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£180m wasted on standby power stations after “serious blackout risk” overstated

The UK Government wasted £180m on standby power stations after overblown warnings of blackouts, according to energy experts from The Energy and Climate Intelligence Unit (ECIU).

The non-profit body said that claims that the lights would go out increased in the face of a string of cold winters, low power imports and plant maintenance work, but were ultimately not justified.

The reserve power scheme put in place to deal with emergencies was not used once and the ECIU even said that an individual was around 10 times more likely to be struck by lightning than the National Grid supply failing.

Conservative James Heappey suggested ministers were “spooked” into backing the costly supplemental balancing reserve (SBR), made up of power stations held on standby outside the regular power market.

Heappey, who sits on ECIU’s advisory board, said: “This report shows that the special temporary measure adopted in 2013 to cover us through the last three winters was completely unnecessary. Bill payers have spent £180m on standby power stations that were not needed.

“On the surface, we did not need the SBR. And while it is valid to argue it was a prudent investment during a period of disruptive energy system change, we should also ask whether ministers of the time were spooked by claims of an imminent loss of power.

“Certainly, stories around at the time, with Ofgem, SSE and some analysts claiming there would be a serious blackout risk within three years, may have played a role into persuading ministers to spend consumers’ money unnecessarily.”

Despite long spells of cold weather over the past few months and import problems caused by a broken cable connecting the UK to France as well as multiple French power stations being out of action, National Grid did not make any requests for extra generating capacity within the regular power market.

ECIU said modern technology means supply and demand can be managed more efficiently than in the past.

Jonathan Marshall, ECIU energy analyst, said: “The clear message from this report is that paying to boost spare capacity in Britain’s electricity system can be very expensive and potentially unnecessary.

“The drop in the number of calls by the Grid for extra power last winter also suggests that, in an era of smarter technology, balancing supply and demand is becoming easier and cheaper.

“This begs the question of whether calls to increase our capacity margins in the UK, for example by a new ‘dash for gas’, are sensible, given that doing so comes with a price tag in the billions of pounds.”

A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “Keeping the lights on is non-negotiable and the supplemental balancing reserve acted as an insurance policy so that extra electricity capacity would be readily available if needed.

“Like any insurance, the best outcome is that you never need to use it, but it is important to have it in place.

“We now have the Capacity Market, which has already secured our electricity capacity all the way up to 2021.”

The construction of a grid-scale facility based on water pumps for storing electricity produced from renewables could start construction next year, after plans were approved by the Government last week, and would represent the first such facility built for 30 years in the UK. 

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