Skip to main content
Electricity tower with economic charts overlay

20 Mar 2025

Electricity grids – Keeping the lights on

Harold Hutchinson | Senior Adviser - Alternative Energy

The failure of an electricity system can lead to severe consequences, including risks to health and safety. What measures should be taken in the UK to prepare the national grid for the anticipated increase in demand over the coming decades.

 

The importance of electricity grids is most evident when they go wrong. And they do. Last month, over 90% of the population of Chile was subjected to a total blackout for several hours after a cable failure in the north cascaded across the whole country.

For context, the Chilean electricity system is relatively sophisticated. It was the first country to implement comprehensive reform of its electricity sector in modern times (Chile National Electricity Act 1982), a poster child for a subsequent privatisation wave across the globe.

Blackouts are a very dark place indeed - customers stuck in elevators for hours (mid-summer in Chile during the recent failure), no cell phone signals, water supply cuts as pumps fail, travel chaos across road, rail and air systems. Critical services are compromised, with life threatening consequences.

So, an adequate, reliable electricity grid is a matter of high national importance, especially in the UK today, with projections suggesting that electricity consumption may more than double by 2050.

What is the way forward? Historical context can give us clues.

The UK electricity network evolved ‘bottom up´, driven by entrepreneurship and investment in innovation. Small power stations distributed electricity to local communities. Gradually, neighbouring networks saw the advantages of being linked together to provide greater flexibility and reliability, although different local operating codes inhibited full integration. The Electricity Supply Act (1926) ensured more coordination, and an embryonic national grid emerged in the 1930s.

In the 1950s and ´60s, technological advances and rapid demand growth facilitated the roll out of today´s high-voltage transmission super-grid, with its overhead and underground cables weaved across the landscape. From this highway, electricity then moves along smaller wires at voltages suitable for consumers, managed by distribution companies that are alert to the needs of local communities.

Overall, the UK has a top-rate electricity grid in operation today - a mix of the old and the new, the national and the local, the visible and invisible. It is not a fixed structure but evolves as technologies improve to meet new demands on the system. 

And now, it must undergo another growth burst.

There is one phenomenon which, above all, drives the evolution of all power systems - demand and supply must be in continuous balance to avoid a variety of system stresses, including blackouts. 

With demand, we expect that the lights will go on at the flick of a switch. Moreover, supply is increasingly driven by variable wind and solar power plants. The future grid must balance the whims of humanity and nature, both short and long term.

It adds up to an enormous system challenge.

For this, we need clear national objectives. We also need technical coordination, as understood in the 1926 Act. Indeed, there are many new engineering challenges emerging as we integrate ´hardware´ machine synchronisation of the past with the software systems that control modern renewables generation.

But it is all possible, and the imperative now is implementation and delivery.

There is one over-riding risk, and it is human not technologicial – hubris. We should not rush to replace the trial and error of evolution with over-planning and assumed perfect foresight.

Instead, we need an indirect strategy to confront the future – none of us really knows the demand or technology outcomes that will emerge in the decades ahead, most of which lie outside our direct control.

The underlying reason is that the economy is itself a complex system, continuously forming and reforming itself, the result of population and environmental changes, industrial innovations, changing consumer preferences, and much more besides.

Might that other great complex system – the human brain – hold clues about how electricity networks can evolve against this backdrop?

  • The brain is not built according to a ‘least-cost’ robotic code. It matured with apparently inefficient features, especially its hemispheric structure, with each ´half´ able to sustain consciouness alone. Moreover, it does not discard older assets that ´work´, but keeps them in good order, including the ‘old brain´ from our earlier evolution.
  • Paradoxically for an organ devoted to connections, the hemispheres retain significant inhibitory features and independence from one other, permitting both collaboration but also competition.

Overall, our brains have evolved through trial and error, according to an organic code designed to enable us to survive and thrive in an unfolding, uncertain world.

Thankfully, we have the broad framework in place already to allow us to replicate these features in our electricity grid.

Basically, we need to refurbish and expand it at pace, in the process enabling storage and signalling technologies along the full transmission and distribution network. This requires collaboration but also healthy competition between main grid and local-grid distribution in meeting stakeholder needs.

After all, these are well-tried principles in our own minds, so why not use them for what amounts to the very nerve centre of our economy?

 

Further reading: Plans versus Strategies: What can we learn from the robin redbreast? Regulatory Policy Institute Insights into Regulation (available at www.rpieurope.org).

Get Harold's Herald delivered to your inbox

Get Harold's Herald delivered to your inbox

Please fill in the form below to receive regular articles and insights from Harold Hutchinson

Investec Bank plc and its subsidiaries recognise and respect the privacy and data protection rights of individuals with regards to personal data.

 

We may use your personal data to provide you with services you request from us,  or to manage your accounts, make decisions, detect and prevent fraud, fulfil any contractual relationship with you, undertake analysis and assessment, ensure that we comply with legal and regulatory requirements and/or for other purposes where in our legitimate interests.

 

For further details as to how Investec uses personal data, please refer to our Data Protection Notice.

Sending...

Please complete all required fields before sending.

Thank you for registering your details.

We look forward to sending you Harold's Herald soon

Sorry there seems to be a technical issue

Read more of Harold's blogs

Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.