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Power Markets In Crisis

September 17, 2021

By Paul Homewood



Alarm bells have been ringing in European and UK power markets this month, as electricity prices surge to record levels. Here day-ahead prices are triple those of a year ago, and European markets are seeing the same happening, a sign of serious instability in European grids.

The immediate trigger has been low wind speeds across much of Europe in the last few weeks, meaning reduced outputs of wind power. This has led to a shortage of power on the grid, and a consequent spiking of prices. This sort of thing occasionally happens in winter when demand is high, but is unheard of in summer months, indicating that something is going badly wrong.

But this problem is not a one-off. It is much more deep seated, and has been building up for years. UK wholesale electricity prices have doubled since this time last year. There are many factors, including rising demand for natural gas from Asian countries as they rebuild their economies, which has also pushed gas prices to record levels. Normally this would incentivise higher production of gas, but this has been discouraged in Europe in recent years, and seemingly now also in the US.

But most of the problems in power markets have been self inflicted. Arguably the biggest factor this year has been the doubling of EU carbon prices, deliberately engineered by the EU to force fossil fuels out of the mix, in favour of renewable energy. UK carbon prices have followed suit.

As coal has the highest carbon footprint, this has encouraged the switch of generation from coal to dearer gas power, thus increasing demand for natural gas already in short supply. Both coal and gas generators have to pay this carbon price, forcing up their costs and consequently prices even further.

On top of that comes the £12bn a year cost of renewable subsidies, currently added to all of our electricity bills, equivalent to £440 per household.

Meanwhile huge tranches of reliable, dispatchable generation have been shut down both here and in Europe. In the UK, for instance, coal and oil generating capacity has dropped from 29 GW to just 6 GW in the last decade. To put this into perspective, UK demand peaks at around 50 GW, so we have lost half of this, leaving our reserves perilously low. The remaining 5 GW of coal power will also be gone in three years time.

The plan of successive governments was that new gas power plants would be built to take up the slack, but this has not happened. Gas power capacity is no higher today than it was in 2010. Because of the obscene subsidies paid to renewable generators, as well as rising carbon prices, new gas power plants are simply not economically viable. We still have 35 GW of gas capacity, the same as ten years ago, but much of this is old plant, due to close in the next decade, and there is little sign that it will be replaced.

The situation in Europe is similar, and will be exacerbated further by the forced closure of all nuclear power in Germany next year, where it still accounts for a tenth of electricity. France is also planning to phase out much of its nuclear power.

All this at a time when demand for electricity will soar because of the enforced switch to electric cars and heat pumps.

There are the inevitable calls to solve this problem with yet more intermittent renewable energy, but this can only make the power system more unstable still, while increasing energy bills still further.

And how is Britain planning to cope with this crisis? Rely on interconnectors to import electricity from Europe!

The National Grid’s Future Energy Scenarios are based around up to 25 GW of interconnector capacity, which amounts to playing Russian Roulette with our energy security. As we have seen this month, when we are short of wind power, the rest of Northern Europe tends to be as well.

What guarantees are there then that France, say, will allow its power to be exported when they themselves are short of it. Indeed, last week Ireland shut down the Moyle interconnector to Britain, built to export surplus Irish wind power. The reason? They too were short of electricity!

To cap it all, a fire has just taken out the 2 GW interconnector between Britain and France, and it won’t be fully back in action till next March.

Russian Roulette with a fully loaded pistol might be a better description!

  1. Robert Christopher permalink
    September 17, 2021 4:54 pm

    “Alarm bells have been ringing in European and UK power markets this month, as electricity prices surge to record levels”

    Just in time for COP26: Alok Sharma MP must be delighted! 🙂

    • TrevorC permalink
      September 17, 2021 5:20 pm

      UK government will simply say that gas is now so expensive that we need more wind farms – which are now really cheap (except for the huge subsidies). Next winter we will have even more expensive electricity and possibly blackouts. They will say that it shows we need even more wind farms.

      Either they haven’t a clue what is going on or someone is making a lot of money out of wind farms. I wonder who it is?

      • Colin R Brooks AKA Dung permalink
        September 17, 2021 6:54 pm

        Both of your alternatives are happening.

    • September 17, 2021 6:37 pm

      Many have been ringing the alarm bells for years. All on wilful deaf ears.

