x Abu Dhabi, UAESaturday 22 July 2017

Shadow of new dark age haunts UK

North Sea energy solved the UK power crisis of the 1970s. But, with little of that now left, this spring the country was just hours away from the kind of blackouts that blight parts of the Mena region.

Bristol City's Brian Drysdale after the cancellation of a match due to a power cut in 1970, when the UK economy was persistently battered by outages. PA
Bristol City's Brian Drysdale after the cancellation of a match due to a power cut in 1970, when the UK economy was persistently battered by outages. PA

In parts of the Middle East and Africa, a constant power supply is a distant dream.

Lebanon's electricity blackouts are so common there is an app to track Beirut's rolling power cuts and a popular Twitter hashtag "BlameBassil" is named after the energy minister, Gebran Bassil.

In recent weeks parts of Beirut have suffered nine rather than the usual three hours per day of cuts. People in rural areas go even longer without power, The Economist said last week.

In June, Niger's worst power cuts in years crippled businesses and government offices in the capital Niamey for more than three weeks, raising fears they could harm the fragile economy of one of the world's poorest nations.

Last month, oil production in Libya dropped 16 per cent to 1.1 million barrels a day, the lowest since January, partly because power shortages disrupt the pumps that lift oil from underground, Abdul-Jalil Mayuf, a spokesman for the state-run Arabian Gulf Oil, which pumps crude in eastern Libya, told Lebanon's Daily Star.

To ensure electricity supply, Libya recently signed a deal with the London contractor APR Energy to provide 450 megawatts of power through mobile generators, the largest ever single contract for temporary power supply systems.

"Stop-gap solutions are unlikely to be enough," said John Hamilton, a director at the UK-based consultant Cross-Border Information. "Power generation and a major upgrading of power lines crossing hundreds of miles of desert are essential to keep production at existing levels."

But Mr Hamilton may have to turn his attention to similar issues closer to home.

The United Kingdom was just hours away from running out of gas this spring as the coldest March for 50 years almost drained gas storage facilities. LNG tankers were diverted to gas terminals at Milford Haven in Wales that had just six hours' worth left.

It is a scenario that could become more common as Britain's creaking energy system gets closer to running on empty.

At the end of June, Ofgem, the energy markets regulator, warned Britain faced an earlier than expected energy crunch mid-way through this decade, as the margin of generating capacity - the difference between total demand for electricity and the power being produced from power stations - tightens to an unprecedented level.

Britain enjoys a cushion or margin of available capacity of about 15 per cent at present but Ofgem said margins in 2015 and 2016 could tighten to between 2 and 5 per cent, depending on demand.

Should that happen, blackouts could be on the cards. Ofgem says the probability of power cuts will increase from 1 in 47 years now to about 1 in 12 years, or lower, in 2015 and 2016.

To try and avert the crisis, large users of electricity - including industrial businesses and hospitals - are being asked to consider curbing their demand between 4pm and 8pm during winter months, when demand is at its heaviest.

For many middle-aged Britons, the threat of blackouts brings back memories of tea-time power cuts of the sort that characterised the 1970s when the UK's economy was so battered a three-day working week was imposed.

"Suggestions of a return to the power rationing we saw in the 1970s are just fanciful, but it is equally wrong to be complacent and take our very high standards of reliability for granted when electricity supplies may tighten considerably from what we have seen in recent years," Ofgem's acting chief executive Andrew Wright said in June.

Ofgem is talking to National Grid, the private company responsible for making sure there is enough capacity available day by day on the system, about solutions. Besides asking big users to use less at times of peak demand, there is also the possibility mothballed gas, coal and even oil-fired plants could be brought, temporarily, back into use.

National Grid has published an informal consultation on these two measures to provide an "insurance policy" that could be deployed if there is a shortfall of electricity in the market. Responses to the consultation are expected to be published next month, but if there is a need, National Grid could begin tendering for the provision of mothballed plant for winter 2014-15 at the end of this year.

"At this stage, we don't see any major areas of concern [this winter] but we're not being complacent," says a spokesman.

David Porter, former chief executive of the Association of Electricity Producers and an independent consultant, says the problem should never have arisen.

"It is a great pity that we have stumbled into this situation. We have known for years that the coal- and oil-fired stations that could not comply with the large combustion plants directive [an EU air quality measure] would have to close by the end of 2015," he says.

Indeed, Ofgem first started warning about the shortfall of investment in generating capacity in 2009. When Alistair Buchanan stepped down after a decade leading the regulator in February, he predicted a "near-crisis" over energy supply.

"If you can imagine a ride on a rollercoaster at a fairground, then this winter, we are at the top of the circuit and we head downhill - fast. Within three years, we will see the reserve margin of generation fall from about 14 per cent to less than 5 per cent. That is uncomfortably tight," he said in a recent lecture.

Even if blackouts are avoided, families and businesses will have to pay higher energy bills to fund the new gas plants needed to replace ageing coal-fired plant being retired, he said.

Some 20 per cent of Britain's power capacity is set to come offline by 2020, as tough new EU environmental laws force the closure of ageing plants, and old nuclear reactors come to the end of their lives. Nuclear power used to provide 27 per cent of the country's electricity in 1997 but now it provides just 18 per cent and the remaining power stations will close by 2020.

The surprise number in all of these stats is the one that shows last year, 40 per cent of our electricity came from coal, gas supplies 30 to 35 per cent, nuclear just under 20 per cent and the rest from renewables, mainly wind farms.

Ofgem's warning in June pointed out energy companies have not invested sufficiently for the future but it is not entirely their fault. Successive governments have not sent the right signals to the industry to make it worth their while investing.

Politicians have also been quick to publicly flog the energy companies over high bills and customer service failings, while privately beseeching them to make investment.

Over the past year the situation has deteriorated as power companies have announced that they will mothball more gas-fired power plants because they are currently not profitable to keep open. So where is the investment, now that it is needed?

"Investors are more cautious than they used to be. Investment has also become much more complicated, because of the Renewable Energy Directive (an EU directive) and the UK low carbon agenda," says Mr Porter.

The British government is reforming the electricity market to try to deal with this by introducing "capacity payments" - effectively paying power stations to be on standby - but companies are still wary of making investment decisions, because the full details of the market reforms are not yet known.

Ofgem says no new gas-fired power plants are due to start construction until 2016 and it expects the equivalent of just one to start generating before the end of the decade. Meanwhile, renewable energy sources - wind and solar - continue to receive large subsidies, even though they are far less reliable than the coal and nuclear plants they are supposed to replace.

There is another solution - although it smacks somewhat of clutching at straws.

If Britain substantially reduced its energy demand, then the risk of blackouts would be lower. Yet Ofgem has said it has little idea of whether a "revolution" - its term - in the management of demand is possible.

Meanwhile, energy bills for consumers continue to rise, largely due to climate change targets. Yet energy security - which is taken as read in a developed country - is weaker than ever.

Perhaps it is time to invest in candles.

 

business@thenational.ae