Winter blackout fear as reserves run low Osbornes green taxes blamed for power supplies falling to danger level

Winter blackout fear as reserves run low: Osborne's green taxes blamed for power supplies falling to danger level

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Britain's power generation capacity is dangerously low and the country risks blackouts for the first time in a generation, with experts warning the problem is a consequence of the drive to a low carbon economy.

Figures out this week are expected to show spare capacity in Britain’s electricity generators will be perilously close to zero this winter and could fall even further, leaving Britain without enough power by the winter of 2016-17.

This week, the National Grid will publish its outlook for electricity supply for the coming winter. It is likely to show that, not including renewable sources which suffer if the wind does not blow or the sun does not shine, spare capacity could be just 1.9 per cent of expected demand. 

Smoked out: Ferrybridge is one of the coal-fired power plants set to close in months

Smoked out: Ferrybridge is one of the coal-fired power plants set to close in months

And the construction of two nuclear power plants at Hinkley Point C in Somerset, which EDF boss Vincent de Rivaz said would allow us to cook our Christmas turkeys in 2017, has yet to begin.

National Grid said it was prepared to buy in reserves via interconnectors from Holland and France, along with supply from renewable energy sources, but even then the margin of capacity over demand is expected to be 5.1 per cent for 2015-16.

It said: ‘We have identified the need to have additional tools in place for the next two winters, ensuring we have a cost-effective insurance policy for consumers.’

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It is a far cry from the winter of four years ago, when spare capacity was 17 per cent. But it is the winter after this one that worries experts.

‘What happens in the winter of 2016-17?’ asked Peter Atherton, energy analyst and managing director of investment bank Jefferies. ‘By then 5.5 gigawatts will have been taken out of the system with the closure of coal-fired power stations.

Carbon taxes: Introduced by Chancellor George, the tax has been blamed by energy firms for the closures of some coal-fired power plants

Carbon taxes: Introduced by Chancellor George, the tax has been blamed by energy firms for the closures of some coal-fired power plants

‘There is very little capacity under construction so, though the grid can buy in reserves, the prima facie evidence suggests that the following winter the capacity margin will be negative – which means demand will outstrip supply.’ And that could mean widespread blackouts for the first time since the introduction of the three-day week by Prime Minister Edward Heath during the miners’ strikes of the early 1970s.

Experts say there is no doubt that the effects of Britain’s headlong rush to decarbonise the economy by boosting renewable sources of energy supply while shutting down coal-fired power stations and failing to build gas-powered ones is set to have a serious impact.

Atherton says that it is not a problem shared by Britain’s neighbours – Spain and Italy have far greater surplus capacity than the UK.

A coal-fired power plant at Ironbridge, in Shropshire, run by E.On will close by the end of this year under European Union rules aimed at reducing the number of coal-fired power stations.

A further three coal-fired plants will shut by early April 2016. Eggborough in North Yorkshire, owned by Czech company EPH, Longannet in Fife, run by ScottishPower, and Ferrybridge in West Yorkshire, run by SSE, have been deemed no longer economically viable by their owners. The four produce nearly 7 per cent of the UK’s power generating capacity.

The Government’s tax regime has been blamed by energy firms for the closures. The UK’s carbon price support mechanism charges companies using fossil fuels for every ton of carbon dioxide they produce.

The tax was introduced by Chancellor George Osborne in his Autumn Statement in 2011 and the Government has estimated that it will raise £1billion a year – money that goes straight to the Treasury rather than to fund environmental projects.

Crucially, the tax is in addition to the European Union’s own scheme, which already taxes carbon emissions.

The tax is unique to fossil fuel users in the UK – foreign power producers who supply the UK market do not have to pay it – and it has been blamed in part for forcing the giant steel plant at Redcar on Teesside out of business earlier this month.

Discontent: The tax on fossil fuel has been blamed in part for forcing the giant steel plant at Redcar on Teesside out of business earlier this month

Discontent: The tax on fossil fuel has been blamed in part for forcing the giant steel plant at Redcar on Teesside out of business earlier this month

ScottishPower’s chief corporate officer Keith Anderson has warned that the reduction in capacity could lead to a new ‘dash for gas’ – a need to build gas-fired power stations at short notice to boost supply.

It is a theme the leaders of Europe’s biggest energy companies, including Shell and BP, are expected to focus on this week when they will announce their own plans to reduce carbon emissions ahead of the UN conference on climate change in Paris in December.

They note that gas produces half the carbon emissions of coal per unit of electricity generated.

Energy Secretary Amber Rudd is expected to outline her long-awaited plans for the industry next month.

A spokesman for the Department of Energy and Climate Change said: ‘While fossil fuels have a role to play in meeting our energy demands, evidence shows that coal as a percentage of total generation has fallen from 40 per cent in 2012 to 29 per cent in 2014.

‘This reflects the fact that a number of coal-fired power stations have closed in recent years and we expect this trend to continue.’

The Government also said it was looking to stimulate investment in lower carbon energy provision.

However there are plenty in the energy industry who fear that may not be enough to keep the lights on.

 

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