Out-Law News 1 min. read

UK winter energy spare capacity margin narrows, although gas supplies 'expected to be sufficient'


The UK expects to have around 5% spare electricity generating capacity spare on the system this winter to cope with surges in demand after purchasing 2.56 GW of additional capacity, according to analysis by National Grid.

"Additional balancing services" purchased by National Grid, made up of additional generating capacity on standby and commitments to reduce energy consumption at critical times from major energy users, will add around 50p to the average household bill, according to the system operator's annual 'Winter Outlook' report. Without these investments, there would only have been around 1.2% spare capacity left on the system, according to the report.

UK gas supplies are expected to be sufficient to meet anticipated demand, according to the report.

"It's clear that electricity margins for that coldest, darkest half hour of winter are currently tighter than they have been, due to power station closures," said National Grid's market operation director, Cordi O'Hara.

"As system operator, we feel we've taken a sensible precaution again this winter to buy some extra services. Together with the tools we already use to balance the network these additional services will significantly increase the energy reserve available this winter," she said.

Last year, National Grid was able to use demand side balancing reserve (DSBR) and additional supplemental balancing reserve (SBR) mechanisms to enable it to guarantee sufficient electricity generating capacity during times of peak demand for the first time. DBSR is targeted at large energy consumers that are able to reduce demand, or switch to back-up generation, when required; while SBR is targeted at power stations that would otherwise be offline. Both services are intended to operate as a last resort.

National Grid did not need to call on the additional balancing services that it purchased last winter, according to the report. This was partly due to milder than average weather, leading to seasonally low energy demand, and stronger than average performance from wind power renewable generation and 'interconnectors' with suppliers overseas, it said.

The system operator's balancing tools are intended as a short-term solution to capacity supply issues. From 2018/19, spare capacity will be procured through regular capacity market auctions established as part of the government's electricity market reform (EMR) programme. EMR is expected to incentivise investment in energy infrastructure, ultimately guaranteeing long-term UK energy security.

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