The Hidden Wiring

Britain’s energy strategy, as set out by the Government, is to replace its old coal fired and nuclear power stations with a blend of renewables and new gas fired power stations.

But the Government is failing to meet this ambition. The 2012 Gas Generation Strategy estimated that 26 GW of new gas generation would be needed by 2030. Yet the actual amount of new domestic capacity being created is falling well short.

Britain has therefore begun – with little public acknowledgment – to import an increasing amount of electricity from continental Europe. It is now projected that the UK will receive 67 TWh of power from undersea interconnectors by 2030, which is a tenfold increase in the projection made in 2012.

‘The Hidden Wiring’ by Tony Lodge and Daniel Mahoney – published by the Centre for Policy Studies on Monday, 23rd October – shows why a move towards a greater reliance on imported electricity could be problematic.

Its key conclusions include that:

• Interconnector capacity will almost quadruple by 2030, allowing 20% of UK electricity to be imported from Europe.

• Interconnectors can be a useful way of delivering secure and cheap supplies across Europe, given they can be used to import and export. But in Britain’s case it is increasingly one-way traffic.  In the 12 months to March 2017, the UK imported 17.22 TWh but only exported 2.78 TWh.

• There are concerns about growing reliance on imported electricity from Europe as surplus supplies there decline. This is particularly the case in light of the German elections. Germany is already decommissioning its nuclear plants. If the Greens form part of the governing coalition, as is likely, they will demand the closure of fossil-fuel plants.

• The more reliant Britain becomes on energy imported from Europe, the more vulnerable we become to disruptions in supply, to sudden price spikes, or a wider tightening of capacity which pushes up prices. (This is already set to happen.)

• This imported electricity also has an unfair competitive advantage, as it is not subject to the GB Carbon Price Floor or transmission charges faced by British generators.

• Indeed, rather than cutting carbon emissions, Britain is to some extent “offshoring” them – closing down our own coal fired power plants but continuing to buy energy from Europe which is likely to have come from plants of the same type

• National Grid’s responsibility for managing the grid and transmission lines gives it a vested interest in building and promoting new interconnectors, rather than in promoting the creation of adequate domestic capacity.

In response to these conclusions, the report argues that the UK’s energy policy must prioritise the building of new gas fired power to deliver energy security. The paper also argues that there should be a Competition and Markets Authority inquiry into the role of interconnectors.

Tony Lodge, Research Fellow at the Centre for Policy Studies and lead author of the report, said:

“At a time when spare electricity generating margins across Europe are falling, it does not make sense to build an infrastructure which risks making the UK over-dependent on imports.  There are significant supply, cost and market distortion implications of doing this at a time when the Government should be looking to strengthen energy security and reduce bills.  It would make much more sense for the UK to build up a safe electricity supply surplus from generators in Britain on a fair and level playing field.”

Daniel Mahoney, Tony Lodge - Monday, 23rd October, 2017