• Peak power demand to drop by 2.5GW
• 2GW of demand-side management
• Overall gas demand to fall 13%
LONDON (ICIS)--The UK’s system operator National Grid is forecasting lower peak electricity demand and overall gas demand for the upcoming winter compared with last winter, it revealed in its winter outlook on Thursday.
Peak transmission system demand is forecast to drop by 2.5GW this winter compared with last, according to the outlook. Last winter, forecast and actual demand peaked at 50.7GW but this winter’s peak is expected to be 48.2GW.
“We would expect to see up to 2GW of customer demand management [this winter],” National Grid said.
This is in spite of reforms, which came into effect earlier this year , reducing the potential returns for distributed generators providing power to companies that reduce their transmission system demand to avoid triad payments.
The lowest level of operational surplus is expected at the end of this month and in the first half of December when demand this winter will peak, according to estimates. The de-rated margin is projected to be 7.1GW, a 15% increase on last winter.
The operational surplus has widened compared with previous winters due to the impact of the capacity market keeping old units on line. The system operator also said some larger units, which do not have capacity market in place for this winter, are expected to continue operating. “This could be due to higher wholesale prices,” it said.
The winter outlook is informed by input from industry stakeholders, indicating that some operators without capacity market obligations have given assurances to National Grid that they will continue to run. One of the 500MW units at SSE’s 2GW Fiddler’s Ferry power station missed out on a contract earlier this year.
Changes to the cash-out price methodology this November, which will result in the most marginal 1MWh of actions being used to calculate imbalance prices, could improve plant availability and provide interconnectors with a greater incentive to import when the system is tight
“Based on this year’s modelling of GB and interconnected markets, we have assumed 2.6GW of net import flows,” National Grid said.
Coal-fired power stations are also expected to run above the least efficient gas-fired power stations this winter.
The network operator expects gas demand for the 2018/19 winter to fall by 13% to 46.6 billion cubic metres (bcm) from the same period in 2017/18. New renewable generation and better coal-fired power plant margins will push out more gas-fired generation, National Grid said.
Gas-fired power station demand is forecast to fall by 45% to 7.0bcm – the lowest winter total in at least five years.
Non-daily metered (NDM) demand – offtake from residential and small industrial users – is forecast to drop 2.6% to 29.8bcm. The growth of buildings connected to the gas network offsetting better home insulation and boilers that are more efficient.
National Grid’s supply outlook remains broadly unchanged from 2017/18. New developments should support UK and Norwegian Continental Shelf (UKCS and NCS) supply. The reclassification of ex-store Rough as a field should offset the closure of the Theddlethorpe terminal while the start-up of the Aasta Hansteen field will add 23mcm/day of Norwegian production.
The expiration of the long-term capacity contracts on 1 October 2018 will drive lower utilisation on the Britain-Belgium Interconnector pipeline, with the Dutch BBL expected to be more heavily used for imports.
National Grid expects LNG imports to remain low, with UK buyers outbid by Asian counterparts. The operator did point out the start-up of additional US LNG capacity and the US-China trade war as potential factors that could drive additional cargos to Europe.
Gas margins test
As system operator, National Grid needs to prove it can meet supply and demand in the event of the network’s single biggest piece of infrastructure failing during a 1-in-20 peak day scenario.
The network would still have a supply surplus of 22 million cubic metres (mcm) if the Felindre pipeline – connecting the two LNG terminals at the port of Milford Haven to the wider National Transmission System (NTS) – failed during a peak demand day of 472mcm.
The operator assessed the risks of prolonged cold periods for the first time, modelling for a “very cold” week, month and winter. National Grid models showed supply was sufficient to meet demand in all scenarios, with storage playing an increasingly small role in the supply mix as the length of low temperatures increased.
The full outlook can be viewed here .