UK summer supply margins comfortable - National Grid
UK electricity- and gas-supply margins are expected to be comfortable this summer, according to the National Grid's summer outlook, released on Tuesday.
The transmission system operator forecasts gas demand at 199 million cubic metres (Mm³)/day, down from 223Mm³/day a year earlier. Economics substantially favour coal-fired generation, given that clean dark spreads are outturning at much higher levels than their clean spark equivalents.
On Monday, ICIS assessed the Q3 '12 clean spark spread for the UK at £2.24/MWh (€2.72/MWh), while the dark equivalent was assessed at £13.87/MWh.
The ICIS calculated coal switch price for the forward month is 42p/th, while May '12 gas was sitting at 60.150p/th as of Monday, although each type of plant has its own generation economics.
Consequently, National Grid sees coal-fired plants dominating the power generation mix over the summer months.
However, some coal-fired plants have limited running hours - under the large combustion plant directive - which may force some coal-fired generation offline for brief periods throughout the summer.
In the outlook, National Grid said it expected LNG supply to the UK to decrease - continuing a trend highlighted in last summer's estimates. High demand from Asia, particularly following on from uncertainty about Japan's nuclear facilities remaining offline, is expected to divert LNG shipments from Europe to Asia (see EDEM 19 April 2011).
Lower production is expected from the UK Continental Shelf, partly because of problems at the offline Elgin/Franklin field, alongside a general decline in reserves. As a result, National Grid expects higher gas imports from Norway.
Demand levels for electricity are expected to be marginally lower compared to Summer '11, continuing a trend of decreasing summer demand recorded in recent years, which National Grid attributed to increasing embedded generation and the economic environment. TF
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