Britain will have enough electricity to avoid disruption over the coming months, but National Grid ESO’s Winter Outlook 2021 warns supplies will be tighter than last year.
The system operator’s forecast comes in the midst of record-high gas prices. In addition, an energy crunch has seen nine suppliers go out of business in the last few weeks.
Winter Outlook 2021 suggests the de-rated margin – the amount of excess capacity above peak demand – for the coming months is 3.9 GW, which equates to 6.6% of overall capacity.
This is down from 4.8 GW (8.3%) last winter and is the lowest margin since 2016-17. It is also tighter than the 7.3% margin predicted in a provisional analysis National Grid ESO published in July.
One reason for this drop is the fire in September that damaged the IFA1 interconnector, which will cut capacity from the link by roughly 1 GW until next March at the earliest.
The worst-case scenario outlined in Winter Outlook 2021, which would include multiple power plant outages, low winds, and bitterly cold temperatures, could even see the margin plunge to just 2.5 GW (4.2%).
Despite the forecast of tightness in supplies, National Grid ESO offered reassurance that there was no increase in the risk of blackouts.
Its forecast Loss of Load Expectation (LOLE) is just 0.3 hours. This is the metric National Grid ESO uses to measure the security of supply. The figure is well within the system operator’s reliability standard of three hours.
🔹 we may take more action in the market than in previous years to secure supply – including issuing electricity margin and capacity market notices.— National Grid ESO (@NationalGridESO) October 7, 2021
For more insight into our view of winter supply & demand for 2021/22 read our full report 👉 https://t.co/Kt8hlh2AVu [2/2]
Mitigating Tighter Margins
Just like it did last winter, the system operator expects it may have to issue Electricity Margin Notices (EMNs) to help meet demand.
An EMN is a call for the market (i.e. energy suppliers) to increase the amount of electricity they make available to increase capacity on the grid. They are issued when supply margins are looking tight ahead of real-time. They don’t necessarily indicate that demand will not be met.
For example, last winter saw six EMNs issued between November 2020 and February 2021, the first ones since 2016. But each one was later cancelled after the market reacted with increased output.
Winter Outlook 2021 predicts it will issue a similar number of EMNs for the coming months.
“The Winter Outlook confirms that we expect to have sufficient capacity and the tools needed to meet demand this winter.
“Margins are well within the reliability standard and therefore we are confident that there will be enough capacity available to keep Britain’s lights on.”
– Fintan Slye, Executive Director of National Grid ESO