Business Irish

Sunday 4 December 2016

Britain's power networks will rely on imports to keep the lights on

Susanna Twidale

Published 29/09/2015 | 02:30

There could be a potential renewable energy boon for Ireland
There could be a potential renewable energy boon for Ireland

Britain is banking on new power links with Europe to pick up the slack of its dwindling power capacity and to keep a lid on rising bills.

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Data compiled by Reuters shows 20pc of Britain's electricity needs could be met by imports by 2022.

Britain is already experiencing increasingly tight winter power supplies due to plant closures.

Its nuclear plants are ageing while coal power stations are closing due to tightening environmental regulations.

It represents a potential boon to Ireland, where the growth of renewables has been pegged as creating the potential for this country to become an energy exporter.

The €600m East-West Interconnector between Ireland and Wales completed in 2013 means power now flows back and forth between the two countries.

A planned North-South Interconnector will link power lines in Tyrone and Meath,

In the UK, the bid to bridge the supply gap has seen companies including British power grid operator National Grid, French grid operator RTE, Danish grid operator Energinet and Belgium's Elia all move to build power links between Britain and Europe.

Once operational, and alongside existing power links, interconnectors could provide more than 12 GW of capacity, or about 21pc of the country's peak electricity demand, compared with 7pc now.

"Government is committed to increasing electricity interconnection ... It can lower the cost of electricity to the consumer by connecting to markets with a lower wholesale price," a spokeswoman for the Department of Energy and Climate Change (DECC) said.

Wholesale electricity prices in Britain are higher than many other countries in Europe, largely due to the additional cost of the country's carbon tax which charges power generators £18.08 (€24.50) for every tonne of carbon dioxide emitted.

Prompt power prices in Britain have averaged around £41 per megawatt hour (MWh) in September.

Meanwhile, prices in France have averaged €39 perMWh and the Nordics (Denmark, Sweden, Norway and Finland) are about €18/MWh.

"Sharply rising interconnection, bringing in cheaper-priced power from over-supplied mainland Europe, looks set to depress medium-term UK prices," analysts at HSBC said in a research note.

To ensure the country has enough power during winter Britain has launched a capacity auction which will pay companies to ensure they can provide electricity at short notice.

The next auction will be open to interconnectors which can bid to supply almost 7pc of the power the country is looking to secure.

DECC said interconnectors will be subject to the same rules and penalties as domestic generators and their inclusion in the scheme will help to secure the country's electricity supply.

"They can add to security of supply in general but it perhaps doesn't offer the same security as those plants that are local and dedicated to one market, but they do diversify the risk," said Matt Brown, an analyst at consultancy Poyry Management.

"Relying on a plant in Britain to turn on at a certain time from cold ... is a different type of risk," he said.

Under the rules of the capacity auction, the interconnectors are given a limit on how much they can bid for based on forecasts and averages of historic supply. (Reuters)

Irish Independent

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