Energy News

Winter Outlook Report: Margins are “Manageable”

           Energy News
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The National Grid’s Winter Outlook report was published last week, following consultation. The report is published annually and shows National Grid’s expectations of energy security for the coming winter.

Their winter view forecasts a 5.1% margin between capacity and peak electricity demand, with the use of balancing reserves. National Grid has described this as “tight, but manageable”. The forecast margin is the lowest since the winter of 2007/8 and compares to last winter’s outlook of 6.1%.

Without the use of balancing reserves, the winter margin would be much tighter, at just 1.2%. There are eight reserves the National Grid can call upon at times of high demand, such as Fast Start, a contracted balancing service that quickly provides additional supply when needed, using Open Cycle Gas Turbine generators.

Additional balancing services were added in 2014; the Supplemental Balancing Reserve (SBR) and Demand Side Balancing Reserve (DSBR). The National Grid has said there is increased likelihood that these will be despatched this winter to help balance the system. Under the SBR, 2.29GW of generation capacity is procured and kept in reserve to come online when demand cannot be met. Under the DSBR, voluntary contracts are held with high energy users who reduce their consumption during times of peak demand to a value of 0.13 GW.

New challenges are facing the National Grid, such as an ageing fleet of coal, gas, and nuclear generators, which increases the likelihood of outages. Sixteen gigawatts of renewables generation has been added since 2010, but this is intermittent by its nature. Three coal power stations are expected to close from March 2016, and recent reports indicate that further coal-fired plant could have to close by 2023 if they do not install carbon capture and storage or convert to biomass.

The government is working towards a number of solutions to improve energy security, one of which is a new capacity market, with the first auctions will be held in 2018. Under this scheme, National Grid will purchase capacity ahead of delivery to ensure investment in new generation.

In terms of gas supply for this winter, under normal supply conditions, the outlook report is forecasting a supply potential of 613 mcm/ day, which includes storage deliverability of 146 mcm/day. This is shown in the chart below against forecast demand of 394 mcm on a cold day and 465 mcm/day for a onein-twenty winter.

As a result of the consultation, the report now also includes a range of potential outcomes for the gas market under different scenarios such as a severe winter with infrastructure loss, a reduction in Russian supplies due to geopolitical events in Ukraine, and supply restrictions at the Groningen field. The full report can be found here.

The publication of the Winter Outlook report has led to a spotlight on security of supply concerns in the press, although most of the focus is on winter 2016/17, given the likelihood of coal plant closures next year. Energy Secretary Amber Rudd said: “Keeping the lights on is non-negotiable. National Grid has the right tools in place to manage the system this winter and we will ensure that they continue to do so in future.”

Written By- Nikki Wilson


Alfa Energy Group

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