PEI officials plan self-sufficiency using wind power

By The Globe & Mail


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After centuries of cursing the wild winds off the Gulf of St. Lawrence, Prince Edward Islanders are vowing to harness the gales to power the tiny province.

A wind farm located on the northern tip of PEI now produces 5 per cent or about 11 megawatts of the power used by the province's 139,000 residents.

But provincial politicians and energy officials have embarked on an ambitious plan to provide all the province's 200 megawatts of electricity from lofty turbines rotating in the island's brisk breezes.

The success of the wind power plan, which Energy and Environment Minister Jamie Ballem says would make the province a model for the rest of the country, hinges on a combination of higher conventional fuel prices, improved windmill technology, political will for the project, attracting private investment and continued Canadian support for the controversial Kyoto accord.

"The scary part of what we're doing right now is that the decisions we're going to make [about promoting and investing in wind power] will impact on this province for the next 40 years. That's also the most exciting part of what we're doing," Mr. Ballem said in an interview this week as he prepared for a trip to Europe to look at wind power sites.

Experiments on producing power from the often gale-force winds that pound northern PEI have been going on for more than 20 years at the Atlantic Wind Test Site. But the cost of producing electricity from the small turbines was prohibitive and the supply of energy depended on how often and how hard the wind blew.

Only recently has the combination of larger, more efficient turbines, which can crank out as much as three megawatts, and the increased cost of power produced from oil and coal narrowed the gap so that wind energy can compete for a place on power grids. A decade ago the cost of producing a kilowatt hour from wind was 10 cents -- that has been lowered to about 7 cents. The cost of producing electricity from coal is about 4 cents a kilowatt hour.

The Canadian Wind Energy Association predicted last week that turbines capable of producing another 112 megawatts of electricity will be built across Canada this year, bringing wind electrical capacity to more than 450 megawatts or about 0.25 per cent of the power used nationally.

The future of wind energy has also been debated during the federal election campaign, with the Liberals, NDP, Bloc Québécois and the Green Party all advocating dramatic expansion of wind technology across Canada. The Conservatives have promised to investigate alternative energy sources.

Advocates of wind power are also hoping that it will get a boost from investment from energy companies under the Kyoto accord. That agreement will require utilities to commit to reducing production of greenhouse gases from conventional power plants, but power companies could also use an investment in wind energy as a green credit to reduce their Kyoto obligations.

"If it's going to cost you $2-million to retrofit a plant but you can spend $100,000 on a wind project for the same result then it's worthwhile to look at that," Wayne MacQuarrie, manager of the PEI Energy Corp. said in an interview.

A recent strategy paper on renewable energy done for the PEI government said it would require an investment of $300-million to reach the province's goal of producing 200 megawatts from wind.

At the same time, the province, which has no petroleum, coal or hydro resources, has to import most of its power from New Brunswick and has long yearned for a cheaper source of energy that could be produce on the island.

Carl Brothers, manager of the North Cape site, who has tested the power potential of PEI breezes for two decades, said many utilities are still balking at the cost of wind energy. "But cheap energy is gone and we're just going to have to come to grips with that. How do you quantify the cost of the pollution produced from conventional plants? Wind is the technology that stands ready to push us into a sustainable energy system," Mr. Brothers said in an interview, while the paddles of the huge turbines hummed as they rotated.

That would require the establishment of several wind farms across the province. The wind test site last fall doubled the number of its turbines and is now producing power from 16 of the units. Aeolus PEI, a division of Vestas Canadian Wind Technologies recently erected a three megawatt turbine near North Cape.

Then there is the problem of what to do when the wind doesn't blow -- on Prince Edward Island that is about 25 per cent of the time. The province has asked the federal government to assist in funding a $15-million hydrogen village pilot project. The wind from North Cape would create electricity that would be converted to hydrogen that in turn could be used to power generators on calm days.

Mr. Ballem said PEI wants to test hydrogen as a fuel to run a couple of fishing boats and a farm tractor. If that works then the use of the hydrogen would be expanded throughout a fishing village and would ultimately be used to produce electricity.