    • devoncamel permalink
      September 17, 2021 6:55 pm

      Not that it will be an item on the agenda.

  2. September 17, 2021 5:02 pm

    Putin’s dream scenario!

    • September 17, 2021 6:41 pm

      Gazprom advertised at the recent Euro 2020 competition simply to rub the west’s noses in it. They’re laughing all the way to the bank, laughing at our govt’s total ineptitude.

    • September 18, 2021 9:16 am

      Russia accused of rigging gas prices to undermine Britain’s economic recovery

      Russia has been accused of increasing gas prices in a bid to undermine Britain and the EU’s economic recovery from the Covid-19 pandemic.
      . . .
      On Monday, electricity prices in the UK surged to 11 times above normal levels – a record high caused by a crunch in the gas supply chain and a lack of wind to power turbines.
      – – –
      Don’t they have contracts? Sow the wind, reap the whirlwind.

  3. Harry Passfield permalink
    September 17, 2021 5:20 pm

    Oh! The irony! Because of the price of gas the companies that produce CO2 from gas are shutting down causing a huge problem for all sorts oc industries: including aninak skaighterand fizzy drinks.
    Radio r news.

    • Harry Passfield permalink
      September 17, 2021 5:21 pm

      Animal slaughter….doh!

      • Julian Flood permalink
        September 18, 2021 10:35 am

        CO2 used to stun is a silly and inhumane choice. Mammals have high CO2 in the blood detectors — hold ypur breath and feel them work. Nitrogen is a better choice.


  4. Andrew Mark Harding permalink
    September 17, 2021 5:26 pm

    Have these alleged ‘experts’ not had the wit to realise that if average windspeed has reduced, this means that there is less energy in the atmosphere.

    If there is less energy this means that the climate on Earth must be cooling as opposed to warming. This situation is caused by lack of sunspots that normally envelope the Earth with a magnetic field. In a solar minimum there is a massive reduction in this magnetic field so deflection of charged particles is greatly reduced.

    + charged alpha particles and – charged beta particles enter the upper atmosphere and seed cloud formation, clouds block radiant heat so the planet cools.

    This situation has been well documented and the Maunder and Dalton Minimae with bitterly cold winters were two extremes.

    An increase in a trace gas is not going to affect this one jot!

    • Harry Passfield permalink
      September 17, 2021 5:53 pm

      Andrew, the Magpies are drilling the hell out of my lawn at the moment – unlike other years. Is this an indication of a hard Winter to come?

    • September 17, 2021 6:45 pm

      Isn’t it a case that the long term natural warming following the little ice age warms the poles and equator at different rates, so making the temp difference smaller and so weather calmer, ie lower winds speeds? It is correct though that we are entering a cooling phase, where renewables will be as good (ie useless) as a match.

      • September 17, 2021 6:55 pm

        Yes, that’s exactly right and if you look at wind speed statistics you will find that speeds have been dropping gradually and monotonically

      • Phoenix44 permalink
        September 18, 2021 9:15 am

        Yes but this is trends on average. They are no good whatsoever in nowing whether you can supply electricity this minute.

        Far too many people have failed to understand the difference.

  5. GeoffB permalink
    September 17, 2021 5:38 pm

    I am a retired graduate electrical engineer, I could see this coming about 8 years ago. How many electrical engineers do national grid, EDF, EON, OFGEM etc have between them? None it seems. OR Do they make more money in times of shortage?
    OFGEM are a useless pack of idiots who have failed to keep consumers costs down, They are run by Jonathan Brearley, who co wrote the climate change act. How can he be independent?

    • John Hultquist permalink
      September 17, 2021 9:14 pm

      ” … I could see this coming about 8 years ago. ”

      What took you so long? {No offense – just a bit of fun!}

      • It doesn't add up... permalink
        September 17, 2021 10:19 pm

        I’m pretty sure I’ve seen GeoffB and several others who post here discussing the impending problems at various sites I’ve bumped into them on the internet for that sort of time or longer.

      • Chaswarnertoo permalink
        September 18, 2021 8:37 am

        Yep, DKUATBT. 😇

    • Phoenix44 permalink
      September 18, 2021 9:17 am

      To be in any position of power or authority requires full acceptance of climate change dogma.

