Q2 2022: Britain becomes an electricity exporter

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Dr Iain Staffell, Professor Richard Green, Professor Tim Green and Dr Malte Jansen – Imperial College London 

For the first time in over a decade, Britain has become a net exporter of electricity.  The 3 months to June saw 8% of the electricity generated here (5.5 TWh) get sent abroad, the largest amount ever recorded.  This stands in sharp contrast to other forms of energy: Britain imports around ¼ of its oil, ½ its gas and ¾ of its coal.

Britain had a trade surplus of 5% of electricity generated (8% exported minus 3% imported), with a net value of £500m per month.  Britain’s exports could have been higher if it wasn’t for a fire at the IFA interconnector to France back in September 2021.  This halved the link’s capacity from 2 to 1 GW, with full service not expected until the end of this year.

Historically, Britain has been an importer of electricity, with an average of 8% of electricity coming from our neighbours over the last decade.  This long-term trade imbalance stems from it being historically cheaper to import power than to generate more power here.  France had cheap electricity from its large fleet of nuclear reactors, and more recently British power stations face an additional tax on the CO2 they produce

So, why the turnaround?  Prices on the continent have risen even further than in Britain because of low capacity and gas supplies.  France has suffered from extensive capacity shortages, with more than half of its 56 nuclear reactors offline either for summer maintenance, to repair corrosion and cracking in the reactor cores, or because they could not be cooled during the summer heatwaves.  Germany is also suffering from a chronic shortage of gas as Russia is withholding exports.

Share of British electricity that was imported and exported each quarter.

A growing export market is good for producers, as they can earn more for their generation by selling abroad, and good for the country’s balance sheet (the current trade deficit is £10 billion per month).  But it can be bad news for consumers, as more competition for the electricity that is generated here pushes up prices – particularly unwelcome when prices are already at a crisis point.

Norway has threatened to impose export controls on electricity to protect consumers, as its hydro reservoirs fall to their lowest levels since 1996.  Norway has been exporting more than usual to Germany, Denmark and the Netherlands in response to power shortages on the continent.  Britain’s electricity trade with Norway is more balanced though, importing 0.66 TWh and exporting 0.44 TWh over the last 3 months.  Effectively, the UK has been paying Norway £117/MWh to use their enormous hydro storage to balance out our wind and solar farms.[1]

This suggests there is value in increasing the amount of pumped hydro energy storage in the UK.  This is the main technology used for long-duration energy storage, which unlike batteries can charge for 8 or more hours at a time.  This is essential for balancing weather-dependent renewable sources, such as solar power which needs to be shifted between day and night time, and wind has shortfalls and surpluses over timescales of days or even weeks.  Britain has just under 3 GW of pumped hydro storage capacity, less than half that of comparable countries like Germany.  Given that there is now 39 GW of wind and solar power, it is no wonder that the job of balancing their variability is being outsourced to neighbouring countries.

While the country’s focus is all on the cost of energy, the threat of neighbours restricting their exports to us, or needing to import electricity from us, raises the issue of Britain’s energy security.  Coal-fired power stations are being paid around £250m to stay online for the coming winter, rather than continue their decommissioning.  In August, the Rough gas storage facility gained approval to reopen after closing on economic grounds in 2017, nearly doubling the UK’s capacity for storing natural gas.  Meanwhile, National Grid conducted a four-day wargame exercise to prepare the energy system for all eventualities, amid fears of rolling blackouts if gas supplies fail to materialise during winter.

[1] The average wholesale price of electricity in Britain weighted by the amount imported from Norway, minus the price weighted by the amount exported to Norway.

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