He said the province has received several expressions of interest from private companies from Canada, Germany and the United States anxious to get involved in harnessing the island's winds.

The province is hoping that its energy corporation and the private ventures can jointly fund the wind projects. One of the proponents, J.D. Irving Ltd. of Saint John has had to scale down a proposed wind farm project near Malpeque Bay due to concerns about the noise and appearance of the towers.

Mr. Ballem said many other islanders have welcomed the advent of wind energy and are anxious to participate in its development.

"I want to make PEI the green part of Canada," Mr. Ballem said. "Our biggest job will be convincing the other governments, primarily the federal government to let PEI be a leader -- we need help to do that."

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Canada to spend $2M on study to improve Atlantic region's electricity grid

Atlantic Clean Power Superhighway outlines a federally backed transmission grid upgrade for Atlantic Canada, adding 2,000 MW of renewable energy via interprovincial ties, improved hydro access from Quebec and Newfoundland and Labrador, with utility-regulator funding.

 

Key Points

A federal-provincial plan upgrading Atlantic Canada's grid to deliver 2,000 MW of renewables via interprovincial links.

✅ $2M technical review to rank priority transmission projects

✅ Target: add 2,000 MW renewable power to Atlantic grid

✅ Cost-sharing by utilities, regulators, and federal-provincial funding

 

The federal government will spend $2 million on an engineering study to improve the Atlantic region's electricity grid.

The study was announced Friday at a news conference held by 10 federal and provincial politicians at a meeting of the Atlantic Growth Strategy in Halifax, which includes ongoing regulatory reform efforts for cleaner power in Atlantic Canada.

The technical review will identify the most important transmission projects including inter-provincial ties needed to move electricity across the region.

Nova Scotia Premier Stephen McNeil said the results are expected in July.

Provinces will apply to the federal government for federal funding to build the infrastructure. Utilities in each province will be expected to pay some portion of the cost by applying to respective regulators, but what share falls to ratepayers is not known.

​Federal Intergovernmental Affairs Minister Dominic LeBlanc characterized the grid improvements as something that will cost hundreds of millions of dollars.

He said the study was the first step toward "a clean power superhighway across the region.

"We have a historic opportunity to quickly get to work on upgrading ultimately a whole series of transmission links of inter-provincial ties. That's something that the government of Canada would be anxious to work with in terms of collaborating with the provinces on getting that right."

Premier McNeil referred specifically to improving hydro access from Quebec and Newfoundland and Labrador.

For context, a massive cross-border hydropower line to New York is planned, illustrating the scale of projects under consideration.

 

Goal of 2,000 megawatts

McNeil said the goal was to bring an additional 2,000 megawatts of renewable electricity into the region.

"I can't stress to you enough how critical this will be for the future economic success and stability of Atlantic Canada, especially as Atlantic grids face intensifying storms," he said.

Federal Immigration Minister Ahmed Hussen also announced a pilot project to attract immigrant workers will be extended by two years to the end of 2021.

International graduate students will be given 24 months to apply under the program — a one-year increase.

 

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Russia to triple electricity supplies to China

Amur-Heihe ETL Power Supply Tripling will expand Russia-China electricity exports, extending 750 MW DC full-load hours to stabilize northeast China grids amid coal shortages, peak demand spikes, and cross-border energy security concerns.

 

Key Points

Russia will triple electricity via Amur-Heihe ETL, boosting 750 MW DC operations to relieve shortages in northeast China.

✅ 500 kV converter station increases full-load hours from 5 to 16

✅ Supports Heilongjiang, Liaoning, and Jilin grids amid coal shortfall

✅ Cross-border 750 MW DC link enhances reliability, peak demand coverage

 

Russia will triple electricity supplies via the Amur-Heihe electric transmission line (ETL) starting October 1, China Central Television has reported, a move seen within broader shifts in China's electricity sector by observers.

"Starting October 1, the overhead convertor substation of 500 kW (750 MW DC) will increase its daily time of operation with full loading from 5 to 16 hours per day," the TV channel said.

