“Demand-side management”: Blackouts by another name

..and why “green energy” is economic nonsense

In a recent speech Ed Davey announced that energy intensive companies would be paid to switch off their machinery during times of high demand. As many have noted, this not what happens in healthy energy markets. Although this policy is called ‘demand-side management’, jargon does not disguise what is still a blackout. But simple economics can determine a much better approach to energy policy than the managed decline preferred by the deeply unpopular minority party in the coalition.

The problem of the UK’s diminished capacity is caused by energy policies, (not shortages of fuel), largely but not entirely driven by EU directives to reduce CO2 and other emissions from power stations.  Much of the UK’s generating capacity has been forced to close by the EU’s Large Combustion Plant Directive (LCPD), followed by the Industrial Emissions Directive (IED), both of which are intended to reduce the emissions responsible for pollution. Nobody is against clean air, but the combination of these policies has compounded the UK’s energy problems, leaving an energy gap which threatens wide-spread blackouts.

The LCPD and IED force the operators of coal-fired power stations either to shut down within a given time (17,500 operational hours between 2016 and 2023), or to add systems to comply with the standards they set out.  Retro-fitting older but still serviceable plants may not be economically viable, so the operational lifespan of these plants is reduced by a decade or more.  Somewhat late in the day, the Department for Energy and Climate Change commissioned a report on the feasibility of building new gas and coal-fired capacity and extending the life of the UK’s existing power plants by making them compliant with the IED.

The existence of the report demonstrates that the current and previous governments’ plans for a greener energy sector have not materialised, and cannot now be achieved. No amount of wind turbines and domestic solar PV installations can replace the capacity that has already been lost to the LCPD and will be lost to the IED. So the government is now forced to face the consequences: begging energy companies to keep remaining coal and legacy gas plants operational for as long as possible in order to avert a deeper crisis.

Along the way, the report shows some interesting things about the history of the UK’s fleet of power stations. The following graph shows two main periods of building. Approximately 3.3GW a year of coal plant between 1965-75 and 2.5GW a year between 1990 and 2000, under different economic regimes.


This demonstrates that relatively rapid deployment of conventional plant is technically feasible. In contrast, the UK’s onshore wind fleet expanded by an average of just 0.5GW a year between 2004-12, equivalent to just 0.15GW when we take into account the variability of wind energy. At this rate, it would take nearly 80 years for onshore wind to replace the 11.8GW of coal and gas-fired capacity that will have been shut down by 2020, by the LCPD and IED. If we include the 6.1GW of nuclear capacity that will have been closed by 2020, the current rate of onshore wind farm construction will take 120 years to replace what took fewer than 6 years to build in the 1960s. So much for green economic ‘progress’.

And the cost? The report rules out building new coal-fired plants, but more interestingly finds that new gas-fired plants can be built for around £500 per KW of capacity – £500 million per GW at a build rate of up to 6GW a year. This is consistent with DECC’s own estimates, which includes onshore wind at £960 per KWh of capacity, or £3,300, when we take into account wind variability. That’s £3.3 billion per GW.  So to close the energy gap with gas-fired capacity would cost around £9 billion, and take three years. But closing the gap with onshore wind energy would cost £59 billion (not including the cost of extensive changes to the Grid to cope with intermittent sources like wind) and take longer than a century. And we’d still need to spend the £9 billion on gas-fired back-up anyway.

It is remarkable, given these facts, that the government should ever doubt the need to keep the legacy power stations open. According to research by The Tax Payer’s Alliance, green energy subsidies will amount to £5.8 billion a year by 2018-19. That could pay for the energy gap to be closed in just 18 months.

These are of course, rough calculations. And they don’t take into account the cost of fuel. But the cost of financing £59 billion worth of wind farms – interest payments – would be far greater than the cost of fuel for gas plants, which is one reason why wind farms need to be so heavily subsidised. No wonder green campaigners are so violently opposed to fracking, and so resistant to a second ‘dash for gas’. The argument for closing down coal and gas-fired power stations, and replacing them with wind farms and other renewables is factually, empirically and morally bankrupt. And no wonder the government is so worried about keeping the lights on that it is asking factories to shut down. It is policies, not technical, economic or environmental challenges, that have caused the energy gap to open up.


