This content is only available within our institutional offering.
19 Aug 2019
Investec UK Daily: 19/08/2019
Centrica plc (CNA:LON), 128 | Drax Group plc (DRX:LON), 524 | Good Energy Group PLC (GOOD:LON), 255 | Iberdrola (IBE:BME), 0 | Iberdrola SA (IBE:MCE), 0 | Irish Residential Properties REIT PLC (IRES:DUB), 0 | National Grid plc (NG:LON), 0 | Safestore Holdings plc (SAFE:LON), 773 | SSE plc (SSE:LON), 0
Sign in
This content is only available to commercial clients. Sign in if you have access or contact support@research-tree.com to set up a commercial account
This content is only available to commercial clients. Sign in if you have access or contact support@research-tree.com to set up a commercial account
Investec UK Daily: 19/08/2019
Centrica plc (CNA:LON), 128 | Drax Group plc (DRX:LON), 524 | Good Energy Group PLC (GOOD:LON), 255 | Iberdrola (IBE:BME), 0 | Iberdrola SA (IBE:MCE), 0 | Irish Residential Properties REIT PLC (IRES:DUB), 0 | National Grid plc (NG:LON), 0 | Safestore Holdings plc (SAFE:LON), 773 | SSE plc (SSE:LON), 0
- Published:
19 Aug 2019 -
Author:
Martin Young | Ben Hunt, CFA | Marc Elliott | Ronan Dunphy -
Pages:
6
The Times article suggests that a lightning strike caused Orsted’s Hornsea One (800MW) to drop off the system, with at least part of RWE’s Little Barford CCGT (730MW) tripping almost instantaneously. It is also possible that embedded generation also tripped. The Times article also suggests that frequency fell, and that it appears that the initial efforts to keep frequency above 49.5Hz proved insufficient, with subsequent falls in frequency to the point at which the system started automatically disconnecting demand to prevent wider blackouts.
The blame game over the past week has been unedifying for the electricity industry, and consumers/rail passengers who were affected by the power cut will most likely not share the ESO’s view that the systems “worked well”. Perhaps not the best choice of words under the circumstances. There are serious questions that need to be answered, including: Why did the ESO not have sufficient backup capacity, particularly given that the cost of doing so would be inconsequential in the context of the dual fuel bill? To what extent did the changing generation mix, and location thereof, play a role in all of this, and are the industry rules fit for the electric industry of today and tomorrow? Who cut the power to the railways and why was power cut to the railways ahead of other demand? Why, when power was restored relatively quickly, did certain parts of the affected railway industry take so long to restore services?
Clearly this goes wider than any single part of the value chain, with serious questions for Ofgem/BEIS too, as to whether the balance of incentives and penalties in the broader remuneration framework are appropriate, and delivering the desired outcome. Remuneration in RIIO-1 has been generous, many offshore wind farms are earning triple digit £/MWh, and we have a capacity market (albeit currently suspended), yet resilience was challenged, and in the eyes of the consumer, voter, and wider British public, legitimacy too. We would not be surprised to see Ofgem’s resolve toughened, with others seeking to make political capital too. Helpful for the electricity industry? Far from it!