Blackouts could hit Britain by 2015, says National Grid chief

Reported in The Daily Telegraph by Jon Swaine 22 Dec 2008, Steve Holliday, National Grid chief executive, said that Britain faces a severe shortage in power generation due to crumbling coal and nuclear plants being taken out of service and that the Government needs to cause the investment of Pounds 100 billion in new power plant.

This is the legacy of the deluded economic “thinking” of the Thatcher era which instituted the not widely admired market for electricity which was supposed to use market signals of supply and demand to cause an optimal delivery of the cheapest sources of power.

The nebulous market concept, beloved of economists was supposed to replace the collected wisdom and expertise of highly trained and experienced planning engineers and their years of technical and engineering knowledge with the simple interplay of market forces.

It doesn’t take much thought to see that markets, whilst maybe good for soft drinks and cans of beans, cannot deliver optimal solutions in the area of electricity supply – it is in the interests of participants to ensure there is always incipient shortage of generation assets since this puts the price up due to scarcity. Why would a participant want to build a plant if it knows it will lower the price of its output, and that its competitors (in name only) might build the same plant and cause a yet further lowering of price? The timing mismatch of build cycles and market cycles will always create a discontinuity – ie the likelihood of blackouts unless managed by intelligent central planning.

The same stupid over application of this discredited market theory is now expected (by people imbued with the same kind of thinking which produced the credit crunch) to deliver the urgently needed solutions to global warming and peak oil – instead it is pretty obvious to many people that a rational choice needs to be made (the “picking of winners” so detested by economists) and imposed by governments rather than left to the irrational caprice of markets.

4 Comments

  1. Reply

    We need to have some sort of docu-drama to get the message across about what this means to all sectors of the economy – especially in terms of the impact to the (voting) man in the street. There needs to be a clear socio-economic risk model that exposes the limitations of simplistic sound-bite market driver models. Perhaps the docu drama would be supplemented by the experience from countries presently suffering from rolling blackouts, made only very slightly more tolerable by having to be planned. Ironically maybe the only time we see proper degree of centralised planning when having to plan these rolling blackouts, when Gold Command, COBRA or what ever gets into its stride. Of course, by failing to plan central generation, this creates a driver for decentralised power production connected to actively managed local regional distributions networks. So maybe there is a bit of a silver lining for the renewable power sector. However, this will not in itself solve the problem – maybe there will need to be a raft of solution elements such as dynamic Demand Side Management, and distributed energy storage (harnessing the electric vehicle population). BUT the big question is, “What’s the Project Plan to get all this in place in good time – not just in time?” Do we have to await an Energy Crunch to make a matching pair with with the Credit Crunch – or even the complete crunch set of Climate Crunch, Security Crunch and the consequent Democratic Governance Crunch?

  2. Reply

    I assume “admin” is Dave, the man who read 1/3 of the Wealth of Nations and felt he knew all he needed to know about economics.

    I may just be a businessman with a history degree, but tomorrow I’m going to build an aeroplane. I’ve got an A-level in physics. It seems I am over-qualified.

  3. Reply

    There has been a rather good docu-drama on just this very topic. The first of the Beeb’s “IF…” series (“It’s your wake-up call”) was “IF…the lights go out”.

    There has also been an “IF…the oil runs out” which dealt more with the USA than the UK consequences, and forgot to mention the effect on food supply, but was nevertheless not too bad.

  4. Reply

    Bruno,

    I don’t think sarcastic and innaccurate comments help move the discussion along.

    Please stick to facts rather than personal comments.

    Kind Regards

    Dave

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