Source · Select Committees · Public Accounts Committee
Recommendation 25
25
Accepted
Department dismisses concerns over grid supply levels, asserting routine system operation
Conclusion
The Department described energy security and the security of supply as its highest priority. We asked the Department what it thought about concerns, set out in a document published by Net Zero Watch called “Blackout Risk in the GB Grid”, that events such as certain weather conditions, or interruption to a few power stations, led to a situation in early January where the level of supply in the grid to meet energy demand fell to what it described as “worryingly low levels”; with a risk of “cutting off certain areas of electricity or even a blackout”.72 Indeed, on 8 January 2025, the National Energy Systems Operator (NESO) issued to energy providers an energy margin notice, one of a range of tools it uses to make sure there is a healthy margin between the demand for energy and the available supply.73 It cost NESO £21 million to achieve this (a similar intervention on 14 January 2022 cost £25 million).74 The Department assured us this was a “normal part” of the 66 Q 11; C&AG’s Report, para 4.14 67 Q 66 68 Q 54 69 C&AG’s Report, para 4.12 70 Q 9 71 Qq 9, 71 72 Q 5 73 Qq 5, 6, 8 74 National Energy Systems Operator, What happened with margins on 8 January?, 14 January 2025 15 system’s operation. It explained that such notices are “routine signals to the market about supply needing to be available”.75 It also told us that it “did not agree with the analysis” in the document from which we drew our concerns.76 NESO acknowledged, however, that there had been some speculation about the seriousness of the situation. In response, it published an article setting out the actions it took and shared the publicly available data that informed its actions.77
Government Response Summary
The government secures electricity security via the Capacity Market (CM), assessing capacity annually and securing it in advance, while also addressing the variable nature of renewables by relying on unabated gas and working with the market to understand the capacity provided by nuclear. DESNZ and NESO have worked to update response and communications procedures, and the National Emergency Plan will be updated later this year.
Government Response
Accepted
HM Government
Accepted
6a. PAC recommendation: The Department should set out in its Treasury Minute response how it will make sure there is capacity in the grid when there is low generation from renewable energy during periods of calm weather, including from wider technologies like nuclear. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented: June 2025 6.2 The Capacity Market (CM) is the department’s primary mechanism to ensure supply meets demand and delivers electricity security. An assessment is made annually of the capacity required to meet peak demand in four years’ time and, through the CM, the majority of capacity is secured well in advance. The rest is secured one year in advance, based on the latest demand forecasts. This ensures the grid has enough capacity available to meet the statutory Reliability Standard, which is the department’s measure of adequate levels for security of supply. 6.3 The variable nature of renewables makes it critical that the grid has sufficient flexible capacity that can be ramped up quickly when renewable generation is low. The UK continues to rely on unabated gas as the main mature, reliable technology capable of providing long duration flexibility when necessary. 6.4 Other technologies like nuclear provide important baseload capacity and the department works closely with the market to understand how the capacity provided by nuclear may change as reactors come on and offline. 6.5 The department is currently focused on maintaining existing flexible capacity to ensure security of supply, and will be implementing a number of changes to the next CM auctions to: a. Support the economic case for investment in ageing plants by making it easier for plants to access three-year 'refurbishing' CM agreements. b. Introduce pathways to allow unabated gas plants to transfer from the CM to a Dispatchable Power Agreement, enabling conversion to power generation with carbon capture and storage. This aims to reduce investor concerns about plants becoming stranded assets.