The chickens have come home to roost -Energy

C_Mababejive

Once upon a time in this relatively small island, we had the CEGB (central electricity generating board), and The British Gas Corporation.

They were not perfect but they were centralized single point experts in their particular fields.

If we take British gas for example, it owned all the transmission and distribution networks and all the meters. It had large research and development facilities, it had a network of showrooms and were held in high regard for their level of expertise in the field of research and engineering.

As a nationalised industry, BG did a lot of work for free or at subsidised rates for customers.

Post privatisation, both industries have been hacked to pieces and various bits sold off. Much of it is in foreign hands.

National Grid has been the constant in that it owns and operates the gas and electricity transmission systems in this country.

OFGEM are forever hacking away at the industry in the name of customer savings until we have reached a point where there is very little meat on the bone.

The most recent assault has been OFGEMs plan to halt National Grids role as "system operator". It wants to segment the current situation by separating the role of asset owner and system operator.

WHO is best to operate the system that they own? The experts at NG or some other third party?

Going back to gas, we have moved from a situation where all the network was owned by one company to one where NG owns and operates the national transmission system, but a plethora of other companies own individual regional transmission and distribution systems.

The most recent disposal was the sale of the massive National Grid Gas distribution network  to a group of foreign pension and asian/middle eastern investment companies and the rebadging of the business as Cadent.

Once national assets now segmented and sold to foreign investors.

Once upon a time this country had large storage facilites to provide ahuge buffer between supply and demand.

That no longer exists.

National Grid, as system operator, takes orders for gas from the various distribution networks, does its own best estimates and orders in the amount of gas it will need from the various suppliers. For example, tomorrows (Thursdays) gas has been ordered in today for delivery tomorrow.

It is a just in time supply network.

If during the day, more gas is needed than has been ordered, NG has to buy it in at premium rates to ensure supply. Equally, if at day end there is gas left over, it can be traded and sold back .

The huge facilities that used to be there are all gone. Generally the only storage available is line packing ie packing the gas into the network at higher pressures . Using the network as a storage vessel.

British Gas /Centrica used to use the offshore rough field cavity as a huge storage vessel but this is no longer operating.

We MUST return to a situation in this country where we have large volume gas storage to act as a supply buffer.

You can see gas supply data here

https://mip-prd-web.azurewebsites.net/

Electricity -where does it comes from? You can see instantaneous energy sources here

https://gridwatch.co.uk/

In the right hand graph ccgt stands for combined cycle gas turbine. In efffect, gas is used as a primary fuel to generate power. As i type, it makes up over 40% of electricity demand in this country !

So what are the sources of gas ?

Well apart from sources off shore , there are a number of subsea pipelines feeding into and into this country. They are incredible engineering achievements. Subsea pipelines from the european mainland feeding gas into this country, for example, Langaled,,all the way from Norway !

https://gridwatch.co.uk/

There are also 3 liquified natural gas terminals

2 on the welsh coast and one at the isle of grain.

https://www.nationalgrid.com/our-businesses/national-grid-ventures/grain-lng

jimjames

It was all so predictable. The articles at the time the Rough Gas storage facility was shut were all very clear that lack of storage capacity would cause more extremes in pricing

https://www.theguardian.com/business/2017/jun/20/uk-gas-storage-prices-rough-british-gas-centrica

Closure of UK’s largest gas storage site ‘could mean volatile prices’

The_Green_Hornet

If you can find Sid tell him. I think he is in the Cayman Islands.

tacpot12

OFGEM have clearly failed in their role which we can now see was to stand up to the Conservative goverrnments that wanted to hand over this vital infrastructure to private interests. 

The private companies make profits which they distrubute when times are good, and go bust when times are bad leaving the tax payer to pick up the bill. Where was OFGEM when the profits were being  given out? 

QrizB

tacpot12 said:

OFGEM have clearly failed in their role which we can now see was to stand up to the Conservative goverrnments that wanted to hand over this vital infrastructure to private interests.

Ofgem are a non-departmental public body. "Standing up to government" is literally the opposite of their role.

danlightbulb

C_Mababejive great post. Ofgem big failure in regulation and resilience. Spot on about shareholders making profits then cutting and running when the going reverses.