While there is a risk of blackouts due to electricity shortages over the coming winter, National Grid ESO is ”cautiously confident”.
The operator has released its Winter Outlook report, which this year models both the Base Case for the period 31 October 2022 to 31 March 2023, and an alternative scenario.
This alternative is new for 2022, and looks to address the variables being driven by the unprecedented turmoil and volatility in energy markets.
It looks at a hypothetical scenario where Britain is unable to import electricity from continental Europe – Britain has become a net exporter of electricity over the summer in light of tight margins in Europe.
National Grid ESO will then work through its toolbox to balance demand and generation, including using coal units it has contracted to stay online over the winter and the Demand Flexibility Service.
The Demand Flexibility Services adds potentially around 2GW+, while the coal units provide around 2.5GW.
National Grid ESO has however warned that if importing electricity was not possible, the weather was cold and the wind generation low, there may be the potential to need to interrupt supply to some customers.
This would be for a limited amount of time, in a managed and controlled manner. This could cause the operator’s Loss of Load Expectation (LOLE) to fall below three hours per year.
But the ESO has highlighted that it expects the mitigations it has at hand to ensure Britain does not reach that point.
National Grid ESO’s Base Case suggests there will be adequate margins of 3.7GW / 6.3% throughout the winter. Its reliability standard is less than three hours of LOLE. Modelling suggested it will be within 0.2hr.
It is still expecting to utilise a range of its tools to keep the system balanced, including Electricity Margin Notices (EMNs), Capacity Market Notices (CMNs) etc.
The operator expects this to lead to higher balancing costs, given these actions will be linked to the wholesale price of electricity as bid into the Balancing Mechanism or offered for trades on interconnectors.
“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,” said Fintan Slye, executive director of the ESO.
“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 complement the robust set of tools we already use to balance the electricity system every day.”
The Winter Outlook report builds on its Early View of Winter, which it released in July, giving early warning about the expected tight margins.
“Of course, blackouts are unlikely but we could eliminate them altogether,” said Greg Jackson, CEO of Octopus Energy Group.
“Instead of cutting off whole chunks of the country if we are short of gas, we can reward people who choose to use less energy at times of peak demand. After all, some people have critical needs – for example when using electrical medical equipment, whilst others are happy to watch Netflix on a laptop for a while.”