UK relies on emergency measures to avert winter blackouts
By Paul Homewood
h/t Patsy Lacey
From the Telegraph:
Britain may have to rely on costly emergency measures to keep the lights on this winter after spare capacity in the power market fell to the lowest level on record.
Power stations operating under normal market conditions will produce barely enough electricity to meet peak demand following a series of coal plant closures, National Grid analysis shows.
The "spare margin" between peak electricity demand and the supplies likely to be available in the market has fallen to just 0.1pc, the lowest on record.
As a result, National Grid has been forced to intervene and bolster supplies by paying 10 power plants £123m to stay open through an emergency scheme, the costs of which will be passed on to consumers through their energy bills.
It will then make additional payments to these back-up power plants to fire up, if they are needed as a "last resort" to prevent blackouts. These costs, which could easily run to tens of millions of pounds in a cold snap, will also be passed on to consumers.
The emergency scheme will bring the UK’s overall spare power margin up to 5.5pc, a "manageable" level to keep the lights on, the company said.
This is the third year that National Grid has had to prepare such emergency measures, which were originally only intended to last for two winters.
However, the underlying situation has deteriorated since last year, when there was still spare margin in the main electricity market of 1.2pc.
Last winter the emergency measures, which bolstered the overall margin to 5.1pc, were only called upon once, in early November.
With the underlying margin now falling to a wafer-thin 0.1pc, it appears more likely that the back-up plants will have to be called upon at extra cost to consumers.
National Grid analysis suggests that there will be almost 14 hours over the course of the winter when there is likely to be insufficient power in the market to meet demand and it may have to call on the emergency scheme.
Cordi O’Hara, director of UK System Operations at National Grid, said: "The surplus margin for this winter is 5.5pc. This is the additional power we expect to have available over and above what is needed to meet electricity demand.
"We believe the margin is manageable and that we have the right tools and services available, including extra power we can call on if we need it, for times of highest demand.
"We expect there to be sufficient gas supplies available to meet demand which will be met from a wide range of supply sources."
Amber Rudd, the energy secretary, said: "When it comes to making sure our families and businesses have the certainty of secure energy supplies they can rely on now and in the future, I’m clear that this comes first and it is not negotiable. I will take no risks with the security of our energy supply, which is why we have taken prudent steps to protect supplies ahead of this winter."
From winter 2017/18 the emergency scheme will no longer apply, with the Government instead relying on a new policy called the ‘capacity market’ to ensure supplies are adequate.
This will provide retainer-style subsidy payments to all power plants that are deemed necessary to keep the lights on to guarantee they will be available when needed.
Ms Rudd said: "In the longer term the Capacity Market is acting as an insurance policy for our electricity needs, securing future supplies at the lowest possible cost to consumers."
A spokesman for National Grid added that although 0.1pc was the lowest "de-rated margin" it had on records dating back to 2001, the methodology had changed over the years.
The National Grid listed the SBR contracts for winter 2016/16 a few months ago: