UK National Grid Warns Of Tight Winter Electricity Supply
In a report on Thursday, the National Grid warned that the UK will likely face tight electricity supplies this winter on rising demand and capacity constraints. However, a top official said they were confident that the National Grid would manage to keep the lights on.
The National Grid’s annual winter outlook report follows record-high energy prices across the UK which have contributed to nine energy companies going bust in the last month. This has resulted in some industrial firms curtailing production and warnings over shortages of some foods this winter.
This year, wholesale gas and power prices in Europe have soared due to lower-than-usual gas stocks in the summer, reduced supply from Russia, and the onset of colder temperatures.
In the UK, gas plants account for approximately 40% of electricity generation. Consequently, high UK wholesale gas prices have also pushed up wholesale power prices. However, the National Grid said that the UK has enough gas supply capacity to meet demand.
The Electricity System Operator (ESO), a legally separate business within the National Grid, said its base case for de-rated margin is currently 3.9 GW for winter 2021/22 or 6% capacity, down from 8.3% last winter.
While ESO has said it remains confident that there will be enough capacity available to keep the UK’s lights on, the latest forecast is lower than a winter margin forecast of 4.3 GW made in July this year. It is also the lowest margin level since the winter of 2016/2017.
Due to the surge in gas prices, higher power prices are expected in the UK this winter. The report said that any days of tight margins could result in significant price spikes and would increase the cost of balancing the electricity system.