Thursday, August 6, 2009

Britain: The looming electricity crunch-"Dark days ahead"

From The Economist:

A shortage of power-generation capacity could lead to blackouts across Britain—and a dangerous reliance on foreign gas

SOUTH AFRICAN burglars pay close attention to electricity. A moratorium in the early 1990s stopped new power stations from being built, and by 2007 demand was overwhelming the country’s electricity grid. So Eskom, the national power company, began cutting supplies to specific suburbs for hours at a time. One side-effect of the rolling blackouts that afflicted Cape Town and Johannesburg was that they disabled the electric fences, spotlights and alarms that adorn richer people’s houses, making them easy pickings for thieves. At first the blackouts were announced in advance; later, aware of the risks, Eskom imposed them without notice. Fortunately for South Africans, the economic slump has trimmed demand (and a huge, rushed building programme boosted supply), but it will be 2013 before order is properly restored.

Britain is running short of power too—so quickly that some economists claim, only just tongue-in-cheek, that the economic slowdown is useful. “A recession is the best demand-reduction policy ever invented,” says Dieter Helm, an energy economist at Oxford University. Many power stations are due to close over the coming decade (see chart 1), and supplies are getting tight. The government reckons that, of a total of around 75GW in generating capacity, 20GW will disappear by 2015.

The private sector is less optimistic. EDF (a state-owned French firm that wants to build nuclear plants in Britain) puts the size of the hole at 32GW, and E.ON, a German competitor, reckons it will be 26GW. One survey of experts before the recession (conducted by Mitsui-Babcock, another power-station builder) found that three-quarters expected blackouts by the time of the London Olympics in 2012. When the BBC did a similar poll in 2008, the downturn had pushed the date back to 2015. “There’s a risk of blackouts somewhere between 2013 and 2016, depending on how fast the economy recovers,” says Mr Helm. “It may not happen,” says an engineer, “but we’d be lucky”.

Indeed, Britain’s energy grids are already showing signs of stress. A cold snap in the winter of 2005-06 led to a spike in demand for natural gas, which is used both as a heating fuel and to generate electricity. Prices shot up but, despite several pipelines linking Britain to Europe, no extra gas was forthcoming from the continent. Big factories were instructed to stop work, and National Grid, the firm that runs the electricity network, came close to cutting supplies to homes as well...MUCH MORE