Politicians love to rant at big companies when they appear to fumble, but it’s not clear that Sunday’s scattered power cuts across Western Europe were evidence of a major failure. Instead, the blackouts, which lasted an hour or two in parts of Germany, France, Italy and Spain, might have been an inevitable, occasional breakdown in a synchronised grid striving for ever greater energy efficiency.

Note the last word. We don’t need a lot more power but much more efficient power. The point was well made yesterday by the International Energy Agency (IEA), which delivered its response to a request by the G8 leaders for policies for an alternative energy future that is “clean, clever and competitive”.

More efficient fuel consumption, more efficient power generation, a switch towards nuclear and renewables in order to minimise fossil fuel burn and carbon emissions. According to Fatih Birol, head of economic analysis at the IEA, it’s all about using less. “The cleanest power station is the one you don’t build,” he suggests.

That power cut — it was the European Commission’s fault, really. By urging Europe’s utilities to become less monopolistic, by encouraging cross-border competition and open access to power grids, Brussels has forced those old utility dinosaurs to become mean cats, building just enough capacity to supply the last consumer at the keenest price.

A hooked-up power grid helps. Less local power generation is needed if you can import electricity. However, a grid needs to operate at a constant frequency, the same level of spin from Hamburg to Marseilles. All the generators must operate in lock step. If one part of the system is removed, the electrons seek the path of least resistance, forcing power to other parts of the sytem, creating the potential for overloads and domino failures.

Power grids do prepare for such risks. It is only cumulative failures that provoke network blackouts. The question is: how much do we want to pay for that extra megawatt hour of generation capacity, for that extra mile of transmission line? It’s a debate about how secure we want to be, reckons Matt Brown, head of European power at Cambridge Energy Research Associates. Electricity is hard to price efficiently because people continue to consume more as the price goes up. “The economically efficient thing to do is to let the lights go out,” Mr Brown says.

Much of Europe’s power system was built in the 1970s by monopolistic utilities when the fashion was gold-plating. With the exception of France, governments and engineers are no longer running most of these companies and the political focus today is energy efficiency and cheaper power.

Britain’s gas supply system is a good example. In the 1980s, British Gas was the sole supplier and, like a good monopolist, it aggressively bought up the content of every North Sea gasfield. Gas supply was secure, but expensive. When the market opened up in the 1990s, rivals pushed down the price of gas, almost driving BG to bankruptcy, weighed down by its overpriced supply contracts. Its inefficiency was exposed by the market, but it had fulfilled its mission — to provide (expensive) energy security.

The argument between price and reliability continues because dwindling European gas reserves are creating new pressures. In Britain, wind power is fashionable but very expensive and causes network problems. Scotland, being windy, is a good place for wind turbines, but the power is needed in southern England and National Grid worries about the cost of transmission. How much should it build? Because wind is intermittent, each turbine is only 30 per cent efficient, but transmission lines must be able to cope with maximum output.

Where do we go from here? Sadly, politicians don’t call for occasional blackouts. It’s not a vote-winner. The Commission wants a European energy policy, but what would such a policy say? Consumers want cheap,

100 per cent reliable, clean energy. It’s not feasible and, faced with an expensive dilemma, the British Government has exposed its intellectual failure by threatening consumers with tax increases. Europe has opted, more or less, for market-based solutions that produce cheap rather than secure energy, but suppliers of fuel, such as Gazprom, are becoming more monopolistic. A collision between the two is not far away. Mr Piebalgs needs to get thinking.

carl.mortished@thetimes.co.uk

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