ESO lowers forecast for winter supply margin

National Grid Electricity System Operator (ESO) has lowered its forecast for the supply margin over the coming winter to 3.9GW – or 6.6% – following a fire at the UK substation for the IFA interconnector with France last month.

The de-rated margin is down from the ESO’s preliminary forecast of 4.3GW – or 7.3% – in its early view in July and from 4.8GW – or 8.3% – in last year’s winter outlook.

The ESO had already predicted a tightening of supply margins this winter, primarily due to the early accelerated closure of the Dungeness B and Hunterston B nuclear power stations.

However, a fire at the Sellindge substation for the IFA2 interconnector, which was already operating at half capacity due to a planned outage until 23 October, has knocked out the other half until March next year.

The ESO expects there to be 103.2GW of nominal generation capacity and 4.2GW of net interconnector imports available to meet peak demand during an average cold spell of 59.5GW, which includes a reserve requirement of 1.5GW.

The body said it has not applied a downward adjustment to the de-rating factors for gas generation to reflect the recent tightness in gas markets after judging that there would be sufficient supplies to keep power stations stocked with fuel.

When combined with record-high gas prices and a number of outages ahead of the winter season, a dearth of wind generation led to sharp spikes in power prices during September.

Although the historical data used to produce its forecasts includes periods in which load factors for wind dropped to just 2 per cent, the ESO said it has applied a 17 per cent de-rating to wind capacity on the grounds that other plants will make themselves if another period of low wind is expected by the market.

It said the peak figure for demand does not include any suppression as a result of the coronavirus pandemic.

The ESO said the forecast supply margin of 6.6% is the lowest since 2016/17 but said the corresponding loss of load expectation (LOLE) of 0.3 hours per year is still well below the government’s requirement of 3 hours. The tightest periods are expected to fall on Christmas Day and Boxing Day.

It said it expects to send out a similar number of Electricity Margin Notices to the six that were issued last winter.

ESO executive director Fintan Slye said: “The winter outlook confirms that we expect to have sufficient capacity and the tools needed to meet demand this winter. Margins are well within the reliability standard and therefore we are confident that there will be enough capacity available to keep Britain’s lights on.”