UK power capacity contracts widen winter surplus forecast, gas flexibility ‘sufficient’

Generation procured from the UK’s electricity capacity market, which begins paying out at the start of the coming winter, will lead to slightly wider supply margins this winter compared with last, National Grid said on Thursday.

The system operator said provisional estimates put this winter’s de-rated capacity margin between 3.7GW and 4.9GW for peak winter evening demand. The analysis was revealed as part of a consultation on security of supply for this winter and a review of last winter.

The margin is slightly wider than the 3.4GW forecast last winter, with National Grid attributing this to generation procured through January’s capacity market auction. De-rating factors for generation have also been updated following improved plant availability last year.

“The margin has increased from last year which is encouraging as we enter the first main delivery year of the capacity market,” system operation director Cordi O’Hara said.

National Grid said the upper end of the surplus range represents a scenario where some generation units that missed out on capacity market contracts may remain available to participate in the balancing market.

As part of the analysis, the system operator has assumed 2.4GW of net import flows through the UK’s 4GW of interconnector capacity for next winter.

Reviewing last winter, the system operator revealed that peak weather corrected transmission demand turned out just over 1GW lower than forecasts ahead of the winter. National Grid attributed this to an increase in embedded generation, which reduces demand on the system, and customer demand management.

Gas flexibility

On the gas side, National Grid expects ample flexible supply sources to meet this coming winter’s demand.

Its finding indicate a drop in imports from the Netherlands through the BBL pipeline, but this will be offset by an increase through the Interconnector linking Britain with Belgium. This will be due to high BBL capacity costs and the increased competitiveness of the Zeebrugge link ( click here to read story ).

National Grid put forward a very wide range for potential LNG import volume of 5-100 million cubic metres (mcm)/day, but it did say that “current market intelligence suggests there will be plenty of LNG available in winter 2017-18”.

It expects LNG to account for 50mcm/day on a “cold day” – the middle of its average LNG volume range for the winter as a whole – while other supply sources on cold days near their upper value. This means any slack on the supply side would be expected to come from LNG.

Responses to the consultation will be used to inform the Winter Outlook published in October, National Grid said. The consultation can be viewed by clicking here . henry.evans@icis.com and jamie.stewart@icis,com