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Building shield

Ed Davey, the Energy Secretary, says that failing to keep the lights on “would not be a career enhancing moment.” Indeed not, but neither would standing for the Liberal Democrats at the next general election – and I don’t see that stopping him.

As Britain’s ageing fleet of nuclear and coal-fired power stations are retired, can we really be sure we’ll have enough new plant built in time for the long-anticipated ‘capacity crunch’?

Given the utterly dysfunctional state of Britain energy ‘market’, such an outcome cannot be guaranteed – but fortunately, keeping the lights on isn’t just about building new power stations. If we can’t produce enough electricity of our own at a reasonable price, then, like most essential commodities, we should import it instead.

That, at least, is the argument made by Simon Moore and Guy Newey in a pamphlet for Policy Exchange:

“The organisation’s latest report calculates that purchasing zero-carbon electricity generated by countries such as Iceland and Norway would be cheaper than subsidising home-grown green power sources.

“It also argues that overseas generators should be able to bid to take advantage of UK clean energy subsidies, predicting that such an approach would reduce the overall cost of decarbonising the UK’s grid.”

We already import some electricity from France via an undersea cable or ‘interconnector’ across the Channel. And there are other interconnectors with the Netherlands and Ireland. New interconnectors could multiply our options – for instance, by providing access to Norwegian hydropower or Icelandic geothermal energy.

Of course, there are strategic reasons why we might want our electricity made in Britain. But when the our biggest source of imported coal is Russia and our biggest source of imported gas is the Middle East, then the fact that it gets turned into electricity on British soil doesn’t add that much to our security. As for non-fossil fuel electricity, that comes at a cost – especially if you don’t want any more of the cheapest source (onshore wind).

Importing electricty could come at a big saving – some of which could be used to fund the research and development required to reduce the price of, say, offshore wind. So, if the price is right, what’s stopping us?

“…rapid expansion of the interconnector programme is being hampered by unnecessary regulatory and policy barriers, such as EU-set limits on profits that can be made from interconnectors and exclusion of interconnectors and foreign power stations from the first UK capacity auctions this year, which are intended to provide subsidies to companies offering back-up power capacity.”

Imported electricity isn’t the only alternative to the building of new generating capacity. In an article for Carbon Brief, Mat Hope explains that ‘demand response’ could also play an important role:

“National Grid will pay energy intensive business to reduce their use during peak times – 4pm to 8pm on winter weekdays. Reducing the amount big power users need at peak time should help National Grid match demand for power with supply.”

As long as participation is voluntary (which National Grid insists it will be) this is exactly how energy markets should work. Indeed, it’s a shame that domestic consumers can’t choose to get in on the act. With the right technology, price signals could be used to incentivise householders not to use appliances like washing machines and tumble dryers at certain times. Meanwhile, fridges and freezers, that automatically switch on-and-off as part of their normal functioning, could also be computer-controlled to help balance the grid.

Unfortunately, this is not currently an option, nor is it likely to be any time soon – thanks to the foot-dragging of the big energy suppliers and the Government’s inept handling of the smart meter roll-out programme.

Advances on various technological fronts – including interconnectors, demand response, energy efficiency, energy storage and local generation – mean that we’ve never had so many choices. Unfortunately, politicians and bureaucrats, misled by lobbyists, are not keeping up with these opportunities to save and make money for the consumer.

21 comments for: Heresy of the week: To keep the lights on, stop building so many power stations

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