As reported in last month’s issue of Muckle’s Energy eNews, the National Grid had to call for additional capacity from both emergency power generation and industry. Following these measures, there are now calls from both ministers and industry commentators for an energy policy rethink to encourage investment.
Fergus Ewing, Scotland’s energy minister, has written to Amber Rudd, Energy secretary, asking the UK to change policy direction to increase build rates for new capacity including renewable, energy storage and carbon capture technology for conventional thermal power generation.
In his letter, Mr. Ewing also said: “The fact that the National Grid were forced to pay £2,500 per megawatt hour earlier this week, compared with the typical price at the time of about £60, shows how worrying this situation has become. Ultimately, it is the bill payer that has to pay for those huge spikes in electricity costs, so if the situation is repeated there is a real danger of increasing energy bills for consumers.”
The recent winter outlook report by the National Grid showed that capacity margins could be as low as 1.2% this winter without the use of contingency services.
Dieter Helm, professor of energy policy at Oxford University, is however reported as saying the capacity auction process is flawed and is encouraging more polluting diesel capacity to be built instead of gas fired capacity. It is apparent that the Treasury is now largely driving energy policy and is focused on containing the overspend on the Levy Control mechanism from £9.1bn to £7.6bn in 2020/21.