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Coal free electricity days are great… if you are happy with a £12,175 bill!

Far from celebrating Britain going “coal free” last week, I am dreading the short-term consequences.

In an apparent triumph for renewable energy, the UK National Grid went coal free on several occasions last week:

“In what green energy supporters have described as a “historic turning point” for the UK’s power system, coal-fired electricity first fell to zero late on Monday night and for the early hours of Tuesday morning.”

Proof – surely – that Britain is finally taking climate change seriously.  Well… sort of.  But it is far from good news.  You see, there are two ways of weaning a country off fossil fuels.  The correct way is to build the alternative mix of renewables (wind, wave, tide, hydro, solar, etc.) together with storage capacity and energy saving measures, so that the country no longer needs to burn fossil carbon.  Then there is the British government’s way of doing it.

The situation that arose last week is a consequence of the government’s announcement that all of the UK’s coal fired power stations are to close by 2025.  However, government ministers blithely assumed that despite making this announcement, the owners of Britain’s aging coal power stations would simply keep paying to maintain them until they are forcibly retired.  Predictably, energy companies have different ideas.  We have already witnessed the closure of several large coal power stations well ahead of the 2025 deadline.  Others – such as Aberthaw in South Wales – will be closing in the near future.

According to Kiran Stacey at the Financial Times, the situation that arose on Monday night was the result of several coal plants being taken offline at a time when demand was high.  The result was that National Grid had to take emergency action to keep Britain’s (household) lights on.  First, they dramatically increased the price of electricity in order to goose supply and dampen demand:

“Power prices jumped to £1,250 per megawatt hour at one point as the company that runs the UK’s electricity network rushed to make sure there was a big enough gap between demand and supply. The normal price per MWh in the summer is about £50.”

Second, they were obliged to issue a Notification of Inadequate System Margin notice at 7.00pm on Monday, obliging heavy electricity consuming businesses to shut down their operations to prevent the lights going out – only the third time that this has had to be done since 2009:

“The last time the company took such action was after similar plant breakdowns last November, when it also paid heavy users for the first time to turn down their equipment.  Analysts said that issuing such a notice at warmer times of the year was highly unusual and illustrated Britain’s continuing reliance on ageing coal power stations, several of which broke down on Monday night.”

National Grid will have to compensate those industries that had to shut or curtail their operations on Monday night; and those costs will ultimately find their way into household bills.  More worryingly, if the loss of coal fired power stations accelerates in the run up to 2025, in the absence of a concerted programme of renewables development, that £1,250 per megawatt hour price spike might become a normal market price.  If that were so, then the average electricity bill for a medium size house would increase from £487 per year to a staggering £12,175… a rise that very few of us could afford; and one that would plunge our economy into recession.

Far from celebrating Britain going “coal free” last week, I am dreading the short-term consequences.  Not because I am pro-coal or anti-renewables.  On the contrary, I believe that the rapid deployment of a whole mix of renewables (together with energy efficiency measures) is the only means we have of maintaining a decent standard of living.  But until we can go coal free without either closing down businesses or hiking up electricity prices, we are merely deluding ourselves.

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