An eye-catching newspaper advertisement this week could have confused anyone concerned about rising electricity costs.
‘Will your business have power this winter?’ read the blurb, before offering two gas-fired power stations – for hire.
The plants, Sutton Bridge in Lincolnshire and Severn, near Newport, south Wales, could be producing enough electricity for nearly two million homes, but instead they sit idle – at a time when electricity companies are warning of power shortages.
Worse yet, the advertisement suggests the plants can be taken to another country for resembly.
It is amazing how it happened. The answer lies in Britain’s creaking energy supply and the distortions created by this Government’s drive to achieve net zero carbon emissions by 2050.
‘Will your business have power this winter?’ read the blurb, before offering two gas-fired power stations – for hire. The plants, Sutton Bridge in Lincolnshire and Severn, near Newport, south Wales, could be producing enough electricity for nearly two million homes, but instead they sit idle – at a time when electricity companies are warning of power shortages
When the two power stations were built, in 1999 and 2010 respectively, their operators were confident that gas would provide the mainstay of Britain’s electricity needs for decades to come.
Our privatized system requires power plants to be able to offer electricity to consumers. But gas was fairly cheap – and much cleaner than coal – so Severn and Sutton Bridge were very competitive.
The 2008 Climate Change Act made this possible. In a bid to reach the-then target of cutting carbon emissions by 80 per cent by 2050, Gordon Brown’s government ramped up a scheme called the renewables obligation, forcing energy companies to buy a certain amount of their electricity from clean sources – wind or solar.
The same time, Westminster, Brussels and Brussels started imposing carbon taxes upon the gas plant owners. They then found it difficult to compete.
Come the first Covid lockdown, when demand for power temporarily plummeted as large parts of the economy shut down, Calon Energy – the owner of the Sutton Bridge and Newport plants – went into receivership and they were mothballed.
But as renewables began to provide more and more of the electricity generated here – wind accounted for 24 per cent of power and solar 4.5 per cent in 2020 – we then ran into the problem of ‘intermittency’.
It is fine when the sun is shining and the wind is blowing – on such days we can derive over half our energy from wind and solar. But come dark and windless winter evenings – such as those over the past week – renewables can account for five per cent or less.
Earlier this year the Prime Minister told us he wanted Britain to become the ‘Saudi Arabia of wind’. Outer Mongolia, more like. Because when the wind isn’t blowing and the sun isn’t shining, it may soon be completely dark
In order to fill the gap and stop the lights going out, the Government set up what it calls ‘capacity market auctions’ in 2014. This is a mechanism by which the electricity industry, funded by levies on consumers’ bills, pays a hefty subsidy to the owners of generators that can be turned on and off at short notice in order to make up for the shortfall in wind and sun.
Additional energy may be generated by battery installations, polluting generators and hydroelectric plants. It is not unusual for large electricity consumers to offer cash subsidies in exchange for agreeing that they will turn off electricity-hungry plants when there is less electricity.
However, most of the back-up power is supplied by coal and gas plants. Instead of providing a steady baseload of power – which would be more efficient – they can now earn eye-watering sums by agreeing to provide power only when the National Grid is crying out for it.
As well as pocketing subsidies for being on standby, coal and gas plants were earning £2,500 per megawatt-hour for the electricity they supplied to the grid in September when wind speeds were light. This is more than 50 times what the average wholesale electricity price.
Anyone tempted by the advertisement for Severn and Sutton Bridge power stations will have to provide their own gas – from the North Sea, Via Dutch or Norwegian pipelines or liquefied gas from Qatar – which won’t be cheap.
Wholesale gas prices have spiked to record levels thanks to a combination of energy demand recovering after Covid, China outbidding European energy companies for advance supplies, Russia’s political game-playing and threats to halt supplies to the Continent and Germany, in its rush to a greener future, closing nuclear plants.
The Severn Bridge and Sutton Bridge plants might still be financially viable if they could sell electricity in high-demand times. That is what Calon Energy’s receivers – backed by money from a Texan billionaire – would love to do.
But ironically the plants cannot compete in the capacity market because there is only one auction – in the spring – and at the time they were forbidden from taking part because they were in administration.
Hence, via those advertisements, the receivers are trying to find a large industrial user – perhaps a steelworks – to make use of them.
While Britons face a cold winter, with low winds and high electricity prices this winter, two fully serviceable gas plants are not being used.
Earlier this year the Prime Minister told us he wanted Britain to become the ‘Saudi Arabia of wind’. Outer Mongolia, more like. Because when the wind isn’t blowing and the sun isn’t shining, it may soon be completely dark.