"This measure will make it possible to dramatically ease the situation with the electricity supply," the report said. Electricity from this converting station is used in three northeastern provinces of China - Heilongjiang, Liaoning and Jilin, while regional markets are strained as India rations coal supplies amid surging demand today. In 29 years, Russia supplied over 30 bln kilowatt hours of electricity, according to the channel.

The Amur-Heihe overhead transnational power line was constructed for increasing electricity exports to China, where projections see electricity to meet 60% of energy use by 2060 according to Shell. It was commissioned in 2012. Its maximum capacity is 750 MW.

China’s Jiemian News reported on September 27 that, amid nationwide power cuts affecting grids, 20 regions were limited in electricity supplies to a various extent due to the ongoing coal deficit. In particular, in China’s northeastern provinces, restrictions on power consumption were imposed not only on industrial enterprises, but also on households, as well as on office premises, raising concerns for U.S. solar supply chains among downstream manufacturers.

Later, China’s financial media Zhongxin Jingwei noted that the coal deficit had been triggered by price hikes brought on by tightened national environmental standards and efforts to reduce coal power production across the country. Reduced coal imports amid disruptions in the work of foreign suppliers due to the coronavirus pandemic was an additional reason, and earlier power demand drops as factories shuttered compounded imbalances.
 

 

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Is this the start of an aviation revolution?

Harbour Air Electric Seaplanes pioneer sustainable aviation with battery-electric propulsion, zero-emission operations, and retrofitted de Havilland Beavers using magniX motors for regional commuter routes, cutting fuel burn, maintenance, and carbon footprints across British Columbia.

 

Key Points

Retrofitted floatplanes using magniX battery-electric motors to provide zero-emission, short-haul regional flights.

✅ Battery-electric magniX motors retrofit de Havilland DHC-2 Beavers

✅ Zero-emission, low-noise operations on short regional routes

✅ Lower maintenance and operating costs vs combustion engines

 

Aviation is one of the fastest rising sources of carbon emissions from transport, but can a small Canadian airline show the industry a way of flying that is better for the planet?

As air journeys go, it was just a short hop into the early morning sky before the de Havilland seaplane splashed back down on the Fraser River in Richmond, British Columbia. Four minutes earlier it had taken off from the same patch of water. But despite its brief duration, the flight may have marked the start of an aviation revolution.

Those keen of hearing at the riverside on that cold December morning might have been able to pick up something different amid the rumble of the propellers and whoosh of water as the six-passenger de Havilland DHC-2 Beaver took off and landed. What was missing was the throaty growl of the aircraft’s nine-cylinder radial engine.

In its place was an all-electric propulsion engine built by the technology firm magniX that had been installed in the aircraft over the course of several months. The four-minute test flight (the plane was restricted to flying in clear skies, so with fog and rain closing in the team opted for a short trip) was the first time an all-electric commercial passenger aircraft had taken to the skies.

The retrofitted de Havilland DHC-2 Beaver took off from the Fraser River in the early morning light for a four minute test flight (Credit: Diane Selkirk)

“It was the first shot of the electric aviation revolution,” says Roei Ganzarski, chief executive of magniX, which worked with Canadian airline Harbour Air Seaplanes to convert one of the aircraft in their fleet of seaplanes so it could run on battery power rather than fossil fuels.

For Greg McDougall, founder of Harbour Air and pilot during the test flight, it marked the culmination of years of trying to put the environment at the forefront of its operations, backed by research investment across the program.

Harbour Air, which has a fleet of some 40 commuter floatplanes serving the coastal regions around Vancouver, Victoria and Seattle, was the first airline in North America to become carbon-neutral through offsets in 2007. A one-acre green roof on their new Victoria airline terminal followed. Then in 2017, 50 solar panels and four beehives housing 10,000 honeybees were added, but for McDougall, a Tesla owner with an interest in disruptive technology, the big goal was to electrify the fleet, with 2023 electric passenger flights as an early target for service.

McDougall searched for alternative motor options for a couple of years and had put the plan on the backburner when Ganzarski first approached him in February 2019. “He said, ‘We’ve got a motor we want to get certified and we want to fly it before the end of the year,’” McDougall recalls.

