System Costs and the Location of New Generating Plant in England and Wales

Abstract

Two basic problems for the electricity supply industry are examined, namely, which type of generating plant to install and where to locate the plant. The post-war location of coal-fired power stations in England and Wales is considered. It is suggested that insufficient attention has been paid by geographers to the effects of the whole system on locational decisions; the multiple functions of the grid system, distribution, interconnection, and bulk transfer are emphasized. The reasons for the up-grading of the grid system to 400 kV are then discussed. The selection of plant type has become especially significant with the development of oil-fired and nuclear capacity. A method of evaluating the lifetime costs of different plant is described, the importance of viewing each plant within the generating system as a whole being stressed. The results of such evaluations indicate the long-term viability of nuclear stations. The significance of political decisions in determining type of plant is briefly indicated. The development of oil-fired and nuclear generation has made the location of power stations much more flexible. In the future, new generating capacity will tend to be located within broad regions of demand. IN the 20 years following nationalization of the electricity supply industry (I948), the demand for electricity in England and Wales has more than quadrupled, and is expected to increase by about 6 per cent a year in the I 97os, despite a falling-off in the rate of growth from the mid-196os. New generating capacity has been provided to cater for this rapid growth in demand and also for the retirement of plant. This paper is concerned with the post-war development of new generating capacity in England and Wales. It considers investment appraisal and decisions regarding the type of plant (nuclear, coal, oil, or gas turbine) to be installed and its location, but not the substitution of fuels in existing power stations. Particular attention is paid to the importance of viewing these decisions in the context of the entire generating and transmitting system, an approach which has been insufficiently considered by geographers. The objective of the electricity supply industry in England and Wales has been defined by the I947 Electricity Act as the minimization of the delivered cost (i.e., the cost of electricity delivered to the Area Boards which are responsible for distribution to the consumer) for a given level of security. There is one corporate decision-making body, the Central Electricity Generating Board (CEGB), whose decisions are subject to government approval. The electricity industry has accounted for io per cent of all capital investment in recent years (Ministry of Power, I965, p. 29), and there is considerable expenditure on research. Accordingly, evaluation of locational factors by the CEGB is extremely thorough, and the subsequent location of plant represents a relatively 'optimal' (i.e., least-cost) choice for the time at which the decision is made. However, the relevant considerations change in relative significance over time. The size of the electricity supply industry has been no assurance against inaccurate predictions of the future demand for electricity or the trend in the costs of nuclear energy. Furthermore, the high capital investment in plant means that, when