Energy: the silent crisis

By Richard North - December 22, 2021

For the time being, at least, the omicron “lockdown” crisis has been averted, with Johnson deciding that there will be no new restrictions in England before Christmas. We now wait to see whether the fears are exaggerated or whether as indicated, the surge is dying down.

But, even if we are spared the full rigours of an omicron epidemic, we may come to decide that was the least of our problems as we face the silent crisis that is the train wreck of our energy policy.

One dimension is evident from the Mail which tells us “Households could face a 56% rice (sic) in their energy bills from April, experts warn”, under the headline: “Gas and electricity bills could soar to £2,000-a-year as the energy price cap is DOUBLED in coming months”.

I suppose the rice is better than tapioca, and it’s just as well punters will be getting something for their money as, the way things are going, they won’t be getting any electricity. That won’t be available off the mains at any price and only those fortunate enough to have a generator or other back-up supply will be able to keep their lights burning.

This undesirable state was brought closer with a sudden leap yesterday when Reuters reported two things. The first element of the report was that European gas prices had hit a new high, rising more than 16 percent to a record high of €171.40 per MW/h. The equivalent British gas contract also hit a new peak at £4.29 per therm.

The second element set out the reason for the first. The first intimation came on Saturday when the westward gas flows through the Yamal-Europe pipeline – one of the major routes for Russian gas to Europe – started slowing down. Then, early on Tuesday the flow stopped and then reversed direction.

Reuters state that it was not immediately clear why flows were down, but both Gazprom and the Kremlin deny any connection between levels of gas supplies to Europe via existing routes, and the ongoing “debate” over the Nord Stream 2 pipeline.

On the other hand, RT is retailing Ukraine’s view that Russia is purposefully keeping the level of gas delivered at a low level in order to force Germany to certify Nord Stream 2.

For the moment, though, there is no confirmation as to when flows will be restored, even if the Kremlin is still denying that there are any political implications to the sudden changes. However, whatever the reasons, this perturbation seems to be yet another sign of an extremely vulnerable supply situation.

But just to demonstrate that insanity is not confined to the ranks of the British government, we have Olaf Scholz’s new coalition government set to close down three nuclear plants next week, removing 4.2 GW from the German (and, therefore, European) energy mix.

The timing could not possibly be worse yet, just to make the difficult almost impossible, Germany’s remaining three nuclear plants will be taken offline by the end of 2022, leaving the country reliant on a mix of coal, gas from Russia and renewables, including wind.

And for those in the wind generation business, the synoptic chart above is what hell looks like, with a high pressure complex stretching from northern Scotland to the Mediterranean and North Africa, encompassing most of Europe from Spain to the Urals. For most of the day, coal generation in the UK has outstripped the entire production of renewables, and throughout the whole of Europe, the wind contribution has been minimal.

Just to add insult to injury, last week EDF discovered a fault in one of its French nuclear plants, prompting the closure of four reactors in total, leading to a capacity loss of about 6GW and a production loss of about one terawatt hour by the end of the year. The shortfall is expected to run into January and February, making an already tight energy situation that much tighter.

Putting these issues together, Ambrose Evans-Pritchard is writing in the Telegraph that: “Europe’s energy crisis is fast turning into a political and strategic disaster”. And he is not wrong.

With gas storage inventories throughout Europe set for record lows, just about everything that could be going wrong with our energy supply is doing so – the UK’s supply intimately dependent on European supplies to meet demand. All we need now is a prolonged spell of below-average temperatures and our system will be struggling.

And for those running away with the impression that this is as bad as it can get, there is even more bad news in the offing. Apart from any stunts that Putin might pull, there is the minor question of the French presidential election, with the first round set for 10 April 2022.

As Ambrose points out, Macron is especially vulnerable to the prospect of power cuts in Metropolitan France, and it is widely believed that he will not be re-elected if there are black-outs. It is assumed, therefore, that he will conserve supplies, blocking exports to the UK and the European grid.

This would have a two-way effect on the UK, the most direct being a limit on the power supplied directly from the French interconnectors. But cuts to the European grid could leave France’s neighbours short of power – including Germany – which would then pull down power from their neighbours and gas from the Norwegian and Dutch fields. This could leave the UK not only short of electricity imports but also with even tighter margins on its gas supply.

As to any additional action that Putin might take, this remains an unknown at this point, bearing in mind that restrictions on supplies have already prevented storage capacity being fully restocked, and are responsible for the soaring prices. Tighter restrictions could pitch the energy market into meltdown.

What is remarkable about the situation, though, is the limited coverage in the British media, with much of what is published dealing with the price hikes. Of the many woes affecting our energy supply, however, price is a downstream problem if security of supply is not assured and we are on the brink of prolonged outages.

It is, of course, entirely understandable that the media should be devoting most of its resources to covering Covid developments and the political ramifications, but there is nevertheless a feeling that the media are underestimating the seriousness of the energy situation.

For sure, we are looking at the ongoing toll of death and disease when it comes to Covid, but it should be remembered that electricity outages – especially in winter – have significant public health implications, and will impose severe constraints on the operation of primary health services and social care.

Then, of course, there are the public order implications, and the knock-on effects of an economy already badly damaged by Covid. Altogether, electricity outages are something we can do without.

From a planning point of view, though, there is much which can be done at all levels of government and society, right down to the household level where stocking up on lanterns, batteries and even candles, is a basic precaution, along with keeping reserves of canned and other non-perishable food, and means of cooking in the absence of electricity.

Media interest at this stage, therefore, would be more than a matter of idle interest. Early warning of the very real risks would enhance preparedness which, from experience of the recent outages in Scotland and Northern England, is dangerously low.

More than anything, we should recognise that, of all the threats confronting us, Covid is but one. Power outages can be a serious challenge and, with every day that passes, the risk becomes more acute.