Balancing Unstable National Grid Could Be Lights Out For UK Energy Companies
Energy companies could go bust because of a surprise £500 million bill for keeping the lights on during the coronavirus pandemic, SSE has warned.
National Grid is spending more than twice as much as usual balancing Britain’s power network as the national lockdown hits electricity demand and forces it to pay plants to switch off.
SSE said that this sudden jump in so-called balancing costs — which normally are passed straight on to generators and suppliers — would have a “significant commercial impact” and could lead to “some parties being unable to continue to operate”. If generators were to go out of business, this would harm security of supply, while more supplier failures would damage competition, the FTSE 100 energy group said.
In an urgent request to Ofgem, the industry regulator, SSE argued that the £500 million bill for extra costs that National Grid had incurred dealing with recent low demand should be deferred until next year.
National Grid’s control rooms must keep supply and demand balanced in real time to prevent blackouts. During the pandemic, it has created a new scheme to pay small wind and solar farms to switch off, which it used this weekend as demand fell to historic lows. It also has paid EDF, the French-owned power company, to halve output from its Sizewell nuclear plant.