The two companies found their environmental values and teams were a good match and quickly formed a partnership. Eleven months later, the modest Canadian airline got what McDougall refers to as their “e-plane” off the ground, pulling ahead of other electric flight projects, including those by big-name companies Airbus, Boeing and Rolls-Royce, and startups such as Eviation that later stumbled.

The test flight was followed years of work by Greg McDougall to make his airline more environmentally friendly (Credit: Diane Selkirk)

The project came together in record time considering how risk-adverse the aviation industry is, says McDougall. “Someone had to take the lead,” he says. “The reason I live in British Columbia is because of the outdoors: protecting it is in our DNA. When it came to getting the benefits from electric flight it made sense for us to step in and pioneer the next step.”

As the threat posed by the climate crisis deepens, there has been renewed interest in developing electric passenger aircraft as a way of reducing emissions
Electric flight has been around since the 1970s, but it’s remained limited to light-weight experimental planes flying short distances and solar-powered aircraft with enormous wingspans yet incapable of carrying passengers. But as the threat posed by the climate crisis deepens, there has been renewed interest in developing electric passenger aircraft as a way of reducing emissions and airline operating costs, aligning with broader Canada-U.S. collaboration on electrification across transport.

Currently there are about 170 electric aircraft projects underway internationally –up by 50% since April 2018, according to the consulting firm Roland Berger. Many of the projects are futuristic designs aimed at developing urban air taxis, private planes or aircraft for package delivery. But major firms such as Airbus have also announced plans to electrify their own aircraft. It plans to send its E-Fan X hybrid prototype of a commercial passenger jet on its maiden flight by 2021. But only one of the aircraft’s four jet engines will be replaced with a 2MW electric motor powered by an onboard battery.

This makes Harbour Air something of an outlier. As a coastal commuter airline, it operates smaller floatplanes that tend to make short trips up and down the coastline of British Columbia and Washington State, which means its aircraft can regularly recharge their batteries after a point-to-point electric flight along these routes. The company sees itself in a position to retrofit its entire fleet of floatplanes and make air travel in the region as green as possible.

This could bring some advantages. The efficiency of a typical combustion engine for a plane like this is fairly low – a large proportion of the energy from the fuel is lost as waste heat as it turns the propeller that drives the aircraft forward. Electrical motors have fewer moving parts, meaning there’s less maintenance and less maintenance cost, and comparable benefits are emerging for electric ships operating on the B.C. coast as well.

Electrical motors have fewer moving parts, meaning there’s less maintenance and less maintenance cost
Erika Holtz, Harbour Air’s engineering and quality manager, sees the move to electric as the next major aviation advancement, but warns that one stumbling block has been the perception of safety. “Mechanical systems are much better known and trusted,” she says. In contrast people see electrical systems as a bit unknown – think of your home computer. “Turning it off and on again isn’t an option in aviation,” she adds.

But it’s the possibility of spurring lasting change in aviation that’s made working on the Harbour Air/magniX project so exciting for Holtz. Aviation technology has stagnated over the past decades, she says. “Although there have been incremental improvements in certain technologies, there hasn't been a major development change in aviation in 50 years.”

 

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Renewables are not making electricity any more expensive

Renewables' Impact on US Wholesale Electricity Prices is clear: DOE analysis shows wind and solar, capacity gains, and natural gas lowering rates, shifting daily patterns, and triggering occasional negative pricing in PJM and ERCOT.

 

Key Points

DOE data show wind and solar lower wholesale prices, reshape price curves, and cause negative pricing in markets.

✅ Natural gas price declines remain the largest driver of cheaper power

✅ Wind and solar shift seasonal and time-of-day price patterns

✅ Negative wholesale prices appear near high wind and solar output

 

One of the arguments that's consistently been raised against doing anything about climate change is that it will be expensive. On the more extreme end of the spectrum, there have been dire warnings about plunging standards of living due to skyrocketing electricity prices. The plunging cost of renewables like solar cheaper than gas has largely silenced these warnings, but a new report from the Department of Energy suggests that, even earlier, renewables were actually lowering the price of electricity in the United States.

