National Grid issues new electricity supply tenders to ensure no UK power black-outs

Electricity grid infrastructureTo ensure that there are now UK power black-outs, National Grid is to tender for two new tools to help balance supply and demand in the coming winters:

  • A tender in June 2014 for up to 330MW Demand Side Balancing Reserve (DSBR) to pilot the new service for winter 2014/15; and
  • Tenders by Autumn 2014 and in early 2015 for a total of up to 1,800MW of both DSBR and Supplemental Balancing Reserve (SBR) for winter 2015/16.

This follows a call for Expressions of Interest earlier this year, a consultation on the two tools, and approval from Ofgem in 2013.

Peter Bingham, leading this initiative on behalf of National Grid, said:“It’s our job as electricity system operator to make sure we’ve got all the right tools at our disposal to balance supply and demand on the electricity network, 24 hours a day, 365 days a year.

“For winter 2014/15 we are inviting providers of demand side response services to offer a small volume of demand reduction capability to pilot the new DSBR service.

“For winter 2015/16, we will tender for both services. This offers generators an incentive to make their power stations available in winter where they might otherwise be unavailable.”

“These tools will help ensure that the country continues to benefit from the levels of system security that we are used to.  

The Demand Side Balancing Reserve service (DSBR) is looking to sign up large energy users who have the flexibility to reduce their electricity use – for example by switching to back-up generation – when demand is at its highest between 1600hrs and 2000hrs on winter weekdays.

This will be in return for a payment, and on a purely voluntary basis. This will help stimulate a (Demand Side Response or DSR) market which ultimately will help keep energy system costs down for consumers by avoiding the need to build additional power stations to service “peak” demands.

National Grid already buys similar demand-side services from a range of businesses, and many large businesses already reduce their electricity usage in peak demand periods to reduce their costs.

Supplemental Balancing Reserve (SBR) is targeted at contracting for reserves from generating plant that would otherwise be closed or mothballed.  Plant would need to be available on winter weekdays between 0600hrs and 2000hrs.

National Grid’s decision follows extensive consultation with the energy industry and the energy regulator, and a call for expressions of interest from potential providers earlier this year.

The maximum volume needed for the coming winters are set out below:

2014/15:         330MW (DSBR)

2015/16:         1,800MW (DSBR and SBR)

2016/17:         1,300MW

2017/18:         800MW

Calculations for these procurement volumes are based on analysis of winter demand, plant availability and continental imports using a methodology approved by Ofgem. Tenders for the winters of 2016/17 and 2017/18 will only be undertaken if an on-going need is for these services is identified and the funding arrangements are extended beyond 2016 by Ofgem.

It is not anticipated that these services will be required in 2018/19 because the Government is introducing a Capacity Market. This will ensure sufficient capacity is available to meet future demand.

Nicola Walker, CBI Director for Business Environment, said: “It’s right for action to be taken to ensure we secure our energy supplies in the short-term.

“This also underlines the need for us to get the investment we need into our energy infrastructure to keep the lights on in the future.

“National Grid’s voluntary arrangement for large energy users to reduce their electricity use is sensible, but in the long-term we need to focus on better energy efficiency in our businesses and homes.” 

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