On Wednesday 4 November between 5 and 6 pm, our British neighbours had to solve a problem that risks being repeated in every country where the decarbonation of the economy is based on intermittent power generation sources: a poorly anticipated energy shortage, which was solved through a combination of firing up dormant thermal power plants and requesting certain customers reduce their electricity usage.
1. Production control
For a product like electricity that cannot be stored on a large-scale, the available production at any moment in time is the smallest of two values: the operational installed capacity and the available primary energy. Gas turbines without gas produce as much energy as gas without a turbine: none.
This very simple principle applies to all technologies. Power plants can therefore be unable to produce energy, either because they have broken down or are undergoing maintenance, or because their water tank is empty, the coal has not been delivered, the sun is not shining, etc. On 4 November, at the end of the day, there obviously was not any production from the 6 GW of installed photovoltaic capacity in Great Britain. This well anticipated absence was amplified by two events that weren't foreseen at all, creating a critical situation: several old coal power plants had to be shut down for maintenance and most of the onshore and offshore turbines stopped for lack of wind. Out of an installed capacity of 13 GW, wind production was only 400 MW during the critical hour, i.e. less than 1% of the needs. The necessary remedies for these two types of failure are very different in the long term. One involves ensuring the availability of capacities, while the other is a question of having control over the primary energy flows or the storage/release of electricity. But in the short and infra short term, the shortage must be managed whatever the reason for it.
2. National Grid, a benevolent dictator
Like Réseau de Transport d’Electricité in France, the British transmission network manager National Grid (NG) is also in charge of managing the power grid. In other words, NG doesn't just look after the high-voltage power lines and transformers. The company also has to guarantee the ongoing balance between supply and demand for electricity in the country.
Faced with an increase in demand and unexpected power plant failure, it is necessary to have sufficient adjustment mechanisms (metaphorically, solvability) that are operational when needed (liquidity). According to the forecast timeframes and the demand and maintenance cycles, the existing power plants will be called upon in a given order depending on their production cost and their flexibility. Importations, release of energy from pumping stations and contractual reductions in consumption also provide a precious supplement. And for residual shortage, there is always the solution of selective power cuts, which has the advantage of simplicity and the disadvantage of affecting consumers without taking the actual economic damage caused into account. But the future is in the growing active involvement of demand in the balancing process, through the use of intelligent tools.
3. Pas de deux
On 4 November, NG efficiently resolved its problems by combining a call for capacity with a paid demand reduction scheme. It takes two to tango, sang Louis Armstrong. It also takes two to make a market work. The electricity market still looks too much like a disgraceful display of pole dancing, with a supply offer shimmying around a demand function which remains hopelessly unmoved by the music of prices. It is time for demand to learn the basic steps of the market choreography.
Cutting certain consumers with their consent when the system is under pressure is an old practice, especially in France. However, opening trading sessions to buy voluntary power reductions is a newer concept. On 4 November, NG purchased 400 MW of extra power for the 4-5 pm time slot by issuing its first request to big consumers who signed up to the scheme last year; 46 companies answered NG's request.
The complement to demand reduction came from the additional production of old power plants. To explain the use of polluting technologies as a last resort it has to be said that the British production facilities' safety margin compared with the maximum anticipated demand has dropped significantly to just 1.2% (see graph). NG is going to have to spend the winter with reduced security. Since 2010, Great Britain has lost 21,400 MW of dispatchable capacity (closure of old coal, gas and nuclear power plants) and only created 6,000 MW due to the lack of profitability caused by the fall in wholesale prices, caused in turn by the proliferation of renewable energies. To restore the 5% margin considered reasonable by electricians, NG asked 4 shut-off power plants to turn back on.
During the appeal on 4 November, NG was looking for 500 MW of back-up capacity. The price negotiated per MW went as high as £2,500, i.e. approximately 40 times the average price for that time of day. The sums paid will of course be reflected in consumers' bills.
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The method used by NG to balance the electrical system is reassuring. It efficiently combines back-up capacities and reduced consumption, based on an auction mechanism.
Other aspects are more worrying. Firstly, NG's lack of communication on 4 November. Luckily the press in Great Britain is very focused on economic problems, especially the Financial Times which gave its front page to the event on 5 November.
The second concern is that the relative shortage took place in November, on a "normal" day, before the winter consumption spikes. According to NG, everything should go smoothly. We will, however, follow with interest how the situation changes in Great Britain and also in other countries which will have to manage nature's mood swings combined with the vagaries of demand.
The final concern is the probable reaction of politicians, who have promised to do everything in their power to keep the lights on. Their agitation won't do anything to make the turbines turn any faster. On the other hand, there is a risk that they will call upon National Grid to implement complex and costly mechanisms to regulate the market.
 National Grid, Winter Outlook Report, 2015-2016, http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/FES/Winter-Outlook/