 

Plunging prices
The report focuses on wholesale electricity prices in the US. Note that these are distinct from the prices consumers actually pay, which includes taxes, fees, payments to support the grid that delivers the electricity, and so on. It's entirely possible for wholesale electricity prices to drop even as consumers end up paying more, and market reforms determine how those changes are passed through. That said, large changes in the wholesale price should ultimately be passed on to consumers to one degree or another.

The Department of Energy analysis focuses on the decade between 2008 and 2017, and it includes an overall analysis of the US market, as well as large individual grids like PJM and ERCOT and, finally, local prices. The decade saw a couple of important trends: low natural gas prices that fostered a rapid expansion of gas-fired generators and the rapid expansion of renewable generation that occurred concurrently with a tremendous drop in price of wind and solar power.

Much of the electricity generated by renewables in this time period would be more expensive than that generated by wind and solar installed today. Not only have prices for the hardware dropped, but the hardware has improved in ways that provide higher capacity factors, meaning that they generate a greater percentage of the maximum capacity. (These changes include things like larger blades on wind turbines and tracking systems for solar panels.) At the same time, operating wind and solar is essentially free once they're installed, so they can always offer a lower price than competing fossil fuel plants.

With those caveats laid out, what does the analysis show? Almost all of the factors influencing the wholesale electricity price considered in this analysis are essentially neutral. Only three factors have pushed the prices higher: the retirement of some plants, the rising price of coal, and prices put on carbon, which only affect some of the regional grids.

In contrast, the drop in the price of natural gas has had a very large effect on the wholesale power price. Depending on the regional grid, it's driven a drop of anywhere from $7 to $53 per megawatt-hour. It's far and away the largest influence on prices over the past decade.

 

Regional variation and negative prices
But renewables have had an influence as well. That influence has ranged from roughly neutral to a cost reduction of $2.2 per MWh in California, largely driven by solar. While the impact of renewables was relatively minor, it is the second-largest influence after natural gas prices, and the data shows that wind and solar are reducing prices rather than increasing them.

The reports note that renewables are influencing wholesale prices in other ways, however. The growth of wind and solar caused the pattern of seasonal price changes to shift in areas of high wind and solar, as seen with solar reshaping prices in Northern Europe as daylight hours and wind patterns shift with the seasons. Similarly, renewables have a time-of-day effect for similar reasons, helping explain why the grid isn't 100% renewable today, which also influences the daily timing price changes, something that's not an issue with fossil fuel power.

A map showing the areas where wholesale electricity prices have gone negative, with darker colors indicating increased frequency.
Enlarge / A map showing the areas where wholesale electricity prices have gone negative, with darker colors indicating increased frequency.

US DOE
One striking feature of areas where renewable power is prevalent is that there are occasional cases in which an oversupply of renewable energy produces negative electricity prices in the wholesale market. (In the least-surprising statement in the report, it concludes that "negative prices in high-wind and high-solar regions occurred most frequently in hours with high wind and solar output.") In most areas, these negative prices are rare enough that they don't have a significant influence on the wholesale price.

That's not true everywhere, however. Areas on the Great Plains see fairly frequent negative prices, and they're growing in prevalence in areas like California, the Southwest, and the northern areas of New York and New England, while negative prices in France have been observed in similar conditions. In these areas, negative wholesale prices near solar plants have dropped the overall price by 3%. Near wind plants, that figure is 6%.

None of this is meant to indicate that there are no scenarios where expanded renewable energy could eventually cause wholesale prices to rise. At sufficient levels, the need for storage, backup plants, and grid management could potentially offset their low costs, a dynamic sometimes referred to as clean energy's dirty secret by analysts. But it's clear we have not yet reached that point. And if the prices of renewables continue to drop, then that point could potentially recede fast enough not to matter.

 

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Energy prices trigger EU inflation, poor worst hit

EU Energy Price Surge is driving up electricity and gas costs, inflation, and cost of living across the EU, prompting tax cuts, price caps, subsidies, and household support measures in France, Italy, Spain, and Germany.

 

Key Points

A surge in EU gas and electricity costs driving inflation and prompting government subsidies, tax cuts, and price caps.

✅ Low-income EU households now spend 50-70 percent more on energy.

