Electricity Grid balancing ensures that our electricity consumption matches electricity production, consequently, as the demand for power goes up and down during the day the supply must also increase or decrease on virtually a second-by-second basis. Electricity is by its very nature difficult to store and has to be available on demand, so the supply has to match the demand very closely at any time despite the fluctuations, however, this comes at a huge cost to the consumer an estimated £17 billion over 12 years. The National Grid controls these fluctuations by accepting bids from nuclear, coal or gas-fired power stations to reduce or increase power generation and payments are made to wind farms to switch off their turbines
Now Ofgem is launching a crackdown on energy firms who are profiteering saying some generators are gaining excessive financial benefits at a huge cost to the consumer these payments made by the National Grid to the generators are added to all our energy bills. A few months ago SSE was fined £9.8m for claiming too much compensation Is this just the tip of the Iceberg? Another problem is that the Grid is not fit for purpose meaning that huge amounts of electricity generated by wind turbines in Scotland cannot be exported to England because there is insufficient Grid structure, and as consumers we are all paying to have these turbines switched on and off. Privatisation of the grid has not helped with huge sums of money going into shareholder’s pockets rather than improving the infrastructure.
The cost of balancing Britain’s power grid hit £4.19 billion last year according to Nuclear Industry Association analysis of National Grid Electricity Systems Operator (ESO) data. The total cost for 2022 is equivalent to every household in Britain paying an extra £150 as National Grid ESO says the costs “are ultimately borne by consumers.” Costs have increased 250% since 2019, when the total was £1.2 billion. In those last four years, balancing the grid has cost British consumers £9.83 billion in total
Balancing costs have spiralled since the beginning of the energy crisis: between September 2021 and December 2022, ESO data shows £5.6 billion has been spent on balancing the electricity grid, more than twice as much as the same period from September 2019 to December 2020, which totalled £2.62 billion.
These soaring costs are a consequence of a shrinking baseload capacity as nuclear stations retire without replacement, coupled with a reliance on expensive imported gas to fill the gaps in electricity generation, and an ageing and inadequate National Grid but we are all paying the price for these failings and its £150 a year for every household.
And to add insult to injury National Grids profits last year were £3.4 billion.