Tuesday, August 10, 2021

The electricity market screws us again

Last night there were blackouts across the country on the coldest night of the year, and there's a risk of more tonight. The immediate cause was record high demand - it was cold - plus Genesis deciding not to turn on an extra unit. But the real cause is the electricity market, which rewards shortages with windfall profits and so encourages our gentailer oligopoly to undersupply. We've known about that problem literally for decades, ever since Max Bradford first fucked things up. But the government has never bothered to do anything about it beyond minor tinkering because, well, that would be work, and generators (and their shareholders) would kick up a stink over being deprived of their "rightful" profits.

But what can we do about it? Re-nationalisation, so that the electricity system works as a system rather than as five big companies scrabbling for profit would help. But in the short term the most effective thing the government can do is simply to build the generating capacity the gentailers refuse to. And at the government's current internal carbon price, this is cost-effective simply to kill Huntly and stop it emitting any more carbon (and similar logic aplies to the Stratford gas turbines). As for the what, the generators are sitting on a huge portfolio of consented windfarm sites, which they are refusing to build (and which will expire soon if left unbuilt). If they refuse to build them, the government should nationalise them and build them themselves.