✅ Governments deploy tax cuts, price caps, and direct subsidies.

✅ Gas-dependent power markets drive electricity price spikes.

 

Higher energy prices, including for natural gas, are pushing up electricity prices and the cost of living for households across the EU, prompting governments to cut taxes and provide financial support to the tune of several billion euros.

In the United Kingdom, households are bracing for high winter energy bills this season.

A series of reports published by Cambridge Econometrics in October and November 2022 found that households in EU countries are spending much more on energy than in 2020 and that governments are spending billions of euros to help consumers pay bills and cut taxes.

In France, for example, the poorest households now spend roughly one-third more on energy than in 2020. Between August 2020 and August 2022, household energy prices increased by 37 percent, while overall inflation increased by 9.2 percent.

“We estimate that the increase in household energy prices make an average French household €410 worse off in 2022 compared to 2020, mostly due to higher gas prices,” said the report.

In response to rising energy prices, the French government has adopted price caps and support measures forecast to cost over €71 billion, equivalent to 2.9 percent of French GDP, according to the U.K.-based consultancy.

In Italy, fossil fuels alone were responsible for roughly 30 percent of the country’s annual rate of inflation during spring 2022, according to Cambridge Econometrics. Unlike in other European countries, retail electricity prices have outpaced other energy prices in Italy and were 112 percent higher in July 2022 than in August 2020, the report found. Over the same time period, retail petrol prices were up 14 percent, diesel up 22 percent, and natural gas up 42 percent.

We estimate that households in the lowest-income quintile now spend about 50 percent more on energy than in 2020.

“We estimate that before government support, an average Italian household will be spending around €1,400 more on energy and fuel bills this year than in 2020,” the report said. “Low-income households are worse affected by the increasing energy prices: we estimate that households in the lowest-income quintile now spend about 50 percent more on energy than in 2020.”

Electricity production in Italy is dominated by natural gas, which has also led to a spike in wholesale electricity prices. In 2010, natural gas accounted for 50 percent of all electricity production. The share of natural gas fell to 33 percent in 2014, but then rose again, reaching 48 percent in 2021, and 56 percent in the first half of 2022, according to the report, as gas filled the gap of record low hydro power production in 2022.

In Spain, where electricity prices have seen extreme spikes, low-income households are now spending an estimated 70% more on energy than in 2020, according to Cambridge Econometrics.


Low-income squeeze
In Spain, low-income households are now spending an estimated 70% more on energy than in 2020, according to Cambridge Econometrics. It noted that the Spanish government has intervened heavily in energy markets by cutting taxes, introducing cash transfers for households, and capping the price of natural gas for power generators. The latter has led to lower electricity prices than in many other EU countries.

These support measures are forecast to cost the Spanish government over €35 billion, equivalent to nearly 3 percent of Spain’s GDP. Yet consumers will still feel the burden of higher costs of living, and rolling back electricity prices may prove difficult in the near term.

In March, electricity prices alone were responsible for 45 percent of year-on-year inflation in Spain but prices have since fallen as a result of government intervention, Cambridge Econometrics said. Between May and July, fossil fuels prices accounted for 19-25 percent of the overall inflation rate, and electricity prices for 16 percent.


Support measures
Rising inflation is also a real challenge in Germany, Europe’s largest economy, where German power prices have surged this year, adding pressure. Also there, higher gas prices are to blame.

“We estimate that the increase in energy prices currently make an average household €735 worse off in 2022 compared to 2020, mostly due to higher gas prices,” Cambridge Econometrics said, in a report focused on Germany.

The German government has introduced a number of support measures in order to help households, businesses and industry to pay energy bills, amid rising heating and electricity costs for consumers, including price caps that are expected to take effect in March next year. Moreover, households’ energy bills for December this year will be paid by the state. According to the report, these interventions will mitigate the impact of higher prices “to some extent”, but the aid measures are forecast to cost the government nearly 5 percent of GDP.


Fossil-fuel effect
In addition to gas, higher coal prices have also pushed up inflation in some countries, and U.S. electricity prices have reached multi-decade highs as inflation endures.

