National Grid’s Winter Outlook: crisis, what crisis?

The lights will stay on this winter. Or so say a string of regulators, trade groups and National Grid itself after the release of its Winter Outlook, which shows capacity margins slashed to just a quarter of where they were three years ago. But although the risk of a supply shortfall has certainly increased after unprecedented unplanned outages this summer, experts believe that the likelihood of blackouts is still low.

“I don’t think a blackout is likely,” former Department of  Energy and Climate Change strategist Jonathan Brearley told Utility Week.

“Although there are no certainties, I think that, given National Grid’s additional measures and the availability of interconnectors, there is enough flexibility within the system that we are likely to be resilient,” he said.

National Grid predicted that de-rated supply margins would fall to just 4.1 per cent. But by securing 1.1GW of extra derated generation and 160MW of derated demand reduction from major energy users this margin will reach 6.1 per cent.

There is no doubt that the situation is still tight by National Grid’s assessment, but this is also based on very conservative assumptions. For example, National Grid’s modelling  assumes that the UK will export power to Ireland at its maximum rate of 750MW but will only import a quarter of its usual capacity from France and the Netherlands.

Partner at advisory firm Baringa, Phil Grant, told Utility Week that while there is potential for a perfect storm of high demand and curtailed supply, “the chances of a full-scale blackout are quite low”.  

“What we’d see is National Grid execute a whole series of emergency measures. There is generation capacity standing idle, which National Grid could contract to ramp up, and further voluntary demand reduction contracts could be offered to industry. These measures, coupled with voltage control, would be applied to prevent power cuts,” he explained.

It’s also worth noting that the UK has survived tight margins before without being plunged into darkness. Although supply is dramatically lower than in the winter of 2012/13, it is still higher than the sub-1 per cent levels of 2004-06, which passed without incident.

National Grid could well prove the alarmist tabloid headlines wrong, but perhaps the only certainty – in the final winter before a general election – is the political pressure to do so.

“There will not be blackouts. Period… We have extra contingencies on top of the caution, and extra contingencies on top of the contingencies.”

Secretary of state for the Department of Energy and Climate Change, Ed Davey told The Daily Telegraph.

“We are confident that National Grid has the right levers to keep the lights on and maintain a risk of customer disconnections, which is better than the reliability standard set by government. However, given the tighter margins there can never be any room for complacency and National Grid and the industry must remain vigilant at all times.”

Ofgem spokesman

“Power cuts during this winter are unlikely because generators have been spending large amounts of money on maintenance over the summer so they can meet demand when it gets cold. The gas security of supply outlook for this winter is very strong due to the diversity of sources supplying the UK.”

Energy UK chief executive Angela Knight

“[National Grid’s Winter Outlook] is no cause for alarm. We were already aware that capacity margins would be in this region and that National Grid had introduced measures to increase them this and next winter… we are content that we now have the necessary measures in place for the short-term and government is in the process of implementing a long-term solution in the form of the capacity market.”

Senior policy adviser at manufacturing trade group EEF, Richard Warren

“Supply margins for the winter are tighter than usual, but wholesale market prices for both gas and power contracts delivered over the winter have fallen steadily over the past month, and this implies that market participants are less concerned about supply disruptions or high demand as we approach the winter.”

Head of power at energy market specialist Icis, Zoe Double