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UK regulator launches probe into utilities' role in power cuts

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UK regulator launches probe into utilities' role in power cuts

The U.K. energy regulator has launched an investigation into widespread power cuts that brought parts of the country to a standstill in early August, honing in on the role of some of Europe's largest utilities in the outages and probing the need for more fast-acting backup power from grid-scale batteries to counter similar events in the future.

The Office of Gas and Electricity Markets, or Ofgem, said it will investigate whether transmission grid operator National Grid PLC, German utility RWE AG, Danish utility Ørsted A/S and Britain's 12 distribution grid operators breached their licence conditions in connection with the event.

Its announcement came after National Grid delivered an interim report into the power cuts, identifying a lightning strike that hit a transmission circuit north of London as the likely cause for around 1.1 million electricity customers, parts of the rail network, an airport and a hospital being disconnected on Aug. 9.

The company, which is tasked with balancing supply and demand on Britain's grid, said the strike took around 500 MW of small embedded generation off the distribution system and was followed by the loss of RWE's Little Barford gas plant and Ørsted's Hornsea One offshore wind farm within seconds of each other. Although the power outages occurred independently of one another, both were connected to the lightning strike, according to National Grid.

Jonathan Brearley, Ofgem's executive director of systems and networks, said National Grid's report left enough questions unanswered to warrant an inquiry and said the regulator could decide to issue fines, which are capped at 10% of a regulated utility's annual revenue in the U.K. "We believe there are still areas where we need to use our statutory powers to investigate these outages," he said in a statement.

In its announcement, Ofgem added, "The opening of this investigation does not imply that Ofgem has made any findings about non-compliance for any of the companies mentioned at this early stage of the investigation. However, if evidence does emerge in the course of the investigation enforcement action could follow."

The outages have added pressure on National Grid just as it faces a storm of regulatory and political headwinds at home. Ofgem plans to cut the allowed investor returns for regulated utilities roughly in half from 2021 and the opposition Labour party wants to take electricity and gas networks back into public ownership if it comes to power.

That also affects the 12 distribution companies under investigation by Ofgem, which are owned by six groups — SSE PLC, Electricity North West Ltd., Northern Powergrid Holdings Co., UK Power Networks Holdings Ltd., PPL Corp.'s Western Power Distribution PLC and Scottish Power, a subsidiary of Spain's Iberdrola SA.

Battery backup

Ofgem said it will probe how generators responded to the transmission fault and whether the distribution companies made the right calls when disconnecting demand from both their household customers and critical infrastructure.

In addition, the regulator is looking at the potential need for more backup power, including inertial response from generators that are already running and frequency response provided by assets such as grid-connected batteries that can ramp up quickly to stabilize the system.

National Grid said it had 1,000 MW of automatic backup capacity on standby at the time of the lightning strike, significantly less than the 1,378 MW from Little Barford and Hornsea One that tripped offline. The company said it used all the resources available to balance the grid immediately afterwards, including 472 MW of battery storage.

The grid operator insisted that the blackout, which affected around 1,000 MW, or 5% of the country's electricity demand, was "an extremely rare event." But several alternative power providers seized on the outage to call for more support for batteries and other flexible generation.

"What is needed is a greater volume of faster response services, which can be called into action when the frequency drops. This would have prevented the need to turn the power off," said Steve Shine, executive chairman of renewables and storage provider Anesco Ltd. The company said several of its own battery arrays sprung into action after the blackout.

National Grid said its full report to Ofgem, expected by Sept. 6, will also look in more detail into the exact failure mechanisms at the gas and offshore wind plants as well as the power cuts by distributors.