What the heatwave reveals about Britain's electricity system
It may surprise people who have been reaching for fans or turning up the air conditioning that, despite last week’s high temperatures, electricity demand has not been exceptionally high. Peak demand has been around 35GW; in winter, it can exceed 50GW.
Nor is this a period when the system should be short of power. It is summer, solar output is stronger, and Britain has more renewable capacity than ever. So why has the system come under pressure, with warnings about tight capacity and unusually high prices for the season?
The answer lies in how the system behaves in hot weather. High pressure often means low wind. Solar helps during the day, but not through hot evenings and nights. At those times, the system still needs flexible generation that can be called on when required.
Batteries and demand-side response are valuable over short periods – minutes or hours – but over longer stretches, like the recent heatwave, they are not sufficient on their own.
In the future, long duration batteries may help, but today this is where gas-fired generation still plays an important role. It remains the main source of enduring flexible capacity when renewable output is low. Both NESO, the system operator, and the government have said that we need the gas fired generation capacity we have on the system to provide stability, but much of that fleet is reaching mid to end of life. As the fleet ages and is used less frequently, reliability becomes hard to maintain.
Summer is typically when operators schedule essential maintenance so plants are available for winter, when they are expected to be needed most. But with weather like that experienced last week, units of the fleet offline, and limited new capacity coming forward, the system tightens quickly and prices rise to signal scarcity. Interconnectors can provide support, but when Europe faces the same weather pattern, Britain is competing with neighbouring markets for that power, pushing prices higher still.
In a system with more intermittent renewables, price volatility is a feature, not a sign of market failure. If price spikes are treated as the problem, the risk is that the signal to act is suppressed rather than the underlying issue addressed: a lack of sufficient reliable, enduring and dispatchable capacity.
These periods of wholesale volatility do not typically drive retail bills anymore; they are largely smoothed over time, when renewables provide most of the power and keep prices low or even negative. What increasingly drives costs are the network and policy investments needed to scale the system as more renewables come online.
At the same time, the need for gas-fired generation in a more limited but critical role will grow, not shrink, if the UK is to enable economic growth. Electrification, digital infrastructure and industrial investment all depend on reliable power. Low-carbon alternatives such as CCS and hydrogen are being deployed at a fraction of the scale required to replace that role in the 2030s. That is why every one of NESO’s resource adequacy scenarios retains at least 35GW of gas-fired capacity.
The UK already has most of this gas fired generation in place, unlike many countries that must build it from scratch to transition away from coal. The most cost-effective approach is therefore to keep viable existing assets available and reliable over the next 10–15 years. In practice, that means refurbishment.
Without that investment, the system risks running ageing assets hard until they exit, leaving a gap that cannot be filled quickly or cheaply, particularly as the UK competes with the US and others to build new gas capacity.
For policymakers, the forthcoming Capacity Market Auction is a practical opportunity to respond to what the system is already signalling.
It should secure sufficient firm, dispatchable capacity to rebuild headroom, retain and refurbish viable assets, and reduce the risk that tightening margins become more disruptive and more expensive to correct.