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37 Responses to “Demand-side management”: Blackouts by another name

  1. Brin Jenkins says:

    Energy illiteracy abounds, this closure of so called high carbon producers has unbalanced our supply system and It amazes me we have not had blackouts already. Joined up thinking is required can nobody rid us of these fools in control?

    Who is pulling the strings that all countries seem convinced this Lemming like energy policy is correct?

  2. The first period coincides with Wilson’s “white heat of technology” (with some overhang as projects approved then get completed. The second with Thatcher and Major. I find that an interesting example of the Luddite takeover of both socialism and then conservatism.

  3. Back in the 70’s, we had something similar at British Steel.

    It was called (I think!) Peak Demand. At short notice the CEGB could put the works on a half hour “Peak Demand”, where each KWh was charged at some unaffordably high price.

    The number of these half hour periods was limited each winter, and naturally the works shut down just about everything. In return , they got lower prices for the rest of the year.

    Of course, we all know how common power cuts were in those days (and not just during miners strikes)

    • Brin Jenkins says:

      With electricity costing us £.20 it would be interesting to see a break even analysis of all home generating plant. With a 3Kw tumble drier operating it seems to be costing between 60p and 30p per hour allowing for the thermostat cutting in and out.

      Without cooking, and heating a domestic load might be reduced considerably from perhaps 6Kw down to less then 1.5Kw. To ensure this 1.5Kw on a dull Feb day one would need to have 12Kw panels installed, and then only in daylight hours.

      • catalanbrian says:

        Brin, My house is powered by six 175 watt solar panels which charge twelve 900ah batteries. The 24v DC battery power is then converted to AC by a 3Kw inverter. This supplies pretty much all my electrical needs (no cooking or heating). Yes I do have a back up generator for the few days a year when the sun does not shine (I live in Catalunya) but the system works and works well. So provided there is adequate storage, solar is an effective method of providing power, although perhaps less so for, say, northern Scotland.

        I would also mention that I live very close to a wind farm of 12 generators. They are rarely not turning and generating, and I can say that I have only noticed them not turning on a dozen or so occasions since they were installed some 2 years ago. And rarely for more than an hour or so at a time. I hasten to add that I am aware that this is not a scientific study of mine, just casual observation, but I think that too much is made of the so called unreliability of wind and solar generators. Generally I think that those who don’t like the look of them tend to lean rather more heavily on their unreliability than those who are not bothered by their visual impact. I can of course understand why people may not like the look of them, but this has nothing to do with whether they work or not.

      • Brin Jenkins says:

        This is England and rather less sunshine than Catalonia Brian, we are enjoying our best summer for nine years currently. I know how little energy panels produce on low light occasions, around 8% of their rated output in February UK Cornwall. Off grid, I’m not doubting it works for you.

        I assume your backup batteries have a life of around 250-300 fully charged to discharged cycles. When I costed them out it was a juggle to choose large enough capacity to avoid deep discharge times against the costs.

        Every time any house owner fits photo voltaic panels it considerably increases, through subsidies, the unit cost to every one else. If there were no subsidies and folk installed them they would lose money in the UK.

        The problem remains, I see is the whole is based on the deception on carbon dioxide being the cause of, global warming, cooling, climate change or as they now claim climate chaos.

  4. We have what Energy Analyst Peter Atherton calls the ‘energy policy from hell’…Of course. And the CMA investigation into energy prices, but not necessarily the politicians, will ensure there is no investment for at least two years, probably longer.
    Thank you to the politicians for bringing this about. Thank you for those that take advantage of green subsidies themselves, either from solar panels, or Big wind developments and dodgy land deals in Yorkshire or wherever.
    ……..A special big thank you to those that should know better. Can we afford any of you thus far?

