Opinion: How London paid a record price to dodge a blackout

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Opinion: How London paid a record price to dodge a blackout
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In a normal situation, without the traffic jams on the grid, the U.K. should have been...

An electricity transmission tower near an illuminated street lamp in Upminster, UK, on Monday, July 4, 2022. The UK is set to water down one of its key climate change policies as it battles soaring energy prices that have contributed to a cost-of-living crisis for millions of consumers.

On most days, the bottlenecks mean distorted costs. Sometimes, it results in sky-high prices where energy is in short supply when it is needed. At other occasions, prices can tumble to zero, or go negative, when producers cannot sell their power into a congested transmission system. Increasingly, it puts the whole system at risk. Talk to most industry executives and you quickly get the sense that we are sleepwalking into more blackouts.

The actual amount of electricity bought at the record price was tiny: enough to supply just eight houses for a year. More power was bought at slightly lower prices. The payments, nonetheless, highlight desperation: buying across the channel was, for 60 minutes or so, the only option to balance the system. If Belgium had not helped, the grid would had been forced to “undertake demand control and disconnect homes from electricity,” says a grid spokesperson.

The world is investing about $300 billion per year in power grids, an amount that has barely changed since 2015, according to the International Energy Agency. It isn’t enough, as the global economy electrifies and deals with a shifting generation map, with intermittent renewable energy like solar and wind replacing polluting — but dependable — coal- and gas-fired stations.

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