In Poland, which is heavily dependent on coal for electricity generation, fossil fuels accounted for roughly 40 percent of Poland’s overall year-on-year inflation rate in June 2022, which stood at over 14 percent, the consultancy said.

The price of household coal, which is widely used in heating Polish homes, increased by 157 percent between August 2021 and August 2022.

Higher energy prices in Poland are partly due to Polish and EU sanctions against Russian gas and coal. Other drivers are the weakening of the Polish zloty against the U.S. dollar and the euro, and the uptick in global demand after COVID-19 lockdowns, said Cambridge Econometrics.

Electricity prices have risen at a much slower pace than energy for transport and heating, with an annualized increase of 5.1 percent.

 

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UK homes can become virtual power plants to avoid outages

Demand Flexibility Service rewards households and businesses for shifting peak-time electricity use, enhancing grid balancing, energy security, and net zero goals with ESO and Ofgem support, virtual power plants, and 2GW capacity this winter.

 

Key Points

A grid program paying homes and businesses to shift peak demand, boosting energy security and lowering winter costs.

✅ Pays £3,000/MWh for reduced peak-time usage

✅ Targets at least 2GW via virtual power plants

✅ Rolled out by suppliers with Ofgem and ESO

 

This month we published our analysis of the British electricity system this winter. Our message is clear: in the base case our analysis indicates that supply margins are expected to be adequate, however this winter will undoubtedly be challenging, with high winter energy costs adding pressure. Therefore, all of us in the electricity system operator (ESO) are working round the clock to manage the system, ensure the flow of energy and do our bit to keep costs down for consumers.

One of the tools we have developed is the demand flexibility service, designed to complement efforts to end the link between gas and electricity prices and reduce bills. From November, this new capability will reward homes and businesses for shifting their electricity consumption at peak times. And we are working with the government, businesses and energy providers to encourage as high a level of take-up as possible. We are confident this innovative approach can provide at least 2 gigawatts of power – about a million homes’ worth.

What began as an initiative to help achieve net zero and keep costs down is also proving to be an important tool in ensuring Britain’s energy security, alongside the Energy Security Bill progressing into law.

We are particularly keen to get businesses involved right across Britain. When the Guardian first reported on this service we had calls from businesses ranging from multinationals to an owner of a fish and chip shop asking how they could do their bit and get signed up.

We can now confirm our proposals for how much people and businesses can be paid for shifting their electricity use outside peak times. We anticipate paying a rate of £3,000 per megawatt hour, reflecting the dynamics of UK natural gas and electricity markets today. Businesses and homes can become virtual power plants and, crucially, get paid like one too. For a consumer that could mean a typical household could save approximately £100, and industrial and commercial businesses with larger energy usage could save multiples of this.

We are working with Ofgem to get this scheme launched in November and for it to be rolled out through energy suppliers. If you are interested in participating, or understanding what you could get paid, please contact your energy supplier.

Innovations such as these have never mattered more. Vladimir Putin’s unlawful aggression means we are facing unprecedented energy market volatility, across the continent where Europe’s worst energy nightmare is becoming reality, and pressures on energy supplies this winter.

As a result of Russia’s war in Ukraine, European gas is scarce and prices are high, prompting Europe to weigh emergency measures to limit electricity prices amid the crisis. Alongside this, France’s nuclear fleet has experienced a higher number of outages than expected. Energy shortages in Europe could have knock-on implications for energy supply in Britain.

We have put in place additional contingency arrangements for this winter. For example, the ability to call on generators to fire-up emergency coal units, even as the crisis is a wake-up call to ditch fossil fuels for many, giving Britain 2GW of additional capacity.

We need to be clear, it is possible that without these measures supply could be interrupted for some customers for limited periods of time. This could eventually force us to initiate a temporary rota of planned electricity outages, meaning that some customers could be without power for up to three hours at a time through a process called the electricity supply emergency code (ESEC).

Under the ESEC process we would advise the public the day before any disconnections. We are working with government and industry on planning for this so that the message can be spread across all communities as quickly and accurately as possible. This would include press conferences, social media campaigns, and working with influencers in different communities.

 

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