By Nick Rosen, Off-Grid.net
UK Energy managers – I have a message for you. Your job could be on the line if you don’t have a backup plan for grid outages this winter. The probability of blackouts is at least 25% on fairly conservative assumptions.
The main risks are outlined below. The question is what to do about it, and for most of us battery storage is the main answer. Expect the price of Powerbanks and Powerwalls to remain firm, and order now.
To assess the probabilities of various scenarios contributing to a potential energy shortage in the UK this winter, I have assigned numerical probabilities based on historical data, geopolitical analysis, and seasonal weather patterns. Below is a breakdown of each scenario and the rationale behind the assigned probabilities. NB: the significant range of factors influencing potential energy shortages, means the cumulative risk of ANY of the factors that can cause an energy crisis occurring in the UK this winter could be approximated at around 77%.
1. Ukraine War Intensifies (Probability: 30%)
The ongoing conflict in Ukraine has already disrupted energy supplies, particularly gas. If fighting escalates further, both Ukrainian and Russian energy infrastructure could suffer damage. Historical precedents show that as wars drag on, there tends to be a progressive intensification of hostilities. Given the stakes involved, a 30% likelihood seems reasonable based on the potential for both sides to sustain losses in energy production.
2. Middle East Supply disruption (Probability: 25%)
The Middle East remains a volatile region with several hotspots of tension, including Iran’s nuclear ambitions and the potential impact of an Israeli strike on regional oil production. If military action occurs (e.g., strikes on Iranian nuclear facilities), this could lead to significant oil supply disruptions. The 25% probability reflects the ongoing nature of these tensions and their unpredictability but recognizes that such escalations are not constant.
3. Severe Winter Weather in Europe (Probability: 20%)
Based on historical data, severe winter weather events in Europe have occurred approximately 20% of the time over the last few decades, leading to energy supply challenges. This probability considers the unpredictability of weather patterns and acknowledges the increasing frequency of extreme weather events due to climate change.
4. Additional Risks: Now add in a host of smaller background factors.
- Lack of Coal and Oil Storage Backup: 15%
- Increased Demand from Data Centres/EVs/Heatpumps: 10%
- Terrorism: 1%
- Human Error: 1%
- Handover Problems between ESO and NESO: 5%
Cumulative Probability Assessment
- Ukraine War Intensifies: 30%
- Middle East Tensions: 25%
- Severe Winter Weather: 20%
- Miscellaneous: 32%
Since a total probability exceeding 100% is not feasible, we need to account for overlapping risks. However each of these risks is highly independent of the others. I favour a conservative adjustment, suggesting approx 30% overlap across the various factors.
Although the setup costs of battery storage can be high there are two ways of recouping the investment even if none of the risks materialises.
- Arbitrage – Buy at night and use during the day. This is only a temporary solution for the next two years – as the more people that use it, the less the differential will be.
- Trading – Selling surplus to immediate neighbours at a lower price than the grid – not as difficult as it sounds, and perfectly legal.
Nick Rosen is an off-grid advisor. He can be emailed at nick@off-grid.net
This article appeared in the Nov/Dec 2024 issue of Energy Manager magazine. Subscribe here.