UK electrifying system costs hit record high – twice in one week

The cost of the UK electricity system broke records twice this week, according to Nuclear Industry Association analysis of market data. The daily cost of matching electricity supply and demand hit a record £20,678,354 on Monday 6 September, before setting a new record of £38,283,557 on Thursday 9 September, according to data from LCP Energy.

The UK also saw record costs for gas and for on-demand electricity this week. The combination indicates an unstable and imbalanced system that could threaten the success of the net zero transition, without new nuclear to bolster energy security:

• Gas prices reached a record of more than 130 pence per therm on 7 September, as surging demand and supply shortages drove up global prices. Around half of UK gas supplies are imported, and gas is the largest source of UK electricity and grid carbon emissions.
• The spot price of electricity hit a record of £4,950/MWh on 6 September, for gas-fired generation at Grain Power Station, according to LCP Energy.
• The UK imported a record 15% of its net power supplies in July and August, enough for approximately 12 million homes. On 29 August, National Grid had to request emergency assistance from France to cut exports to the UK to preserve grid stability.

Throughout this time, nuclear has been the leading source of low-carbon generation and a critical source of grid stability. Nuclear is the UK’s only proven energy source that is firm, low-carbon and home grown –  and thus key to improving grid resilience. Nuclear can replace the always-on power provided by gas and coal without emissions and does not rely on last-minute fuel imports that are subject to volatile global prices. It also does not depend on interconnector flows and price imbalances like imported power does.

However, most of the current UK nuclear fleet will retire within two and a half years, and all but one station by 2030. Without new investment, the UK’s firm power base will shrink substantially even as demand surges.

Commenting on the latest data, Tom Greatrex, Chief Executive of the Nuclear Industry Association, said:

“UK consumers and businesses cannot afford the price volatility and high carbon consequences of trying to meet net zero without nuclear. Grid instability and spiralling costs will wreck our energy transition, costing homes and businesses more unless we have a robust mix of clean power sources working together.

“New nuclear, producing reliable, clean, home grown electricity, is the best way to complement and reinforce the major expansion of renewables – which deliver clean power, but to variable amounts depending on the weather To unlock that investment in large and small nuclear, the UK Government should bring forward the legislative proposals for a new financing model as soon as possible.”

ENDS

Notes to Editors

• Daily balancing costs are available from LCP Energy at https://twitter.com/lcpenergy?lang=en and further information on spot prices at https://thecurrent.lcp.uk.com/.
• Day-ahead auction prices are also available from Nordpool: https://www.nordpoolgroup.com/Market-data1/GB/Auction-prices/UK/monthly/?view=table.
• The UK has seven generating nuclear power stations, of which Hunterston B, Hinkley Point B, Heysham I and Hartlepool nuclear power stations are all scheduled to retire by the end of March 2024, representing more than 4 GW of nominal generating capacity. Hunterston and Hinkley Point B will be in defuelling by mid-2022.
• Of the existing fleet, only the Pressurised Water Reactor at Sizewell B, with 1.2 GW of capacity, is scheduled to be operational after 2030.
• Nuclear is the second most important source of clean power in the UK currently, after wind.

About the Nuclear Industry Association
As the trade association for the civil nuclear industry in the UK, the Nuclear Industry Association represents more than 250 companies across the UK’s nuclear supply chain.

For further information, please contact:
Lincoln Hill
Director of Policy and External Affairs
[email protected]
07554701533