U.K. Seen Becoming Too Reliant on EU to Keep Its Lights on

(Bloomberg) -- The U.K. should reduce its reliance on huge cables that carry electricity to and from Europe to ensure that the lights stay on.

The government is overlooking the risks of relying on supplies that may not materialize, according to a report by Oxford, England-based Aurora Energy Research Ltd. Electricity on interconnector cables flows to where prices are more expensive, making supplies difficult to predict or control.

U.K. Seen Becoming Too Reliant on EU to Keep Its Lights on

“The contribution of interconnectors to security of supply is unknown, and, to a significant extent, unknowable,” said Aurora Chief Executive Officer John Feddersen. “Government has so far overlooked this inconvenient fact.”

Historically, interconnectors have often delivered less power than National Grid Plc, the system operator, assumed they would when demand is at its highest, according to Aurora. On some occasions, the cables have even undermined security of supply by exporting to neighboring countries during peak demand periods.

The U.K. has links with France, the Netherlands and Ireland, as well as one to Northern Ireland, which shares a power market with its southern neighbor. Britain plans a further 18 gigawatts, equivalent to almost a third of peak demand. Usually interconnectors import cheaper power from the mainland but the winter of 2016 to 2017 showed flows can reverse if both the U.K. and continental power markets have unusually high demand.

“Reducing the reliance placed on interconnectors for security of supply would enable Britain to retain the benefits of freer flow of electricity with Europe, while ensuring sufficient domestic back-up capacity exists in the event that interconnectors prove to be less reliable that Government currently assumes,” Feddersen said.

Capacity Auctions

Interconnectors participate in Britain’s capacity auction, where generation competes for contracts for being available in future. In the last auction 2.4 gigawatts of interconnection won agreements, pushing out coal and gas plants. Operators including Drax Plc and RWE AG, say that interconnectors can’t provide the same reliability as a conventional plant.

“They cannot be relied upon in the same way as domestic generation,” said Tom Glover, chief commercial officer of RWE Supply & Trading GmbH. “The government should carefully consider the impact of relying on significant increases in imported electricity for security of supply.”

The government is currently reviewing the auction parameters. The difference in the reliability of the electricity provided by different sources needs to be better taken into account in future, Aurora said.

Calculating the contribution of interconnectors is “critical to security of supply and the consequences of error are high,” Aurora said.

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