ESO says winter power cuts cannot be ruled out

National Grid Electricity System Operator (ESO) has said there is a risk it may need to cut power supplies to some customers this winter if gas shortfalls leave generators without fuel.

The body explored this eventuality in one of several illustrative scenarios in its Winter Outlook for 2022/23.

In its base case, the ESO said it expects peak underlying demand during an average cold spell to total 59.5GW, including an operating reserve of 1.2GW.

A total of 101.2GW of generation, de-rated to 57.5GW, is expected to be available to meet this demand, plus 8.4GW of net interconnector imports, de-rated to 5.7GW.

This would leave Britain with a de-rated supply margin of 3.7GW or 6.3%, representing a slight decrease when compared to last year’s forecast of 3.9GW or 6.6%. The ESO said this equates to a loss of load expectation (LOLE) of 0.2 hours per year.

However, given concerns over the impact Russia’s invasion of Ukraine on energy supplies in Europe, the ESO also modelled two additional scenarios reflecting the risks of reduced electricity imports via interconnectors and shortages of gas.

The first scenario assumes there are no electricity interconnector imports from France, Belgium and the Netherlands, but 1.2GW of imports from Norway and 0.4GW of exports to Northern Ireland and Ireland.

In this case, the ESO said it would deploy both the 2GW of coal generation that has been kept online as part of its winter contingency service and the 2GW of demand reduction it expects to be available through the new demand flexibility service it has been developing in recent months. It said this would result in a de-rated supply margin of 3.3GW or 5.7%, equating to a LOLE of 0.5 hours per year.

Even with reduced take up for the demand flexibility service, the ESO said it expects supply margins to remain without the government’s reliability standard of a LOLE of 3 hours per year. However, on days of both high demand and low wind output, the ESO said there may be the need to interrupt supplies to some customers for limited periods.

The second scenario additionally assumes that 10GW of combined-cycle gas turbine generation is unavailable over a two-week period in January due to insufficient gas supplies.

In this scenario, the ESO said the contingency coal generation and demand flexibility service would be insufficient to prevent a supply shortfall, meaning it may be necessary to initiate planned, controlled and temporary load-shedding under the Electricity Supply Emergency Code.

“In the unlikely event we were in this situation, it would mean that some customers could be without power for pre-defined periods during a day – generally this is assumed to be for 3 hour blocks,” the ESO explained.

Rise in gas demand predicted

In the Gas Winter Outlook released by the gas system operator, National Grid said it expects total gas demand over the winter to total 53.1 billion cubic metres (bcm), up from 51.9 bcm during the winter of 2021/22.

The increase is primarily due to increased demand for power generation, which is expected to rise from 10.1 to 12.3 bcm as more power is exported to France. Demand from other users is expected to fall slightly as they respond to the current high prices.

Gas from the UK continental shelf and Norway are expected to remain the main sources of supply, with the former projected to range between 68 and 117 million cubic metres per day (mcm/d) and the latter between 34 and 141 mcm/d.

National Grid noted that Britain has one of the largest capabilities in Europe for the re-gasification of liquefied natural gas (LNG), totalling 141 mcm/d, meaning the country will be well placed to receive cargoes if prices are competitive.

It said Britain will also be able to import up to 125 mcm/d via interconnectors with Europe, noting that nearly 20bcm of extra LNG import capacity is expected to be brought online in North West Europe this winter as result of the arrival of floating storage and regasification units at Eemshaven in the Netherlands and Brunsbuettel in Germany.

National Grid said up to 117 mcm/d could be withdrawn from domestic gas storage, with stocks currently at around 1.6bcm – the highest level at this time of the year in the last five years. These figures do not cover Centrica’s Rough gas storage facility, which recently resumed partial operation.

Commenting on the reports, ESO executive director Fintan Slye said: “Under our base case, as set out in the Winter Outlook, we are cautiously confident that there will be adequate margins through the winter period.

“As an expert and responsible operator of Great Britain’s electricity system it is incumbent on us to also factor in external factors and risks beyond our control like the unprecedented turmoil and volatility in energy markets in Europe and beyond.”

He continued: “Our illustrative scenarios outline how we would respond to any challenges around interconnector availability and potential impacts to gas supplies for power generation. We’ve engaged with and continue to work with the National Grid Gas System Operator, system operator counterparts in Europe, government, the energy regulator and the energy industry.

“We’ve also taken prudent action in agreeing winter contingency contracts for coal and developing our innovative demand flexibility service to compliment the robust set of tools we already use to balance the electricity system every day.”

Reaction

Charles Wood, deputy director, Energy UK

“Both the National Grid Gas and Electricity System Operator’s Winter Outlooks are clear that there should be sufficient resources to ensure security of supply over the next few months – although we do note that there will continue to be uncertainties and challenges resulting from the situation across Europe.

“Energy UK’s generator and supplier members have worked closely with National Grid to help put in place additional measures – like the contingency contracts and demand flexibility service – which can be brought in if margins are tight. Demand flexibility has huge potential to benefit customers and the whole energy system.

“With these measures in place, the energy system should cope with the considerable challenges it will face this winter. But prices will remain high and this again underlines the importance of rapidly expanding our own sources of clean domestic power, and ensuring that our buildings are as energy efficient as possible. “

Simon Virley, vice chair and head of energy and natural resources, KPMG

“Today’s Winter Outlook report shows just how challenging this winter could be. The government and Ofgem are looking to use every tool available to ensure reliable energy supplies and avoid paying excessive prices for imported gas.  Businesses should adopt the same approach of looking at all the levers at their disposal, including energy efficiency, interruptible contracts and onsite generation.

“While this is a short-term gas crisis, now is not the time to pull back from the energy transition.  It’s vital that we double down and accelerate the moves to home grown clean energy.  To get that done, we need the government to put in place the right market frameworks, so UK plc doesn’t miss out on international investment, and speed up the planning and consenting process for essential new infrastructure.”

Jess Ralston, senior analyst, Energy and Climate Intelligence Unit

“Last year the grid stood solid during the winter, but the gas crisis has changed the outlook this year because there is still a large unknown around how high the gas price will go and what will be available.

“We didn’t need to be here. Had investment in energy efficiency and onshore wind gone ahead over the past few years, we’d be much more certain about meeting demand. Every spin of a wind turbine and loft lagged means less gas we need to try to buy.

“Bringing more market dynamics into the electricity system makes sense and will help to bring bills down not only for those households taking advantage and switching their energy use to off-peak times, but will reduce the need for the most expensive gas plants to come online in the first place, cutting the nation’s overall electricity bill.”

Valts Grintals, market specialist, Kaluza

“National Grid ESO’s new demand flexibility service is a great step towards incorporating more small-scale flexibility into the energy system and enabling households to benefit from smarter ways of using their energy.

“However, longer-term thinking is needed to create the right market conditions for scale in line with rapidly-growing technologies like electric cars and heat pumps.

“By leveraging electric cars alone over the next four years, we could double the volume of flexible capacity available at winter peak times, but the work to establish the right market design and incentives needs to start now.”