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The Actuary The magazine of the Institute & Faculty of Actuaries

Risk of electricity blackouts due to ‘overly ambitious’ climate change targets

The UK’s National Grid is at risk of failing to meet demand over the winter months due to policies designed to reduce carbon dioxide emissions, according to the British Infrastructure Group (BIG).

Calls for ‘radical changes’ to UK electricity network ©iStock
Calls for 'radical changes' to UK electricity network ©iStock

Their Electric Shocks report claims that targets for closing coal power stations and expanding the use of renewables, have rapidly reduced the country’s electricity generating output and slashed capacity margins.

It states that energy prices could be hiked by £30 a year for each household by 2020 to plug this capacity gap, with electricity rationing possible to ease costs.

BIG chair, Grant Shapps MP, said: “It is clear that a perfect coincidence of numerous policies designed to reduce Britain’s carbon dioxide emissions has had the unintended effect of hollowing out the reliability of the electricity generating sector.

“Current projections place the cost of covering potential shortfalls at well over a billion pounds by 2020-21.

“With top officials suggesting candidly that some measure of energy austerity might be implemented to save costs, British energy policy will soon be, if it is not already, in crisis.”

The report states that the National Grid’s safety buffer has shrunk to 0.1%, and that there is a danger of intermittent blackouts for the foreseeable future due to the reduced base capacity and freak weather events.

It goes on to say that by next year, the ‘Christmas lights could go out’, with £122.4m having to be paid for emergency power this winter.

In addition, the government’s ‘overly ambitious climate change goals’ are in danger of undoing much of the work done in the 1990s when energy prices came tumbling down by breaking up the ‘national monopoly of power generation’ in the country.

“The lights will probably stay on this winter, but only just, and at exorbitant cost,” writer and commentator, Matt Ridley, said.

“This is a self-inflicted harm to the British economy from policies that have put decarbonisation at any price ahead of security and affordability of supply.”

The report is calling for ‘radical changes’ to the UK electricity network, which include:

A single tier carbon tax
Review of infrastructure costs
Restoring the market so power stations can be built without government assistance
Savings through energy efficiency.

“A radical rehabilitation of electricity markets is required to bring both consumer prices and capacity concerns under control in the short-term, but in the long-term, the government should work to make it profitable for private companies to invest and innovate in our electricity markets once again,” Shapps added.