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Who, What, Why: What made electricity prices soar during a heatwave? Who, What, Why: What made electricity prices soar during a heatwave?
(3 days later)
UK electricity prices soared this week as much of the country experienced a heatwave. Why was demand for energy so high?UK electricity prices soared this week as much of the country experienced a heatwave. Why was demand for energy so high?
You might imagine that unseasonably high temperatures in much of England and Wales - reaching 32C in London - would make the cost of energy cheaper, not more expensive. Isn't everyone going outdoors? No-one would put the heating on in these conditions. Probably fewer cups of tea are being brewed, and more salad is being eaten.You might imagine that unseasonably high temperatures in much of England and Wales - reaching 32C in London - would make the cost of energy cheaper, not more expensive. Isn't everyone going outdoors? No-one would put the heating on in these conditions. Probably fewer cups of tea are being brewed, and more salad is being eaten.
It doesn't quite work like that, experts say. On Wednesday, UK wholesale electricity prices for the day ahead jumped from approximately £40 per megawatt hour to nearly £200 - the highest figure in 10 years.It doesn't quite work like that, experts say. On Wednesday, UK wholesale electricity prices for the day ahead jumped from approximately £40 per megawatt hour to nearly £200 - the highest figure in 10 years.
This is mostly because of limited supply, says Jim Watson, professor of energy policy at the University of Sussex. The number of gas power stations in the UK that have closed for planned maintenance is at its highest level since 2009, and several French nuclear power stations are offline limiting the amount France has to sell to the UKThis is mostly because of limited supply, says Jim Watson, professor of energy policy at the University of Sussex. The number of gas power stations in the UK that have closed for planned maintenance is at its highest level since 2009, and several French nuclear power stations are offline limiting the amount France has to sell to the UK
To compound matters, a cable connecting the UK's grid with the French network is not working properly, knocking a further 0.5GW from the UK's available supplies, and the hot spell has also coincided with a lull in winds, leading to a reduction in wind power.To compound matters, a cable connecting the UK's grid with the French network is not working properly, knocking a further 0.5GW from the UK's available supplies, and the hot spell has also coincided with a lull in winds, leading to a reduction in wind power.
Heatwave adds to UK power squeezeHeatwave adds to UK power squeeze
But demand has risen, too. It's above average for September and at its highest since April, when there were severe weather warnings in parts of the UK due to a cold snap.But demand has risen, too. It's above average for September and at its highest since April, when there were severe weather warnings in parts of the UK due to a cold snap.
So what has driven this? The biggest factor will be air conditioning, says Watson. Normally it accounts for a much smaller proportion of electricity use in the UK than it does in countries with warmer climates, and British homes tend not to have it. Offices do however, and it is quite energy-intensive. The Carbon Trust warns that having air-conditioning can double your energy bill.So what has driven this? The biggest factor will be air conditioning, says Watson. Normally it accounts for a much smaller proportion of electricity use in the UK than it does in countries with warmer climates, and British homes tend not to have it. Offices do however, and it is quite energy-intensive. The Carbon Trust warns that having air-conditioning can double your energy bill.
What's more, it runs off electricity.What's more, it runs off electricity.
You don't see surges of demand for electricity in the same way during cold weather, Watson says, because "most of our heating needs are gas and oil-based".You don't see surges of demand for electricity in the same way during cold weather, Watson says, because "most of our heating needs are gas and oil-based".
A lesser factor leading to the spike in electricity demand, he says, will be the extra demand placed on fridges, which consume more electricity than other household appliances because they are left on all day. They are controlled by a thermostat, which resumes cooling whenever the temperature in the fridge rises above a certain point, and this happens more often during hot weather.A lesser factor leading to the spike in electricity demand, he says, will be the extra demand placed on fridges, which consume more electricity than other household appliances because they are left on all day. They are controlled by a thermostat, which resumes cooling whenever the temperature in the fridge rises above a certain point, and this happens more often during hot weather.
All this has lead to rises in electricity's day-ahead price - that is, the amount generators charge to put power into the UK network the next day. All this has led to rises in electricity's day-ahead price - that is, the amount generators charge to put power into the UK network the next day.
But Watson says this shouldn't mean vast rises in individual consumers' energy bills. "These are prices for short-term trading," he says. Only around a 10th of UK electricity is bought by suppliers at the day-ahead price. Suppliers sign long-term contracts with generators that cover most electricity supply in the UK.But Watson says this shouldn't mean vast rises in individual consumers' energy bills. "These are prices for short-term trading," he says. Only around a 10th of UK electricity is bought by suppliers at the day-ahead price. Suppliers sign long-term contracts with generators that cover most electricity supply in the UK.
There have been concerns about whether there is enough capacity in the system as winter approaches, but the National Grid has said the situation is "completely manageable" and it has enough energy to keep the lights on.There have been concerns about whether there is enough capacity in the system as winter approaches, but the National Grid has said the situation is "completely manageable" and it has enough energy to keep the lights on.
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