Gas and electricity supplies in the UK are forecast to be sufficient to meet the expected demand this winter, on the back of improved electricity de-rated margins and diversification of gas supply sources, network operator National Grid said.
For electricity, the margin is set to be similar to last year but includes a larger proportion of contingency balancing reserve services, it said in its 2016/17 Winter Outlook Report.
It noted since last winter, additional generation capacity at Eggborough power station has returned to the market and an outage on the East West Interconnector has decreased expected exports to Ireland. These events have increased the de-rated margin for winter 2016/17 from approximately 2.9 GW to 3.4 GW, or 6.6%, with LOLE of 0.5 hours/year.
The de-rated capacity margin measures the amount of excess supply above peak demand. The supply is adjusted to take into account the availability of power plants. The LOLE (Loss of Load Expectation) represents the number of hours per annum in which, over the long-term, it is statistically expected that supply will not meet demand.
“The last few winters have been mild, but we are not complacent” it stressed, adding that it has “taken additional actions to improve the outlook for this winter and the de-rated margin includes the supplemental balancing reserve services that we have procured.”
National Grid's forecast is based on a de-rated generation capacity of 55 GW.
In terms of demand, the network operator said that normalised transmission system demand is expected to to peak this winter at 52 GW in mid-December. This can be “met in all weeks across the winter under three interconnector scenarios with low, medium and full interconnector imports from Continental Europe” National Grid said, adding that on the back of an analysis of forward electricity prices, net electricity imports from Continental Europe to Great Britain are expected at peak times during the coming winter.
On the other hand, higher electricity prices in Ireland suggest there will be net exports from GB during peak periods. However, “these flows may reduce, or even switch to GB imports, if there is high wind generation output in Ireland.”
Overall electricity volumes flowing to and from the Republic of Ireland are set to be reduced on the back of an outage on the East West Interconnector, it said.
Gas market to benefit from diversity of supply sources
Meanwhile, National Grid said the diverse range of gas supplies available to the UK market means demand is likely to be comfortably met over the winter.
Looking at energy price forecasts, it said fuel competition between gas and coal could increase on the back of narrowing price spreads between the two and gas becoming cheaper than coal for electricity generation.
Both demand for domestic consumption and for exports are forecast to be lower year on year. The Corrib gas field is now capable of flowing at full capacity and so is expected to reduce Ireland’s demand for GB exports, National Grid noted, adding that exports to Continental Europe are also expected to fall year on year.
This is expected to be partially offset by higher demand for gas-fired generation.
Total demand this winter is forecast at 49.1 Bcm, with peak daily demand at 472 mcm. With total combined storage and non-storage supplies of some 602 mcm/day, National Grid expects supplies to exceed peak daily demand.
On the other hand, due to ongoing restrictions at the Rough long-range storage facility, there will be 1.3 Bcm in storage at this site at the start of winter, compared to 2.8 Bcm in October 2015. Imports from the Netherlands, via the BBL pipeline, may also be lower this winter due to tighter production restrictions at the Groningen field.
Nevertheless other sources, including Norway, LNG and the IUK pipeline are all likely to be available to supply the system.