  5. georgyporgie says:

    An excellent report showing the fallacy of DECC’s “keeping the lights on” failed strategies !!!.
    What you could, and I believe you should have said very, very clearly, is that building any more wind-turbines and PV solar panels will NOT provide one iota of additional capacity to meeting the peak electricity grid demand at 17.30 to 18.00 hours on a very cold winters day !!!
    This occurs as the darkness peak times when there is a high pressure weather system over Britain and western Europe when there is absolutely ‘NO wind’ and ‘NO sunlight’ !!!
    Consequently, any of these renewable energy philosophies will NOT provide any energy capacity security under such circumstances !!!
    The Greens will obviously state is “that additional pumped storage systems and battery storage systems can be built to provide this additional short-term capacity problems”.
    The problem with this is the “powers to be” are talking about vast pumped storage systems being built in Scotland which would have a turn-around efficiency of 70%, at best, but then an additional transmission loss of 10% for the export to England. Also, their is the view being put forward that yet more power interconnectors should be built between the UK and Europe. BUT these storage and interconnection solutions are vastly expensive and Europe itself would, in general be suffering from the same fate, no wind power and no solar power at such times !!!
    These whole scenarios are being planned to extort more money out of the end consumer with the power magnates rubbing their hands and saying, if you want security then you must pay for it !!!.
    The simplest and most cost effective solution would be to STOP building any more wind turbines and solar PV power farms, (because they ARE NOT providing any energy security whatsoever to meet the electricity demand at these winter peak times), and simply build more combined cycle gas turbine plants with a flexible operating range of 50% to 100% output at overall efficiencies of 60% plus !!!
    The peak “demand management” scheme has been in place since 1990, I was instrumental in its marketisation BUT such schemes have been in place from the early 1960’s when I first joined the CEGB.
    What should also be made clear is that £20-billion of “roll-out” costs are being enforced on consumers for smart meters that will eventually provide the means to charge consumers for their electricity demand at such high demand peak times. This will encourage consumers NOT to take electricity power at these times. So be aware that many electricity customers will be buying 2.8 kW generators from Lidl and Machine Mart outlet stores (@ £179 plus switch-over costs to ensure that they will have an alternative lower cost energy supply. It will provide a back-up for their fridges, freezers and central heating supplies as a second back-up guarantee!!!

  6. Francis says:

    All very well said Roger but you have again ignored emerging technologies that can fill the gap with renewable energy. We have a zero CO2 process that converts household waste into energy. We can ramp up the output to GW levels at a much lower cost than the traditional generators. All while disposing of waste at the same time. We even have processes that deal with difficult fractions such as mixed glass. Glass we can turn into a useful building and insulation material. The technologies are out there but no one is listening.

    We have crossed swords over fracking before. I know you have been to the US to see what is happening over there. You told me that there was no adverse effects from the process. May I suggest you go look again? Even the very bias EPA is now concerned and several US courts have started to award damages for health related issues. Then there is the methane leaking out of redundant wells. Add to that the massive amount of vehicle movements (with Deisel pollution), the poisoning of the water table (with fracking fluids) and the amount of gas that is not captured (so leaks into the atmosphere). The environmental damage that is ignored for short-term gains. The evidence against fracking is mounting and Ukip must not ignore this fact. Please at least call for a moratorium on the process so that it can be truly assessed rather than putting it forward as one of the cures for our energy shortage issues. I should add here that the tax breaks offered to fracking companies in the UK and a massive burden to the tax payer for the dubious benefits of the shale gas should also be put into the equation.

    • ian wragg says:

      “We can ramp up GW hour from plants burning waste.”…… I worked in such a plant and can assure you EFW plants are generally small 15 to 30 MW and burn waste inefficiently (they are designed to do that as primarily they bare to burn waste). It would take 150 EFW plants to replace just one coal fired station. Planning permission is difficult and believe it or not, there is not really that much suitable waste.

