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National Grid spends £4bn to prevent blackouts after surge in wind and solar

National Grid was forced to spend more than £4bn to keep the lights on during 2022 - REUTERS/Dado Ruvic
National Grid was forced to spend more than £4bn to keep the lights on during 2022 - REUTERS/Dado Ruvic

National Grid was forced to spend more than £4bn to keep the lights on during 2022 following a surge in power prices and a jump in intermittent wind and solar power.

The company spent a record £4.2bn on balancing payments - taking actions such as importing power from abroad, ramping up gas stations, or turning off wind turbines, to make sure supply always matches demand.

The so-called “balancing costs” are ultimately added to consumers’ bills, on top of high energy costs which are fuelling a cost–of-living crisis.

The Nuclear Industry Association, which calculated the figures using data published by National Grid’s electricity system operator (ESO), said it was the first time annual balancing costs had shot past £4bn.

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It argues the figures show the need for more stable sources of power, such as nuclear power stations.

Tom Greatrex, chief executive of the NIA, said: “We urgently need to get going with a pipeline of large-scale stations and a fleet of small-modular reactors to provide stable, predictable, clean power alongside renewables.

“If we don’t act urgently with a clear policy framework, other countries will leapfrog us in attracting investors who want to develop in Britain, and we risk not delivering on energy security and net zero.”

Electricity supply and demand must be constantly matched to avoid triggering blackouts.

National Grid ESO intervenes in the market throughout the day to smooth out any mismatches between supply and demand, and make sure there is always a healthy buffer of supplies.

It can, for example, pay power stations to quickly ramp up if there is a looming shortfall, or it can buy in power via undersea cables from France, Belgium or other neighbours.

It can also pay wind farms to switch off if it is too windy and turbines risk overwhelming the grid. This often happens because cables are not large enough to move the electricity from windy areas to where it is needed.

The ESO’s task in balancing the market is getting more complicated with more wind and solar power on the system, as the supplies are intermittent and not completely predictable.

The National Grid can pay wind farms to switch off if it is too windy and turbines risk overwhelming the sysrem - Ian Forsyth/Bloomberg
The National Grid can pay wind farms to switch off if it is too windy and turbines risk overwhelming the sysrem - Ian Forsyth/Bloomberg

Wind power supplied more than a quarter of Britain’s electricity last year for the first time.

Meanwhile Britain’s ageing nuclear stations, which provide a steady flow of power once on, have been closing down because of their age, with replacements yet to be built.

The high bill for balancing the system in 2022 has also been driven by exceptionally high electricity costs over the past year.

These were largely a knock-on effect of high gas costs which started climbing in 2021 due to shortages as countries re-opened from the pandemic, worsened by Russia’s war on Ukraine.

Gas is used to generate more than a third of Britain’s electricity, meaning the price of electricity generated in gas-fired power plants affects the price of electricity from all sources.

Meanwhile, generators being paid by the ESO to balance the system have been able to charge high prices for their electricity, as they knew the supplies were tight.

At one point in July, the ESO had to pay almost £10,000 per MWh to import power from Belgium amid constraints on the network in the south-east.

According to the figures calculated by the NIA, balancing electricity supplies has cost £9.83bn in the four years between 2019 and 2022.

It said £5.6bn was spent between September 2021 and December 2022, compared to £2.62bn between September 2019 and December 2020.

The Hinkley Point C nuclear plant being built in Somerset is expected to cost developers up to £26bn - Ben Birchall/PA Wire
The Hinkley Point C nuclear plant being built in Somerset is expected to cost developers up to £26bn - Ben Birchall/PA Wire

Building new power stations and networks is also expensive, however, and there is debate within industry over the best way to design a cleaner electricity system, with acceptance that there will always be some balancing costs.

The new Hinkley Point C nuclear plant being built in Somerset is expected to cost developers up to £26bn, with bill-payers guaranteeing them a fixed electricity price once it is built.

The figures are highlighted amid concerns that clean energy and other investors are being lured away from the UK by huge subsidies in the US and EU.