OFGEM issues ‘Don’t panic’ warning over National Grid’s capacity to keep the lights on

Aghast at the political and industry response to the National Grid’s own report that the UK capacity margin for electricity generation is set to fall to just 1.2% this winter, OFGEM has issued a statement aimed at re-assuring consumers that ‘the lights will stay on this winter’.

It highlights that the  National Grid has secured 2.56 GW additional balancing services to ensure secure supplies for consumers this coming winter.

It also emphasises that there are clear opportunities for generators and other market participants to play a role in delivering security of supply for 2016/17

OFGEM’s Electricity Security of Supply report has confirmed that National Grid has enough additional balancing services to secure electricity supplies for consumers this winter.

 With the balancing services it has procured, National Grid forecasts a margin for this winter at 5.1% which it considers manageable. 

However, the report shows there is ‘uncertainty’ on the outlook for margins in 2016/17, and a significant opportunity for industry to play a role in delivering security of supply, for example by returning mothballed plant to the market or improving plant availability.

Margins could also be boosted by higher imports from neighbouring countries.

National Grid has started a consultation on whether to extend the option to purchase balancing services for winter 2016/17. This allows National Grid to contract with generators and businesses to provide additional balancing services over and above those provided by the normal market.

Rachel Fletcher, senior partner, markets, OFGEM, said: “We are confident that National Grid has the tools it needs this winter to manage the risks arising from the recent power station closures.

 “As there is a wider range of uncertainties in the outlook for 2016/17, National Grid’s decision to consult on extending these services into next winter is a prudent one. However, given we are 18 months away from winter 2016/17 there is also plenty of opportunity for generators and other market participants to continue to make more supplies available.”