Risk of blackouts this winter ‘remains low’, energy advisor insists

National Grid may have to deploy more measures this winter to ensure security of energy supply, but the risk of blackouts from a lack of generation capacity remains low, consultancy firm Baringa Partners has insisted.

Following the announcement yesterday that the de-rated capacity margin for the coming winter will be just 5.1 per cent, the lowest for a decade, Phil Grant, partner at the company, told Utility Week: “Under normal weather conditions the supply margin will be extremely tight this winter and likely next winter too with only one large thermal plant currently under construction.”

He added that the UK can “ill afford” to see a recurrence of the large plant outages experienced in recent years. “If there are more extreme weather conditions with very low temperatures and/or low wind conditions, then the supply margin will fall further and Grid may well have to implement measures to ensure security of supply and there are a range of measures that grid has procured to protect against blackouts.”

However, he added that, although Grid may have to deploy additional measures this winter, “the risk of actual blackouts from a lack of generation capacity remains low”.

National Grid has bought nearly 2.6GW additional balancing services for the coming winter, including 2.4GW of supplemental balancing reserve from generators and an additional 200MW of demand-side balancing reserve from major energy users willing to reduce their energy consumption at peak demand times.

Npower Business Solutions director of markets and innovation Wayne Mitchell argued that demand-side has a major role to play in keeping the lights on.

“Over three quarters (77 per cent) of businesses told us last year they were worried about security of supply,” he said. “With the UK now facing an even tighter energy crunch, it’s right that National Grid use every tool at their disposal to ensure the lights stay on.

“Large energy users have a major role to play in this through demand-side response, and particularly measures that incentivise them to switch off at peak times, for the right price.”

Last winter, National Grid increased the de-rated capacity margin from 4.1 per cent to 6.1 per cent by finalising contracts with three power stations to provide additional reserve under supplemental balancing reserve which, together with the demand-side balancing reserve the TSO had already contracted, provided an additional 1.1GW of de-rated capacity.

In its 2014 electricity capacity assessment report, Ofgem said margins are “expected to fall” over the next two winters as older power stations close, before “improving in the later years of our analysis”.