EXCESS CAPACITY AND THE DEMAND FOR ELECTRICITY IN SCOTLAND
| DOI | http://doi.org/10.1111/j.1467-9485.1982.tb00435.x |
| Published date | 01 February 1982 |
| Date | 01 February 1982 |
Scultish
Juurnal
of
Puliciul
Economy.
Vol.
29,
No.
1,
February
1982
6
1982
Scottish
Economic
Society
0036 9292/82/00030000
$02.00
EXCESS CAPACITY AND THE DEMAND
FOR ELECTRICITY
IN
SCOTLAND
ALISTAIR MCGUIRE*
I
INTRODUCTION
The estimation of future system maximum demand (SMD) is essential to
determine the future capacity plans in an electricity supply system. The long
lead times involved in capital investment gives an integral role to the forecasts
of
SMD
in matching supply and demand in this industry. We are thus dealing
with a dynamic system.
Forecasts of SMD are used to determine future electricity output capacity.
In a number of consistent over-, or under-estimations in the forecasts have
been the norm for a period of years, then capacity figures will reflect the errors
made in the estimation process. Given the large amounts of capital involved in
the electricity supply industry such a pattern would of course be very costly.
The Scottish electricity supply industry appears to have suffered from
consistent over-estimation and SMD from the mid-1960s. The purpose of this
paper is to look at this historical record and to attempt forecasts of future
capacity, demand and excess capacity.
I1
THE HISTORICAL
RECORD
The Scottish electricity supply industry is governed by two Boards; the
South of Scotland Electricity Board (S.S.E.B.) and the North of Scotland
Hydro-Electric Board (N.S.H.E.B.). These Boards are closely integrated. For
example, they co-operate in the planning and the operation of generating plant
and share the costs of all generation on an agreed basis. Moreover, the sales
and purchases of electricity to and from their English counterpart (the
C.E.G.B.) is very small. For our purposes, then, we shall consider the industry
in Scotland as a self-contained system which is optimised as a single entity.
The two Scottish Boards jointly publish an occasional pamphlet which
reviews the authorities’ assessment of the medium term future, usually seven
years (N.S.H.E.B. and S.S.E.B.
1975).
The period of seven years is taken to
represent the average lead time between the decision to build a new plant and
the commissioning of that plant. Table
1
summarises the actual figures and the
*
I
should like
to
express thanks
to
David Rose
for
establishing the computer programme used
in the section on sensitivity analysis and
to
Professor D.
W.
Pearce
for
comments and suggestions.
Date
of
receipt
of
final manuscript
:
6
April
1981.
45
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