      • Francis says:

        Ian, we do not burn waste. That is of course a very poor way to use the feedstock. Our processes are endothermic rather than exothermic. We have no smoke stacks as there is no smoke. No fumes, no smells. 50% of all MSW collected in the UK still goes to landfill. There is enough waste there to keep us going.

    • Tax breaks don’t cost taxpayers a penny. They merely mean that gas companies pay less tax upfront, and more down the line.

      Ban fracking, and there will be no tax revenue at all.

      • Francis says:

        Tax breaks mean less money paid to the exchequer and therefore there is a cost to the country/taxpayer. With capital allowances on the very expensive drilling and associated equipment, there is even less being handed over to the country. The geology in the UK is different to the US and fracking has yet to prove a successful exercise here. Even abortive trials will attract the breaks.

        While I agree that all forms of subsidies/breaks for ‘green’ technologies are questionable, let us not forget that the fossil fuel industry receives far larger support than the ‘greens’.

    • Britain has gold standard regulations that do not compare with the USA or Australia. And so no comparison is possible. Variations in tax rates are not ‘gifts’. The more we frack, the more tax the exchequer receives, whatever the rate is set at. The CBI is clear on this, Hydraulic Fracturing for Gas has clear economic benefits to Britain, from tax, employment, benefits to industry and feed-stocks, as well as offering security of supply, and reduced transport costs, as well as reduced CO2 emissions (for those that are concerned about such matters.)

      • Francis says:

        My comparison with the US was to do with geology and not gold standards?

        What is wrong with the exchequer receiving the full amount of tax rather than a reduced percentage?

        There is no guarantee that we shall be able to extract that much gas for this to be a viable exercise. Each well uses millions of gallons of water that is generally delivered by tankers. Those heavy tankers destroy country roads and cause serious congestion. We have no grid to remove the gas and this will either create even more vehicle movements, or worse will end up with pipes being laid all over the country. According to the experts Poland was supposed to have the best gas sources but so far they can’t get it to work there.

        So even if we ignore the mounting evidence of health and environmental damage issues that are emerging in the US. If we ignore the damage that will be caused to the minor roads not built for heavy traffic. If we ignore the traffic congestion all these large vehicle movements are bound to cause. If we ignore the noise of those large vehicles passing through small communities. If we ignore the damage that will be caused to the countryside should a pipe network be laid. If we ignore the potential water shortages. If we ignore the methane that will be leaked into the atmosphere as is happening elsewhere. If we ignore the CO2 argument. If we ignore the huge groundswell of public opinion against this process, that I should add gives votes and support that Ukip might have picked up to over the Green Party.

        If we ignore all of the above it still might not be a viable exercise. Does all this ignoring add up to being ignorant?

        We need to look at all the factors and not just the potential quick fix this will give to our energy supply. Compare the cost of building a nuclear reactor in the ’60’s and the cost of decommissioning one now. If we had known how difficult, dangerous and costly the decommissioning was going to be would we have built them? I am not sure we would have.

        There is technology available today that can turn our waste into natural gas and synthetic gas. Last week I saw a working plant in south London converting human faeces into natural gas. Now as all will agree we do have sufficient and continuous supply of feedstock! This is a pollution free process that instantly vaporises the waste matter and all that is left is a small amount of carbon residue.

      • “What is wrong with the exchequer receiving the full amount of tax rather than a reduced percentage?

        There is no guarantee that we shall be able to extract that much gas for this to be a viable exercise”

        You answer your own question as would be obvious to anybody who did not think the world owed him the duty to produce wealth an give it to him (except that you want to destroy that wealth and still have it given to you).

        I note you still produce no evidence.

      • Brin Jenkins says:

        Francis I love alternative technologies, but not at any price like our wind and solar farms. Technology might well exist, what feedback have we on its viability? What sort of contribution to energy needs, and is it where, and when its required? If it was all positive, then surely shareholders would be fighting to build them. We have far too much invested in silly wave hubs and other costly energy schemes that are only half baked.

