Millions of British households are expected to struggle with their energy bills this winter.
Gas supply problems have been well documented in the past year following the Russian invasion of Ukraine. Higher energy prices are being felt across the country, even with the introduction of the Energy Price Guarantee.
Once reviewed in March, energy consultancy Cornwall Insight predicts the average consumer will pay £3,702 a year.
Unfortunately, that’s not where the problems end. Supply problems are starting to mount in the run-up to a cold winter, raising concerns that the UK could experience power outages this winter, evoking memories of the 1970s.
National Grid has warned there could be power outages for up to three hours this winter if supplies run out
Why is the UK at risk of power outages this winter?
National Grid has warned that households could lose power for up to three hours at a time this winter if supplies really run out.
This is mainly due to the emergency measures taken after the Russian invasion of Ukraine.
Although the UK is less dependent on Russian gas than on mainland Europe, the lack of gas storage will increase the pressure on the electricity grid.
While the UK has been exporting gas since late spring to help European countries, the ongoing lack of gas storage means they are dependent on imports in the colder months.
Gareth Kloet, energy spokesperson for GoCompare: ‘About a third of our electricity supply has historically come from the combustion of gas. So if it’s limited, like it is now, it’s going to be very expensive.
“We really have an electricity problem because we will struggle to meet our peak times. I don’t want to sound overly alarming… at this time of year it’s not a problem, but if we get a real spike it could be problematic. That’s why people talk about blackouts.’
Gas is not the only source of energy as the UK also has offshore wind capacity, but relying on the weather makes forecasting much more difficult.
‘If the demand exceeds the supply, you will have power cuts. Then the question is how quickly you can bring the stock back to provide enough people with their energy’, says Kloet.
‘If we have a really cold winter, it will put a lot of strain on the system… Many people are still working from home, people will want to heat their homes much more than before the pandemic. There is a lot of demand… [but] this will only really happen if we have a very cold winter.
“The perfect storm would be a Monday morning on a cold day. You would have a lot of demand from offices coming online, people at home turning on their heating, lots of businesses running and it’s cold. I think you could have problems with the power supply.
‘If it were a particularly windless day across the country, which meant that you no longer had any wind power, that would be a problem.’
Thanks to National Grid’s flexibility service, energy suppliers like Octopus will pay households to reduce energy consumption
How likely are blackouts and how long can they last?
A milder October has helped to reduce demand and allow storage to be topped up, putting less strain on the system.
While we may not see a public campaign encouraging people to reduce their consumption, the National Grid Electricity System Operator (ESO) will run a ‘Demand Flexibility Service’ until March 2023.
This will pay households to reduce their usage during peak times of the day to avoid UK power outages
When will energy bills go down?
Gas prices have started to fall in recent weeks. The spot price of gas has fallen from record levels and is now comparable to 18 months ago.
Energy companies ‘cover up’ by purchasing gas and electricity well in advance when it is needed. Suppliers will pre-purchase a certain amount of energy to fix the price and reduce the risk of adverse price movements.
It means that our monthly bills do not reflect current prices, but rather wholesale costs from when the supplier first paid for the energy.
Cornwall Insight expects gas prices to remain high and volatile for some time to come, depending heavily on developments in the Russia-Ukraine war, international gas markets, LNG prices and prevailing weather conditions.
“Drivers are currently mainly pointing that gas prices are expected to remain high and volatile for the foreseeable future,” the consultancy said this week.
Under a similar scheme launched last week, Ovo customers will be rewarded with up to £100 – £20 per month if they reduce their energy consumption during peak hours. Ovo has reduced its peak demand to between 4pm and 7pm, as the data shows that the average household uses 19 percent of daily total consumption during these times.
“Natioal Grid has developed many programs over time to prevent these blackouts,” said Guillaume Proost, founder of climate technology startup OakTree Power.
“I think we are certainly less at risk in that regard than other countries. There is always a risk due to the intermittent nature of renewable energy. In the United Kingdom in particular, we are increasingly dependent on wind.
“There is always a risk of blackouts, but I suspect these risks are extremely well managed and hopefully there will be increasing participation from electricity consumers across the board, which will help National Grid maintain stability.”
Energy consultancy Cornwall Insight has said the current baseline is that there will be enough power in the winter, and the ESO predicts demand will be lower than previously forecast.
This is largely due to prices remaining high amid ongoing storage concerns.
The Demand Flexibility Service has been developed to encourage customers to reduce their usage and give National Grid a little more leeway in times of high demand. In the base scenario, according to Cornwall Insight, this service would be used for between 0 and 5 days.
In the event that there is not enough gas due to a lack of imports from France, the Netherlands and Belgium, emergency measures are in place, although Cornwall says a scenario requiring recourse to these is ‘highly unlikely’.
ESO has also signed contracts with Drax, EDF and Uniper to extend the use of coal-fired power plants this winter until the end of March 2023.
Cornwall Insight says these units will not be outsourced to the open market and ‘are only intended to be used when all commercial options have been exhausted’.
However, it warns that without adequate use of the flexibility service, especially during cold spells, some customers may face disruptions in their supply.
Another scenario could be a negative supply surplus in the new year, leading to a bigger interruption. It could see the temporary implementation of something called ‘rota load shedding’ to control or reduce electricity demand, although the ESO considers this unlikely.
Rota load shedding, also known as a rolling blackout, would mean that some customers could be without power for predefined periods of a day, usually during blocks of three hours.
Businesses and emergency services will have backup generators to minimize disruption.
How can consumers prepare for blackouts?
The message seems to be that the lights are unlikely to go out, but consumers will still have to do their part to prevent blackouts.
The ‘Demand Flexibility Service’ launched earlier this month and consumers can sign up through their energy supplier to receive money in exchange for reduced consumption between 4 pm and 7 pm.
“It’s everyone’s responsibility to understand how these markets work and to participate in them…there are many benefits to them,” says Proost. “Ultimately, we will reduce electricity consumption and thereby lower our overall electricity bill and reduce our carbon footprint.”
For more information on how to reduce the cost of energy, see our essential guide that describes how your bills are calculated, what help is available and how you can save on energy.
Ten energy-saving tips
The Energy Saving Trust has listed these ten tips, along with how much they can save an average household on energy and water costs per year. Read more on the energy saving tips here.
1. Switch appliances off standby: £55
2. Draught-Free Openings: £45
3. Turn off the lights: £20
4. Wash at 30 degrees and reduce use by once a week: £28
5. Avoid Tumble Drying: £60
6. Limit showers to four minutes: £70
7. Swap a bath for a shower a week: £12
8. Don’t overfill the kettle and fit a tap aerator: £36
9. Reduce your dishwasher use by once a week: £14
10. Insulate Your Water Heater: £35
Source: Energy Saving Trust, based on a typical three-bedroom gas-fired house in Great Britain, with April 2022 price caps
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