Amid forecast electricity margins of as low as 2% – the excess of supply over demand – for the UK next winter OFGEM has announced details of the special measures it could use to keep household lights on over Winter 2014-15.
Britain’s energy industry faces an unprecedented challenge to secure supplies to consumers due to the global financial crisis, tough environmental targets, increasing gas import dependency and the closure of ageing power stations
The new rules provide National Grid with the option of extra tools to help it balance the system against tighter electricity supplies as older coal-fired power stations come off the grid at a faster rate than first expected. An OFGEM spokesman explained:
“Britain has one of the most reliable power systems in the world, but with margins tightening there can be no room for industry complacency on security of supply. Therefore we have approved these new tools to act as an extra insurance policy that is available for National Grid to protect consumers’ power supplies.”
Ofgem’s decision gives National Grid the ability to agree contracts with power stations to provide extra reserve power to balance the system in peak demand periods. Mothballed gas-fired plant and other generators would compete for these contracts.*
National Grid will also be allowed to develop a new demand side product. It will be able to offer businesses a new opportunity to reduce their electricity use during times of high demand (between 4pm and 8pm on weekday evenings in the winter) in return for a payment. The amount they would receive would be determined through a tender run by National Grid next year.
National Grid is now making preparations to be able to begin tendering for the services from Spring 2014, so that they could be delivered from winter 2014-2015 onwards.