Extreme cold, light winds: Energy prices skyrocket in UK

Published 12 Dec 2022 at 18:26

Storm warning for the UK electricity grid. The cold snap that has hit Europe has pushed UK electricity prices to record highs of £675 per megawatt hour, according to data from Epex Spot. During peak hours, between 5pm and 6pm, the megawatt-hour even traded at an all-time high of £2,586, a sign of tension on the power grid across the Channel.

This price increase comes as Britons have been forced to sharply increase their energy consumption with falling temperatures, coupled with weak winds, which penalize wind farm output. On Sunday, wind power contributed just 3.7% of UK electricity generation, compared with 61% for gas and 15% for nuclear. If we take the average since the beginning of the year, the share of wind power is usually 28%, gas 42% and nuclear 17%.

Low wind episode

This episode of low winds underscores the vulnerability of the UK, which has made it an energy leader that has enabled it to move almost entirely off coal. This fragility is compounded by the difficulties in the French nuclear fleet, of which the UK is normally an importer of electricity, and by its low gas storage capacity, despite the reopening of the Centrica storage site at Rough, in Yorkshire, closed in 2017 for financial reasons.

The war in Ukraine and the interruption of supplies with Russia have forced the country to reconsider its exit from coal. The Ministry of Economy this summer postponed the closure of several coal-fired power plants operated by Drax and EDF to start them up in case of risk of “blackout”. This option was almost activated during the day on Monday. The grid operator, National Grid, told the Drax group’s power plants to be ready to get back on the road before finally giving up during the day.

The hardest part is yet to come

Among the other options to ease tensions, the operator is considering a system of remuneration to consumers if they give up consumption during peak periods. This scheme would work with voluntary customers provided they have a smart meter. Again, this option has not yet been used.

But the hardest part is yet to come for the British network. National Grid boss John Pettigrew has warned that January and February will be the toughest months. In the most pessimistic scenario, that of a cold, light wind and export restrictions from France, Belgium and the Netherlands, “there could be blackouts between 4pm and 7pm,” he said in October at a conference organized by the “Financial Times”.

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