Britain’s Plan To Save Energy By Paying Businesses To Shut Down Falls Apart

(REUTERS/Carlos Barria)

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Andrew Follett Energy and Science Reporter
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The operator of the British electrical grid is paying for “negative electricity” when there is not enough power to meet demand, resulting in rolling blackouts.

The National Grid wrote a letter Tuesday to “volunteers” announcing it was no longer paying businesses to not use electricity this winter because “too few users said they were willing to put themselves on standby,” according to The Financial Times, though the exact number of volunteers was not stated. The letter notes that “it is clear this has not been successful” and that the program “was designed for those consumers that don’t already reduce/shift demand or run embedded generation during peak times in response to pricing signals.”

British grid operators used a similar scheme last winter to prevent mass blackouts after power plants unexpectedly went offline. The U.K. grid has also struggled integrating large amounts of wind and solar energy into the electrical supply system.

“The decision by Britain’s National Grid to cancel one of its emergency demand response programs because of a lack of companies willing to cut their electricity use when demand peaks is more evidence of the difficulties involved in trying to keep the lights on when more and more power is coming from intermittent and unreliable sources such as wind and solar,” Myron Ebell, director of the Center for Energy and Environment at the libertarian Competitive Enterprise Institute, told The Daily Caller News Foundation.

National Grid sent the letter because the government wasn’t able to enlist enough companies to make the program work, despite lucrative payments

“Wind and solar boosters tell us that it’s easy to balance the grid with fluctuating supplies,” Ebell said. “Reality is proving them wrong.  It’s going to cost a lot more than projected to avoid blackouts.”

“The volunteers aren’t volunteering for free.  National Grid was paying them to agree to shut down whenever needed,”Ebell said. “Unpredictable and frequent outages make a mess of trying to produce anything.”

Emergency measures to keep the lights on in the U.K were taken, but official analysis suggests there could still be insufficient electricity. Brownouts and blackouts are already impacting Britain.

Britain’s government announced that it wants to phase out existing coal power over the next 10 to 15 years, which will make replacing lost energy capacity even harder. Closing the country’s remaining 15 coal plants will take a whopping 24,830 MW of generational capacity offline, meaning that somewhere between 20.2 percent to 34.6 percent of Britain’s electricity will have to be replaced.

The alternatives are not promising. Wind and solar run the risk of producing too much or too little electricity, which can overload and ultimately fry the power grid. These surges in wind or solar are why electrical companies will occasionally pay consumers to take electricity.

Britain’s attempts to use wind or solar power are immensely costly. U.K. residents paid a whopping 54 percent more for electricity than Americans in 2014, while energy taxes cost residents roughly $6.6 billion every year. Green energy subsidies in the U.K regularly exceed spending caps and account for roughly 7 percent of British energy bills, according to government study released July, 2015.

Polling indicates that 38 percent of British households are cutting back essential purchases, like food, to pay for high energy bills. Another 59 percent of homes are worried about how they are going to pay energy bills. Companies are getting hit by pricey British electricity as well, and some are even leaving the country because of it, threatening up to 40,000 jobs.

The U.S. Supreme Court voted 6-to-2 to uphold a similar program in January, allowing regulators to force electrical utilities to artificially make green energy more cost-effective. This overturned a ruling by the U.S. Court of Appeals for the District of Columbia which previously held that FERC did not have the statutory authority to impose the program. The court also stated that the rule was arbitrary and capricious, because FERC did not consider or respond to the arguments made in opposition to the rule.

The problem with British energy distribution consists of energy comanies paying middlemen for “negative electricity” — power theoretically saved by consumers during peak demand times, which allows regulators to recoup those payments through increases in the cost consumers pay for electricity, earning these middlemen billions of dollars. The policy has been pushed by the U.S. Federal Energy Regulatory Commission (FERC) since 2011.

Demand-side management “creates a counterproductive demand response mechanism that produces economically undesirable behavior and wasteful outcomes that will injure consumers and society in the long run,” stated an amicus curiae brief to the Supreme Court filed against FERC by economists from Harvard University. Studies have shown that demand-side management generally results in higher electricity costs for consumers, which disproportionately harm the poor.

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