    • September 18, 2021 9:23 am

      I’ve been saying this for about 15 years now – obviously all those letters I wrote to successive energy ministers had a real impact!

      • Chaswarnertoo permalink
        September 18, 2021 10:31 am

        Yep. They ignored all of them. We need accountability for these lying morons.

  6. StephenP permalink
    September 17, 2021 6:03 pm

    Far from being short of wind for the past few weeks, you just have to look at Gridwatch to see that wind has been under-performing for months.
    Since April there have been only a few spikes in production from wind, the rest of the time it has been between 1 and 5 GW.
    I’m glad my electricity price is fixed on contract until July 2023, but dread to think what the increase will be after that.

  7. Joe Public permalink
    September 17, 2021 6:11 pm

    Gotta love how the likes Ambrosia Heavens-Pilchard try to blame rising gas prices for rising electricity prices.

    Some erk from IRENA this morning produced a chart showing how gas prices had risen sharply in the past year.

    Naturally, he forgot to mention how high they’d been prior to last year.

    • bobn permalink
      September 17, 2021 8:01 pm

      Gas prices rise to meet increased demand as it substitutes for the coal blacklisted by western Govts. Its just market forces reacting the Govt policies. Govt policies are 100% to blame for soaring energy prices. Alas it will get worse as our Govts punish oil, gas and coal exploration and production. I’m stacking firewood.

      • sapper82 permalink
        September 18, 2021 4:54 pm

        As much as I dislike having to fell diseased ash & elm, at least I’m getting a fair bit of firewood from it.

    • It doesn't add up... permalink
      September 17, 2021 10:49 pm

      Gas prices seem to have peaked for now (though it could easily soar again on the back of any bad news): February delivery NBP did reach over 200p/therm, or £20/MMBtu, or about $27.60/MMBtu at the peak – by all accounts a record for futures (although during the Beast from the East spot gas traded as high as £5/therm). Not of course quite up to the Texas freeze, where they had prompt prices soaring to $300/MMBtu.

      While the Ember chart gives some explanation of prices on the Continent it fails to account for prices in the UK, which have been driven by acute capacity shortage and the need to fire up coal at £4,000/MWh or more (in part to cover the costs of warm up). But basically National Grid have had no alternative to accepting the high offers.

      • Chaswarnertoo permalink
        September 18, 2021 10:32 am

        Because of their own incompetent management.

    • Peter MacFarlane permalink
      September 18, 2021 11:19 am

      Ambrosia Heavens Pilchard!


      I’m going to steal that, hope you don’t mind.

      • It doesn't add up... permalink
        September 18, 2021 9:04 pm

        Climbing up the Eiffel Tower?
        Man, he’s been a naughty boy…

      • Harry Passfield permalink
        September 19, 2021 8:05 am

        You are the eggman, man!

  8. Cheshire Red permalink
    September 17, 2021 6:25 pm

    Weren’t we told that if there’s a lull in UK wind ‘the wind is always blowing somewhere’?
    That went well, then.

    AEP’s absurd Telegraph piece also gives the game away as to governments likely response when the lights go out; ‘fossil fuels are unpredictable so we need more renewables’.

    We’re in an age of madness.

    • Chaswarnertoo permalink
      September 18, 2021 8:38 am

      Mr Nut Nut PM’s insanity is showing.

  9. Graeme No.3 permalink
    September 17, 2021 6:30 pm

    I wonder how long it will take for the Government to realise there is a problem?
    Not that they will think that their policies are lunatic but when the public reacts to soaring power bills and starts blaming them, I expect they will try to “ride out” the problem, at least until the polls show a drastic loss of support. Followed by a change in P.M.

    P.S. South Australia has had the same reduction in wind, but has enough gas and diesel capacity to continue. Many times in the last few months when generation from gas has been around 90% (+ a fraction from Victoria’s brown coal).

  10. mjr permalink
    September 17, 2021 6:42 pm

    isn’t it a pity that we in England don’t have huge supplies of cheaply and easily accessible and produced gas just lying around under the ground that we could use

    • Joe Public permalink
      September 17, 2021 8:08 pm


    • Julian Flood permalink
      September 17, 2021 9:47 pm

      I see what you did there.


