MorganEnergy

Thousands of customers across the UK were without power yesterday as a result of a perfect storm of plant outages that left National Grid struggling to schedule sufficient generation. The problem began around noon when the grid operator issued a “High Risk of Demand Reduction” notice following the unexpected and almost simultaneous shutdown of both the Sizewell B nuclear plant (British Energy, 1180 MW) and the Longannet 1 coal-fired plant (Scottish Power, 576 MW).

National Grid originally stated, “It’s not something that customers should notice.” However, further outages occurred during the afternoon and eventually the system was around 400 MW short of capacity, resulting in loss of power in many parts of the country (though not the SouthWest – our own offices were blissfully unaware of the unfolding drama until much later). In total nine generating units were unavailable, including Grain(E.ON), Ratcliffe (E.ON), Cottam (EdF), South Humber (Centrica) and Deeside (International Power). Thousands of homes and businesses were affected, including the busy Clapham Junction railway station in South London which averages over 100 trains per hour through its platforms.

Inevitably this switch from a containable problem to a crisis has prompted accusations of malfeasance. This Independent article quotes unnamed energy traders as suggesting that generating companies were deliberately taking plant offline in a period of known supply shortages in order to further inflate the market price. This Times article reports that the wholesale price of power rose by 35% to hit £95/MWh ($190/MWh), a new record for the current market design (though it is not clear which price The Times is referring to). Ofgem has not yet issued a statement, but presumably an investigation will be forthcoming. As much of the UK’s output is covered by contracts it seems unlikely that there was a lot of room for profiteering on a California scale.

The latest news from National Grid is that supplies are now back to normal. Sizewell B may be offline for several days, but the problem appears to be with instruments rather than the reactor. Accurate information about the situation is difficult to come by as generators are concerned that any public statements they might make would affect market prices.

The problem at Sizewell B is particularly bad news for British Energy, coming at the same time as the nuclear operator admitted that core earnings had fallen by 28% on the previous year. Reuters reports that earnings are still ahead of analysts’ expectations, but this is not a good situation for a company that is up for sale.