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National Grid ESO has warned of tight margins come winter due to supply uncertainty

Cold weather and low winds pushed the grid last winter, and is likely to again in 2021/22. Image: Getty.

Cold weather and low winds pushed the grid last winter, and is likely to again in 2021/22. Image: Getty.

Following the tight margins seen on the electricity system last winter, National Grid ESO has released an early view of its winter outlook.

It is expecting there to be similar or even slightly lower system margins over winter, and is predicting a base case de-rated margin of 4.3GW or 7.3%. While this is slightly lower than last year, it still falls within the reliability standard of three hours, with a loss of load expectation (LOLE) of around 0.1 hours/year.

There is some uncertainty, however, around this de-rated margin due to the availability of supply. Across the operators three cases – low, base and high – the margin varies between 3.1-5.4GW or 5.3-9%.

With nuclear and coal plants closing, supply over the last winter became more complicated. Both Dungeness B and Hunterston B nuclear power stations are now expected to be offline come winter 2021/22, and only coal units with capacity market agreements are expected to be available over the winter.

Additionally, Baglan Bay, Severn Power and Sutton Bridge combined cycle gas turbine (CCGT) power stations are all expected to be offline in the winter.

There is expected to be more interconnector capacity than last winter, however, with IFA2 to France available and NSL to Norway expected to be online from October. Renewables, storage and distributed generation is all expected to be in line with expectations set out in the Future Energy Scenarios.

A number of factors could impact the availability of supply. For example, within the low case, there is a margin of just 3.1GW, which could be caused by just two power stations going down, or a combination of higher demand and one outage. This would bring the margin to 5.3%, its tightest since 2015-16.

Average cold spell (ACS) peak demand is expected to be 59.5GW, and experience no suppression due to the COVID-19 pandemic. Last year, lockdowns across Britain led to demand being reduced by 3-4%.

Despite this reduction, cold weather and low winds pushed the electricity system on a number of occasions. As such, National Grid had to put out six Electricity Market Notices (EMN) in an effort to manage the volatility.

This volatility drove up prices with the day ahead prices jumping to almost £1,500/MWh, while Balancing Market hit a record breaking £4,000/MWh on Friday 8 January. EDF’s West Burton B CCGT plant, for example, achieved the highest daily revenue from the Balancing Mechanism, receiving over £7.5 million in a single day.

Despite the challenges seen last year, and the uncertainty around supply going into winter 2021/22, National Grid ESO said it had the tools available to manage the grid.

“We may see some tight margins again this winter, but we’re confident there’ll be enough electricity to keep Britain’s lights on,” it said in a statement.

Following this early look, the full Winter Outlook is due to be published in October 2021.

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