    • Chaswarnertoo permalink
      September 18, 2021 8:39 am

      Yes, a real shame. We could also do with some coal reserves…..

      • Micky R permalink
        September 18, 2021 12:56 pm

        ” We could also do with some coal reserves ”

        You must be referring to the billions if not trillions of tonnes of coal under the UK and UK coastal waters.

    • T Walker permalink
      September 18, 2021 11:30 am


  11. September 17, 2021 6:57 pm

    I take it all those virtue signallers on green tarriffs won’t suffer from high pricees or blackouts because all their electrons come from 100% green sources?

    • matt dalby permalink
      September 17, 2021 7:19 pm

      If only it was true that people on a “green” tarriff only got energy from renewable sources. Obviously since they’re connected to the same grid as the rest of use their power comes from the same mix of generating types as everyone else. They should only be supplied with electricity when renewables are producing a reasonable amount of power, i.e. if supplies are tight they should be selectively blacked out. They would very quickly loose their enthusiasm for renewables and switch away from their pointless virtue signalling tarriffs.

  12. Mack permalink
    September 17, 2021 7:54 pm

    Watched Boris opening his first cabinet meeting with his reshuffled placemen (and women) championing his green agenda. Listening to him was a bit like watching the Iraqi propaganda minister, ‘Comical Ali’ on TV during the First Gulf War proudly declaring that Iraqi forces had vanquished the invading allied armies at the Kuwaiti border, just as, in camera shot over his shoulder, allied tanks could be seen moving into Baghdad unopposed. Sadly, Boris, and his minions, are either completely delusional.or totally corrupted.

    • T Walker permalink
      September 17, 2021 8:06 pm

      OR Both Mack.

      I stood up for BoZo Johnson recently- somebody said he wasn’t fit to dig ditches – I said he was.

    • September 17, 2021 8:23 pm

      The tragedy is that most of our political class believe the same.

      Fortunately we have a few Tory rebels opposed

    • Phoenix44 permalink
      September 18, 2021 9:21 am

      Johnson has shown again that he wants a cabinet full of yes-people, with no room for dissent or discussion. Agree with him or you are out.

      The only blessing about that is the mad farrago will unwind more quickly.

  13. John Hultquist permalink
    September 17, 2021 9:36 pm

    See my reply to GeoffB, above.

    Prior to fall of 2008, my connection to the internet was next to useless. That September the phone company installed Digital Subscriber Line (DSL). One of the first papers I encountered was by Steve McIntyre (of Climate Audit) with the title now as The Ohio State Presentation. Here is his link:

    I think that I am smart enough to not have been swayed by a pro-AGW paper had I read such a thing first. McIntyre saved me from that conundrum. Others quickly followed. The sites are well known, so I will not name any more – not wanting to leave any out.

    I haven’t re-read Steve’s Ohio State paper in many years. Following that, his Climate Audit site was often technically advanced, but still I could follow the discussions.
    Those not familiar with Climate Audit might want to have a look on the cold and dark nights now approaching.

    Thanks Paul, for adding your expertise to this topic and providing a site to communicate with others.

  14. September 17, 2021 9:53 pm

    To cap it all, a fire has just taken out the 2 GW interconnector between Britain and France, and it is expected to be out of action till next March.

    Not exactly. It now seems 1 GW is still operating and 1 GW is kaput until late next March.
    (see Outage Profile)

  15. Thomas Carr permalink
    September 17, 2021 10:24 pm

    HM Treasury are reported almost daily as to their worries about the trend in inflation in the UK. Do they not realise that one of the near universal input costs for industrial and domestic existence can be moderated to achieve a significant reduction in the inflation projections which they so fear?
    Abandon the commitment to the dilusional target of net zero and restore power generation to a robust and predictable state by taking the ‘flakey’ sources out of the equation.

  16. Steve C permalink
    September 17, 2021 10:32 pm

    I’m sure they’re trying to push me off gas and onto electric heating, irrespective of what my landlord actually provides. A couple of days ago I got notice of SSE’s new rates from October 1st: electricity is going up a “mere” 9.78%, while gas is going up 22%. It’s going to be a cold winter, whatever the weather.

