet and the looming threat of power outages hanging over it all, the U.K. has some serious thinking to do on energy policy.
The country cannot expect to shut down multiple gigawatts of coal power and just expect the lights to stay on without a plan to maintain reliability. It's one thing to sign on to carbon-cutting treaties, but actually making a low-carbon power grid work is a more difficult trick.
An energy reform bill has passed through Parliament's lower house and is now being debated in the House of Lords. One hopes the debate will not have to be carried out by candlelight.