London paid an astonishing price to avoid blackouts in last week’s heatwave

July 25, 2022, 10:38 AM UTC
As evening light fades, bright light from the electricity-hungry Canary Wharf docklands development is supplied by the voltage from electricity cables and supporting struts at West Ham sub-station, Canning Town, London England
As evening light fades, bright light from the electricity-hungry Canary Wharf docklands development is supplied by the voltage from electricity cables and supporting struts at West Ham sub-station, Canning Town, London England.
Pictures Ltd./Corbis/Getty Images

Good morning. David Meyer here in Berlin, filling in for Alan.

Last week, I wrote about the European heatwave, with a focus on the U.K. But there’s a mind-blowing detail that only just came to light.

As reported this morning by Bloomberg, London avoided blackouts last week by briefly paying an astonishing $11,700 per megawatt hour—over 5,000% more than the regular spot price—for electricity sent over from Belgium.

There are two underlying problems here. The first is the climate emergency, with the extreme weather it increasingly generates. The other is underinvestment in the power grid—which is far from being a particularly British issue.

For this South African, it feels like developing-nation problems are starting to cross over into the more industrialized world—though there’s a heck of a way to go yet.

Back home, the state power utility Eskom operates a rickety grid that makes rolling “load shedding” blackouts a daily reality. There, it is pretty much essential to install an unofficial app on your phone (EskomSePush: a quite amusing name that I sadly cannot explain in a family-friendly newsletter; rest assured it’s not flattering to Eskom) that informs you of the timing and severity of your area’s scheduled blackouts. Eskom’s near-failure weighs very heavily on the South African economy and its public debt.

Europe obviously isn’t anywhere near that sort of crisis, but recent events have shown it is not immune.

Russia may not have realized Europe’s worst energy fears by turning off its gas supplies entirely, but the artificial constraints it is imposing on those flows have already forced the German government to bail out local energy giant Uniper, to the tune of $15 billion. And a more serious disruption could yet come; Greece is the latest country to unveil a contingency plan for that eventuality that would include rolling blackouts in the worst case.

Again, Europe’s power grids aren’t about to fall apart. But the days of taking electricity for granted 24/7 may be numbered.

More news below.

David Meyer



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This edition of CEO Daily was edited by David Meyer.

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