National Grid issues supply crunch alert

National Grid has called on the market to bring forward at least 500MW of extra power generation capacity just three hours before multiple plant break-downs and low wind forecasts result in an expected capacity crunch.

The transmission operator told the market on Wednesday afternoon that supply margins for this evening are “inadequate” despite the warmer than usual weather after a string of unplanned plant outages tightened already meagre winter supply margins.

“An additional 500MW is being requested for between 16.30 and 18.30 this evening,” National Grid said in a Notification of Inadequate System Margin (NISM) at 13.30, its first since 2012.

Later in the afternoon National Grid called on contracted companies to reduce their demand on the grid through its demand-side balancing reserve (DSBR) and accepted offers of 40MW of capacity reduction. Both the DSBR and the supplemental balancing reserve (SBR) were put in place last winter but this is the first time that National Grid has faced capacity so constrained it needs to rely on these options.

Since then, intra-day trading has seen the price of power rocket to highs of £2,500/MWh.

NISMs are usually offered to the market as much as a day ahead of the expected squeeze but low levels of unpredictable wind generation may have led National Grid to offer significantly less notice of the coming crunch.

In addition, part of National Grid’s balancing systems were under “planned downtime” on Wednesday ahead of the rollout of new balancing codes set to come into effect from Thursday.

National Grid declined to comment on the timing of the market call, or say which outages have contributed to the UK’s unexpected capacity shortfall.

In recent days thermal generation including the Eggborough and Didcot plants have come offline while EDF Energy’s Heysham and Hartlepool nuclear reactors have been removed from the market for offload refuelling.

At the same time wind generation levels have dipped to just above 0.5GW, or 1.5 per cent of the total generation market.

National Grid has removed three power plants from the market this winter to form a backup reserve to prevent blackouts. But the operator can only call on these units after all available plants in the market have been ramped up.

The transmission operator has no choice but to accept any offers from the market. And the loophole had already raised concerns that generators may be able to exploit this shortfall by demanding dramatically higher National Grid payment before the reserve capacity can be used.

Shortly before 18.00 on Wednesday evening National Grid cancelled the alert, saying the market “duly responded to this signal”.