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Some 7GW worth of gas-fired power generation is unprofitable and could exit the market, fresh evidence from National Grid suggests.
With a capacity crunch looming in 2015/16, National Grid is considering a supplemental balancing reserve (SBR) to avert the risk of blackouts. This involves paying generators to sit out of the market and be available for emergencies.
An industry survey showed interest from some 7GW of plant (understood to be gas-fired) that is currently available in the market, as well as 2GW of mothballed plant that could be brought back. A further 850MW to 1GW of capacity could be freed up by demand-side response.
Peter Bingham, from National Grid’s Electricity Market Reform project, said he was “very encouraged” by the level of interest. It showed the market would “respond positively” if needed.
It is also a sign of how much gas generation is on the brink of closure. Mark Somerset, vice president at generation company Intergen, said the results show gas plant “are essentially unprofitable and looking towards the SBR for value”.
National Grid is still assessing whether the SBR will be needed. Government has indicated up to 300MW of extra capacity could be required this winter and 1GW the next.
The SBR “may assist some capacity” but leave the rest “potentially facing closure”, said Somerset. Taking plant out of the market could squeeze capacity margins and increase prices, he warned.
A spokesman for National Grid said tenders for the SBR were likely to be “highly competitive” given the volume of interest, driving prices for that service down.
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