Energy Rationing

 


 

Russia’s invasion of Ukraine has prompted much discussion of energy supply issues and the possibility of energy rationing.  Earl (2020) cited the head of the International Energy Agency, Fatih Birol, on the risk of energy shortages and rationing in Europe in the coming winter and the need for governments to reduce consumer demand and secure alternative energy supplies. The IEA had earlier called for restrictions on driving and air travel.  An article on the economic aspects of the situation points to the increasing risk of recession (Bakkum, 2022). The author considers it likely that “Russia will cut off more gas supplies to Europe” and notes that “Germany and the Netherlands have already moved to an emergency gas plan” prioritising energy security over climate ambitions. An opinion piece from Euromoney argues that energy price caps are unlikely to solve the problem for Europe which will be “running on empty by March”: it advocates testing the systems and practical procedures for energy rationing (Euromoney, 2022).

Lawson (2022) points out that while Britain does not rely heavily on Russian supplies, reductions in its gas exports will increase gas prices. Britain’s present emergency supply plans are geared to coping with interruptions due to storms or system faults rather than to supply shortages extending to months. The life of some coal-fired power stations may have to be extended, and in worst case situations millions of household might have to cut consumption at peak times. Manufacturers using large amounts of energy might be asked, where possible, to plan for three hour shutdowns, but there would be exemptions for products such as steel. Voltage reductions might be employed, causing ‘brownouts’, and in the worst situations ‘rota disconnections’ could be employed, three hour blackouts at intervals depending on the severity of supply shortage. Facilities such as airports, hospitals and water treatment plants would be exempt. Households may be asked to lower thermostat settings to reduce the frequency of blackouts, and people may be encouraged to improve home insulation and to wear more clothing indoors. Some schemes envisage paying consumers to use less energy at peak times. Amaglobeli et al. (2022) discuss rationing strategies in a variety of contexts, and stress the importance of price signals for energy and “providing clear targets to the population through a communication campaign”. They cite a quota system used in Brazil in the early 2000s which achieved a reduction in consumption of more than 20 percent in one year, and consumption targets for enterprises and reduced demand for air conditioning set by Japan after the 2011 earthquake and subsequent shutdown of nuclear power plants.

Further examples of energy rationing could be drawn from past crisis situations such as the Arab Oil Embargo of 1973, but it is the rationing implicit in the UK’s net zero ambitions which provides a subject for Montford (2021). He sees the decarbonisation plan as involving the “wholesale electrification of the economy, including the two biggest domestic sources of energy demand: heat and transport.” Two reasons for this are growth in use of electric vehicles (EVs) and the planned introduction of heat pumps on a large scale for domestic heating. Consumer behaviour is likely to produce peak demands for electricity in the mornings and evenings beyond the capacity of the existing supply network. Distribution Network Operators (DNOs) could reduce the risk of grid overloads by shifting demand towards the middle of the night, when it is relatively low at present. This would avoid the high cost of grid reinforcement, and could be done through the price signals provided by smart meters. Montford claims that a form of rationing is already being used in some areas where EV owners have been asked to install current limiting devices on their chargers, which can then be activated if required from electricity substations. Users will in effect be unable to charge their vehicles during the hours 8–11am and 4–10pm on weekdays. Heat pumps do not generally load the grid as much as EV chargers, but in unusually cold weather when their efficiency falls, the corresponding increase in demand could become a problem, raising the “question of how load shifting can be achieved without consumers noticing.”

Load shifting is at best a partial solution, as it cannot deal with sustained reductions in supply such those resulting from reduced wind turbine output in periods of calm winter weather.  “At such times, it is likely that National Grid will prevent any EV charging at all, and they will probably reduce heating to a bare minimum”. Rationing electricity “in response to the needs of both DNOs and National Grid will raise a host of ethical questions that will represent a minefield for everyone.” Montford believes that load shifting will be achieved mainly through pricing, and those most likely to respond to pricing signals will be the poor. Unlike the wealthy they will be unable to protect themselves against temporary loss of power through measures such as heat batteries, and we will “move from a society in which the majority stay warm through the winter to one in which the poor go cold when the wind fails to blow for a couple of days.” He notes two predictions of National Grid’s Future Energy Scenarios, that road transport energy demands will fall by up to 60–70%, and that residential electricity demand increase will be modest, and suggests that they “allow the DNOs to assume that by enforcing smart meters everywhere, they will largely be able to avoid upgrading the network”.  In his opinion rationing would be inevitable given a repeat of the calm winter weather experienced by the UK in the spring of 2021, and this “is what smart meters and smart homes are intended to enable.”

 

References

Amaglobeli, D. et al. (2022), Fiscal Policy for Mitigating the Social Impact of High Energy and Food Prices, IMF, online, accessed 30 July 2022

https://www.elibrary.imf.org/configurable/content/journals$002f068$002f2022$002f001$002farticle-A001-en.xml

Bakkum, M-J., 2022, Energy rationing becoming likelier, NN Investment Partners, 29 June 2022, online, accessed 29 July 2022

https://www.nnip.com/en-INT/professional/insights/articles/energy-rationing-becoming-likelier

Earl, N., 2022, Europe at risk of energy rationing this winter, warns IEA: June 2022, City A.M., online, accessed 29 July 2022

https://www.cityam.com/europe-at-risk-of-energy-rationing-this-winter-warns-iea/

Euromoney, 2022, Forget price caps, try energy rationing, Euromoney, June 2022, online, accessed 29 July 2022

https://www.euromoney.com/article/2aafbv46p0zogqkh4b0n4/opinion/forget-price-caps-try-energy-rationing

Lawson, A., 2022, How to keep the lights on – UK gears up for worst-case energy scenarios, The Guardian, online, accessed 29 July 2022

https://www.theguardian.com/business/2022/jul/10/how-to-keep-the-lights-on-uk-gears-up-for-worst-case-energy-scenarios

Montford, A., 2021, Survival of the Richest, The Global Warming Policy Foundation, online, accessed 26 July 2022

https://climate-science.press/wp-content/uploads/2021/10/0Montford-Smart-Homes-Energy-Rationing.pdf

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