Why UK consumers had to foot a £7bn (and-growing) gas bill for National Grid
The cost of balancing Britain’s National Grid has leapt 55 per cent in the last two years, according to research by a leading energy body.
Research conducted by the Nuclear Industry Association (NIA) and shared exclusively with City A.M, show that in 2022 and 2023, the National Grid Electricity Systems Operator (ESO) spent £7bn of consumer money on gas to fill in when renewable energy sources were not meeting demand.
This is has more than doubled from the combined £3bn spent through 2019 and 2020.
In 2023 alone, balancing the grid cost billpayers £2.85bn, equivalent to every electricity consumer in Britain, including households and businesses, paying an extra £80 per year.
Since electricity cannot be stored, National Grid must pay to either bring on or turn off electricity generation to keep supply and demand in balance at all times.
The more unpredictable sources of generation are, the more difficult the task becomes.
The NIA said that the soaring costs are a consequence of a shrinking baseload capacity given that nuclear stations retire without replacement, coupled with a reliance on expensive gas to fill the gaps in electricity generation.
In comparison to renewable sources such as solar and wind that only power the grid when the sun shines and the wind blows, nuclear energy is comparable to gas in providing a reliable baseload energy source that cannot as yet be sourced from nascent battery storage facilities.
Indeed the NIA estimated that nuclear has saved the UK over 2.3bn tonnes of carbon emissions, more than any other source.
Furthermore, government guidance suggests that a nuclear project would likely “at most add a few pounds to typical consumer bills during this Parliament and on average less than £1 per month during the full construction phase of the project.”
Currently, the UK has five generating nuclear power stations, providing around 14 per cent of the country’s electricity from 5.9 GW of capacity and last year was the lowest amount of National Grid electricity generated from nuclear in 40 years.
All but one (Sizewell B) are currently scheduled to come offline by 2030 and major projects Sizewell C and Hinkley Point C are mired in multi-year delays and sky-rocketing project costs.
Tom Greatrex, chief executive of the Nuclear Industry Association, said: “These costs are the price of the UK not investing in nuclear power, but if we ramp up nuclear at scale and at pace to the levels needed for energy security and net zero then we can avoid having to rely on expensive fossil gas to fill gaps in generation.
“For that we need to act at pace and at scale with a new fleet of large stations and SMRs to provide stable, predictable, clean power alongside renewables.”
The UK released a nuclear sector roadmap in January of this year, outlining programmes to bring on the development of small module reactors (SMRs) as well as another major Hinkley-sized project, a developer for which is yet to be confirmed.
Elsewhere, the Grid last week revealed a £60bn plan to overhaul the UK’s electricity system, underpinned by hugely ambitious offshore wind project targets.