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Electricity blackouts would cause 'severe economic consequences'

Electricity pylons Image copyright PA

The UK would face "severe economic consequences" if there was a serious disruption to the electricity supply.

The cost could run into billions of pounds, according to a new report from the Royal Academy of Engineering.

While the likelihood of such an outage is low, the report warns that calculating the impact of electricity blackouts is increasingly difficult.

The government says the report is right about the impacts of long blackouts but insists this will not happen.

The report says that the UK has not suffered serious power interruptions for 40 years.

But in that time our dependence upon electricity has increased. Our living patterns have also become more fragmented and complex.

That makes it very difficult to establish the overall cost to the economy.

Storms

"We have looked at the methods used to quantify the economic risk and the social impact, and found them wanting", says Dr John Roberts of the report's working group.

"A nationwide blackout lasting for longer than 48 hours could have a severe impact on society".

While that scenario is unlikely, Dr Roberts points to the storms and power cuts last winter in the south of England, which left hundreds of thousands of households without power in the run up to Christmas.

He adds that significant adverse political impacts would result from any kind of electricity shortfall.

"Our historic high levels of supply in the UK mean that we are accustomed to the lights always staying on," he says.

'Yardstick'

Estimates suggest that the UK needs to spend upwards of £200bn over the next decade to upgrade and decarbonise the electricity supply infrastructure.

Dr Roberts concludes: "We do not have a good yardstick to compare the potential cost of infrastructure investment with the cost to society of power outages."

The report outlines costs associated with previous real world blackouts, including the capacity crisis that hit California in the summer of 2000.

That resulted in rolling blackouts for 1.5 million people, cut California's GDP and is thought to have cost around $40bn.

The rolling power cuts that followed the Japanese tsunami and the explosions at the Fukushima power plant in 2011 are also highlighted.

The event affected 45 million people and led to shortages at companies around the world that were reliant upon components or parts made in Japan. It notes that data on the cost of the disaster is very limited.

Uncertainties

Modelling was also used to consider the economic and social costs of electricity shortfalls.

But the report warns that there are growing uncertainties in the methods used to calculate the impact of blackouts.

It found that there are very high uncertainties within estimates for the Value of Lost Load (VoLL) in the UK.

VoLL is the most commonly accepted method of calculating the cost of blackouts but it is highly sensitive to the nature of the power outage, where it happens and which part of industry is affected.

The report concludes that it is "highly risky" to base decisions on such uncertain estimates and that developing a more robust assessment method would require more detailed research.

Deter investment

Last month National Grid confirmed that the spare capacity in the electricity network had fallen to 4.1% for this winter.

The margin is expected to go even lower next year as EU rules force more old polluting power plants to switch off.

National Grid has taken emergency measures to boost the margin including paying three power plants to be available over the winter period. It says this has boosted the spare capacity to above 6%.

But the report warns that perceptions of deceasing security of supply could potentially deter investment.

"If the UK were perceived or demonstrated to have an unreliable energy infrastructure, this would be factored into the future siting or investment decisions by global companies," it says.

The report concludes that some relatively low cost measures, including improving communication in the event of an outage, could mitigate the impact of shortfalls.

Resilience

A National Grid spokesperson said that the report "highlights that the likelihood of a serious outage in the UK is very low, but National Grid remains vigilant to the possibility".

The spokesperson added that last year National Grid had its highest level of resilience.

A spokesperson for the Department of Energy & Climate Change said: "The Royal Academy of Engineering are right about the impacts a prolonged blackout could have, which is why we're not going to let one happen."

The report, "Counting the cost: the economic and social costs of electricity shortfalls in the UK", was prepared by the Royal Academy of Engineering for the Prime Minister's Council for Science & Technology.

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