        Small mixed farms with waste products enriching fertility is desirable, local produce consumed locally. Recycling is a usually waste of our time and energies, if it had to be viable, and not supported by grants and subsidies it would not be the wasteful industry we see today. The rag and bone man worked well for centuries, until the EU killed him off like everything they get involved with.

      • Francis. Fracking for gas has cross party support, the only party opposing it is the Green party, that you would obviously prefer to be a part of. There is no question that we will be using gas for the foreseeable future. The only question is where we get it from. Either from here or abroad (exporting our pollution as we do so). The issue is regulation as I say, In Britain we have the best, and therefore will not be causing the problems other nations might, or might not, experience. What is wrong with collecting tax from this industry? You don’t seem to want to….You are out of step.

        Any doubts about details will be put to rest by gathering data from test drilling. Stop objecting to this.

        Transport is the real issue, you identify this correctly. As it is with all heavy industry and energy systems, Wind follies in particular. Transport is where our focus of concern should be, and where communities need to be engaged and fully compensated.

        There is no concern about water, Jim Marshall policy advisor water UK, said at the recent Fracking conference in London that water usage was quit small in the grand scheme of things, and no more at risk than with other heavy industry. Was confident in the level of existing regulations, and the use of closed tanks (as opposed to other nations). Also closed loop recycling can be used to steam off the pollutants and reuse the water, using gas from the well for efficient heat.

        The CO2 ‘argument’ is in frackings favour, there will be less CO2 emissions than from gas transported from other nations.

        We are discussing gas not nuclear (you are arguing against your own position)

        Gas from waste is of course another good option that we should go flat out for (on this we agree) but it is not going to provide all our gas needs….Hence the need for shale and CBM.

      • Every party but the greens may now nominally support fracking but I’m afraid they are of the “not wanting to ban just a moratorium” sort of doublespeakers.

        They know the public want cheap energy desperately so they won’t officially ban it but when there is a will to fail obstacles can always be found, or if necessary invented. Thus immediately the ban was ended Cadrilla was informed there was a local ban in place around their well because it was 10 miles from a bird sanctuary. We need an honest government not just a promise from a dishonest one.

    • ian wragg says:

      What is this endothermic process that can ramp up at the drop of a hat. I’ve been in the power industry for 40 years and haven’t heard of it.

  7. This is a summary of the official report last year on fracking from the joint committee set up by the Royal Society and Royal Academy of Engineering.

    It puts to bed all of the scare stories.


    • Francis says:

      Yes I have read this report. I have also read many others that counter this opinion and that is the main point here, it is an opinion. Very learned people on both sides have written much on this subject. I am not proposing a ban, I am asking for a moratorium to fully investigate the subject. Then and only then can the facts be put to the public before decisions can be made. The present government has seen fit to ride roughshod over public opinion on this issue, no matter how ill founded those opinions may turn out to be. Ukip needs to be seen as the party that listens and responds to concerns. The party that lays the facts before the public before taking measures that are deemed (maybe incorrectly) dangerous to public health.

      • It’s covered by existing regulations Francis. (Too many overlapping regulations if anything).

        There is also a shortage of data that can only be collected by test drilling, which can only go ahead if people like yourself will stop putting obstacles in the way to prevent it. Without that data what are you calling for? What’s to discuss that hasn’t already been discussed?

  8. Richard111 says:

    The power of wind varies as per the CUBE of the wind speed. Double the speed and you have eight times the power. Half the speed and you end up with one eighth the power. The turbine blades are still visibly turning but that is no guarantee you are getting steady power out. To talk about the turbines only being stopped for short periods is waffle for the masses.

    • catalanbrian says:

      I can only state what I can see. And I will repeat it as clearly you seem to have a problem with accepting the facts. The turbines are rarely not generating and on the few occasions that they have stopped it is only for a short period of time.

    • Brin Jenkins says:

      In Cornwall under no perceptible wind, I have seen them turning vigorously, I stopped my car and checked, no wind.

