Two articles in the Financial Times have highlighted problems in the UK, USA and Mexican grids related (in one case, it appears falsely) to declining shares of fossil fuels in recent times, as well as, in the UK’s case, complications resulting from Brexit. The problems last summer in California were widely documented, as many consumers experienced blackouts and prices surged; a similar surge in prices was experienced in Britain in the first week of this year, with EDF’s gas-fired West Burton B power plant selling power for £4,000 (€4503/US$5465) per MWh for a brief period, around 100 times higher than average prices. Most of this was because of cold weather and lower-than-normal renewable energy generation, but a part was also because of structural market changes. Because Britain’s electricity market auctions are now not directly linked to the EU + Pan-European Hybrid Electricity Market Integration Algorithm (EUphemia), there is room for spot price divergence, and this is what occurred a number of times during the week. (Britain still participates in EU auctions, and prices are usually similar.) Alastair Martin, founder and chief strategy officer at Flexitricity, described this as “probably a market inefficiency, and it remains to be seen how it will be resolved.” On the generation front, renewables sometimes account for as much as 65% of Britain’s demand, but at other times (87 days in 2020) account for 20% or less, and it is the volatility in output which makes planning for backup generation somewhat difficult – especially if infrastructure problems happen to occur at the same time – and spot prices to peak wildly. The FT speculates that because over the long term fossil-fired power plants do not provide an attractive return on investment in current market conditions in the UK, intermittency problems are likely to get worse in the years to come.

In Mexico, meanwhile, power cuts were experienced on 28 December, affecting 10.3 million people, with national electricity company CFE stating that the cuts were necessary to avoid shutting down the grid entirely. The company directly blamed the intermittency of renewables and a knock-on effect on transmission lines, yet only around 6% of the country’s electricity is produced from renewables, and the administration of President Andrés Manuel López Obrador has championed domestic fossil fuel production and use. Analysts point the finger instead at under-investment in transmission lines, which may more helpfully explain the situation. Rather weirdly, CFE produced a letter from the state civil protection agency stating that the cause of the 28 December outage was a fire associated with transmission lines (in turn, related to renewables), and the letter turned out to be a fake. While in 2015 Mexico was lauded as a leader in pledging renewable energy production increases (the aim was to generate 35% of electricity from renewables by 2024), it appears that the country will get nowhere near that target, and may become recognised as an international laggard.