Companies to cut energy consumption to boost capacity this winter

Andrew Pring
4 November 2014

National Grid has contracted with a range of businesses to cut their electricity usage if required during peak periods this coming winter.

It says the deals, with companies including Tata Steel and Flexitricity, mean it is confident of meeting electricity demand this winter despite spare capacity falling to its lowest level for nearly 10 years.

The companies will reduce their power demand or switch to on-site generation at periods of peak demand, if called upon. They will receive payments from National Grid to ensure they are appropriately compensated for providing this service. The service will be available for short periods between 16:00 hrs and 20:00 hrs on weekday evenings between November and February. 

Although gas supplies are in a strong position this winter, with capacity well in excess of maximum expected demand, electricity margins have decreased compared to recent years, with the average cold spell margin expected to be 4.1 per cent. This is due to planned generator closures, breakdowns and new plants not coming online as quickly to replace them.

As well as possible pay outs to energy users, National Grid is finalising contracts with three power stations - Littlebrook, Rye House and Peterhead - to provide additional reserve. Together these two measures will increase the capacity to 6.1 per cent.

Together with the deals with major energy users (known as the Demand Side Balancing Reserve), National Grid has already contracted, these will provide an additional 1.1 gigawatts of de-rated capacity (excess supply above peak demand) to that assumed available, increasing the de-rated margin from 4.1 per cent to 6.1 per cent.

Cordi O’Hara, director of market operation, said: “The electricity margin has decreased compared to recent years, but the outlook remains manageable and well within the reliability standard set by government.” 

Three years ago, the electricity margin was 17 per cent, but in 2004-05 and 2005-06 the figures were 0.7 per cent and 0.9 per cent respectively.

National Grid's assessment is based on similar demand to last winter but a fall in supply, due to generators closing and breaking down, and new plants not coming online quickly enough to replace them. Since 2012, 15 power plants have been closed or partially closed, taking out a large chunk of the UK's energy-generating capacity.

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