      I have done considerable cross Channel sailing and understand wind power.

      • Ex-expat Colin says:

        Believe they have to be powered (by diesels) to prevent damage to rotor bearings if stationary too long. That happens in Germany while they figure out how to connect to shore.

      • catalanbrian says:

        They don’t need massive wind to make them turn. Yes, in the event of no wind they do draw power from the grid to keep them turning in order to prevent damage to the bearings, but at such a slow speed that it is hardly noticeable and which certainly could not be mistaken for generating speed. And the comment re diesels is misleading. Diesel generators are used to keep them turning but only until such time as the wind turbine is connected to the grid. Then the diesel generator is moved on to the next project.

  9. Ex-expat Colin says:

    The issue I have with policy is the total absence of any strategy/plan for when this planet gets colder than the usual temperature envelope. Thats when cavity wall/roof insulation won’t be enough and of course that topic (insulation) is all about increasingly expensive energy supplies. Solar won’t be much good and the wind may be zero or too high?

    Anybody can use solar panels/wind turbines lawfully for their private use….and who cares, unless they become a nuisance with it. Transfer that to national supply (the mix) and I think its at that point where modern technology/engineering does not deliver well. The old efficiency equation is lost, well is closer to zero than it sensibly should be. Common sense….gone!

    The C02 issue like the EU issue is two distinct gravy trains, and are co-joined in needful places. Those places are where the money is and has to be paid for by the ordinary people. That would be many without the means to pay it.

    Solar appears to be such a success in Spain that two court cases are lodged against the Spanish government for encouraging investor folk with something like..now you have the Sun. You do I suppose until the subsidy is cut. Money again!

    I hope UKIP can derail the green energy and EU businesses….after all thats exactly what they are.

  10. Richard111 says:

    catalanbrian, I may be misunderstanding you here so please correct me. Your comments above seem to indicate to me that you believe wind turbines generate their rated power at any wind speed?

  11. Malcolm Edward says:

    I find it astounding beyond my comprehension that our government is planning for failure. Everything you have said above and written about on other occasions, stating realities in understandable language, should also be clear to someone in a ministerial position. If the wellbeing of our country is any consideration then different policies and a different course of action should have been taken from back in the Blair years up to the present. Of course we cannot go back in time, but that is no excuse for not getting it right from now onwards.
    For us to be attractive to industry, especially manufacturing industry that we are told we need to attract and encourage (and that I agree with), surely we need to have a guaranteed supply of competitively priced energy at all times of day – which until recent times we have managed to provide.
    The actuality that our government is presenting industry with, is that power consumers (ie wealth creators) can be subject to the whim of the wind for all they care. How that can be attractive baffles me. (And in this energy poor country where else is the extra productivity going to come from to pay for the compensation payments).
    The level of crass stupidity and/or wilful economic vandalism, displayed by Ed Davey and those who put people like him into a ministerial position, means they are clearly unfit to run our country for the benefit of its population. They are a gift to our world competitors and no friend to the British people.

    PS. I’m very sorry about the choice of representation the people of Newark recently made. The reason for my sorrow is founded on the content of your blogs,

    • Brin Jenkins says:

      Hi Malcolm, and welcome to our new political reality. My understanding started around the time of John Major, how could he ignore what was happening, and stay quiet?

      It’s far from comfortable knowing, when so many remain of us are still asleep. We have destroyed all of our industry, much of which we invented and developed. To suggest this is all a coincidence is past belief. Someone intended it to take place and elevated the incompetent to positions they never qualified for. I’m not a member of UKIP but see no one on the horizon even remotely as good.


  12. Your assertion that the path to renewable energy is paved only with wind farms is absurd, green energy comes from a huge variety of sources.

    • Brin Jenkins says:

      It need not be for sure Paul, but how do other energy conversion devices rate on the Richter scale for possible contribution and cost effectiveness? What do you think are the best other options, with an explanation please? I am interested in all devices but many have failed on efficiency and costs involved.

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