    I seem to be living in the old Goon Show joke (provide your own Scots accent): “Sit down and warm yersel’ at this roarin’ candle” …

  17. Gamecock permalink
    September 18, 2021 12:39 am

    ‘Alarm bells have been ringing in European and UK power markets this month, as electricity prices surge to record levels.’

    Clowns. Their problem is NOT prices. Their problem is electricity supply . . . at ANY cost.

    Power Markets In Crisis

    They do not comprehend the precipice they stand on. Frankly, I thought renewable penetration of the market would reach about 30% before it crashed and burned. You are fortunate that the collapse is earlier. The UK now has a chance of survival.

  18. Crowcatcher permalink
    September 18, 2021 7:43 am

    I’m very glad I’m the age I am because when the doodoo really hits the fan I won’t be here, and all those youngsters wandering around poking at their mobile phones will be wondering where their signal has gone!!!!!

  19. September 18, 2021 9:25 am

    I’ve heard numerous commentators on the BBC blaming it on everything except incompetent successive government policies over the last 20+ years.

    • MrGrimNasty permalink
      September 18, 2021 6:46 pm

      BBC was a disgrace again today.

      Although they have at times mentioned that wind has been disappointing this year, they allowed a renewable proponent to state that the problem was the volatile gas market, that renewables were the cheapest form of energy, and thank goodness renewables were there to ‘pick up the slack’. The news presenter did not challenge this nutty nonsense.

      The reason power prices are going through the roof is the whole impact of the renewables policy and the deliberate destruction of our own nascent fracking industry and Biden undoing Trump’s energy independence for the USA – handing the market power to the Russians. It is in any case the aim/consequence to make fossil fuels unaffordable so that renewables look cheap. That is the policy – this is the policy ‘working’!

  20. Gamecock permalink
    September 18, 2021 12:10 pm

    “In this present crisis, government is not the solution to our problem; government is the problem.” – Ronaldus Magnus, 1981

  21. Micky R permalink
    September 18, 2021 1:04 pm

    Is there a calculation or a website that easily permits the comparison of cost for baseload power generation with coal and baseload power generation with gas? Assuming that both types of power station are competently designed, competently maintained and competently operated

    • It doesn't add up... permalink
      September 18, 2021 7:28 pm

      I do the following fairly simple calculations:


      Convert NBP gas price to £/MWh (=p/therm / 2.93, or 3 if you are doing mental arithmetic) and multiply by 2 (50% implied effective efficiency). Add CO2 tax at 40% of the UKA price in £/tonne CO2.


      Covert API2 coal price (CIF Rotterdam) from $/tonne to £/tonne. It has almost exactly 7MWh/tonne gross heat content. Assume 33.3% efficiency (which allows for loss on warm up etc.), so multiply the £/tonne for coal by 3/7. Then add the whole CO2 UKA price.

      These give a rough guide for switching economics. If you are able to run a modern plant at optimal efficiency (i.e. continuous operation at design utilisation) then you could be looking at up to 60% on gas and 45-50% on coal, but you also need to add in other costs to finesse the calculation, which complicates matters and doesn’t greatly improve the answer.

      • Micky R permalink
        September 19, 2021 9:30 am

        Thanks IDAU

  22. September 18, 2021 1:16 pm

    More unintended consequences of the Green Lobby. The increase in gas prices, due to the manipulation of Green policies and carbon prices, has now just closed down Co2 factories, which use large quantities of gas, as it is uneconomic to continue, meaning a serious shortage of fizzy drinks and meat as it is used in processing.

  23. 2hmp permalink
    September 18, 2021 3:55 pm

    Log fires and a Honda Genny for lighting and this winter. There is no accounting for idiotic politicians.

  24. September 19, 2021 9:42 am

    In times past we would have pivoted to coal to balance high gas prices. Even on a summer’s day we are using 0.5GW coal but the capacity left is meaningless. This will be the big story of the winter.

  25. Nicholas Lewis permalink
    September 19, 2021 9:44 am

    Kwasi Karwtang has put out press release telling us not to worry as we building out more renewables

    “We are also investing millions into scaling up strong renewable energy capacity and driving down demand for fossil fuels”

    • Micky R permalink
      September 20, 2021 6:29 pm

      Unfortunately, the current mob of incompetent glorious leaders have realised that the GB public are generally subservient and willingly accept whatever crap is thrown at them 😦

      “Build coal power”


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