U.K. National Grid Sees Power Supply Risks Easing in Winter

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The risk of power shortages in the U.K. will ease this winter as National Grid Plc quadruples the amount of electricity available to balance the network.

The grid operator will boost the nation’s buffer of spare capacity to 5.1 percent in the six months through March from what would have been a 10-year low of 1.2 percent by paying for a reserve of plants, according to a report published Wednesday.

Supply margins have dropped as some of the nation’s biggest coal plants shut under EU emissions rules and power-plant profits were too low to encourage replacements in the past year. That prompted generators to close 2 gigawatts of capacity since last winter, cutting the number of plants available at times of peak demand, the grid operator said.

“Electricity margins for that coldest, darkest half-hour of winter are currently tighter than they have been due to power plant closures,” said Cordi O’Hara, director of market operation at National Grid. “These additional services will significantly increase the energy reserve available this winter.”

National Grid said June 3 it paid 36.5 million pounds ($57 million) for this winter’s reserve of 2.56 gigawatts to companies including Centrica Plc, SSE Plc and Engie. That compares with 1.6 gigawatts at a cost of 31.3 million pounds last winter.

Wind Energy

The network operator said it had no need to call on any of the supplemental reserve contracted for last winter thanks to warmer-than-usual weather, high plant availability, strong wind generation and imports from mainland Europe.

Margins dropped as low as 7 percent last winter when some plants were delayed returning from maintenance and clocks changed. Weather-corrected power demand was little changed at 51.9 gigawatts, according to the report.

EON SE said in June it was closing its 900-megawatt Killingholme gas-fed plant, which failed to win a contract from National Grid for next winter.

Supply uncertainty remains until 2018, when the U.K.’s capacity market starts, according to O’Hara. Under the system, National Grid guarantees supply by paying all power plants on the system an auction price for staying open.

The grid operator is now looking to the two winters after 2015-16 to see if a similar reserve will be needed to bridge the gap to 2018, O’Hara said.

(An earlier version of this story was corrected to show in the second paragraph that the reserve margin would have been the lowest in 10 years.)