Informer Issue 484 - 20/10/2020

National Grid ESO is confident there will be no electricity supply issues this winter despite capacity margins tightening due to generation outages and plant closures.

In its winter outlook report, National Grid ESO said there was “no threat” to security of supply, partly as demand for electricity could fall by around 5% compared with last winter as Covid-19 measures continue to impact.

The lower demand is forecast to provide a 4.8GW margin - 8.3% of the total supply – although this is less than the 7.8GW forecast last winter.

“System margins aren't quite as high as last winter but remain well within the Reliability Standard set by the Government under all COVID-19 scenarios,” said the report.

As its “central operational scenario”, the system operator has pencilled in an overall level of demand suppression of 5% from anticipated pre-COVID demands. However, it has also modelled additional scenarios for transmission demand, including a 11% peak fall if the country returns to a full lockdown although it said it believes it is very unlikely that would persist for more than a month.

Roisin Quinn, Head of National Control at the ESO, said: “While we’re anticipating recently reimposed lockdown measures reducing national demand, the higher demand we tend to see over winter means we’re not expecting to see the same operability challenges we did over summer as a result.”

Quinn said whatever the outcome of Brexit negotiations, the system operator expects to be able to “reliably manage electricity flow to and from the continent without interruption”.

The winter forecast came as the ESO last week warned of tight supply margins over the coming days, amid very low wind output and higher demand.

“Unusually low wind output coinciding with a number of generator outages means the cushion of spare capacity we operate the system with has been reduced,” it said on Twitter.

“We’re exploring measures and actions to make sure there is enough generation available to increase our buffer of capacity.”

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Regulator Ofgem is introducing new licence rules to require suppliers to help customers affected by the pandemic this winter.

From 15 December suppliers will be formally required to offer emergency credit to domestic customers who cannot top up prepayment meters.

If customers are in debt, suppliers must put them on "realistic and sustainable" repayment plans.

In March, suppliers voluntarily agreed with the Government to support people affected by the pandemic.

Ofgem said those in financial difficulty would get some breathing space, but ultimately all customers will need to pay for the energy they use.

Ofgem's Director of Retail Philippa Pickford said: "Suppliers have stepped up to the challenge of supporting their customers during the Covid-19 crisis, especially those in vulnerable situations."

"Customers who are struggling to pay their bills should contact their supplier as soon as possible. The extra protections we have announced today will help ensure they get some breathing space this winter."

In a separate move, BEIS has announced that the energy price cap will be extended until the end of 2021.

The Government the cap had saved customers around £1bn, equivalent to around £75 to £100 a year for a typical household on a default energy tariff.

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Electricity prices, generation and demand bounced back to close to pre-Covid levels in the third quarter of the year, according to figures.

Data compiled by energy consultancy EnAppSys showed demand totalled 60.6TWh across the period, significantly higher than the 53.2TWh recorded in Q2, and approaching the 63.1TWh seen in Q3 last year.

The average system price across the quarter was £35.56/MWh, close to the £36.56/MWh in Q3 last year, and materially up from the £29/MWh in Q1 and £24.98/MWh in Q2 of this year, when lower demand saw more oversupply and fewer tight periods.

Gas produced the largest share of generation during the quarter at 40.5%, closely followed by renewables at 39%.

Although a lower share than the two preceding quarters, the renewable share of the generation mix was still greater than any quarter in preceding years.

Of the renewable contribution, 21.2% was from wind, 6% from solar, 2% from hydro and 9.9% from biomass.

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National Grid has launched Britain's latest interconnector with France following a £700m investment with partners RTE.

The IFA2 link, which runs for 149 miles along the sea bed between Portsmouth and Normandy in France is expected to deliver 1.2% of Britain's electricity needs with zero carbon energy.

Despite the pandemic, IFA2 has remained on time and on budget. The 1,000 MW high voltage direct current (HVDC) interconnector is National Grid’s second link to France.

By 2024, National Grid said the addition of a further three projects by 2024 will mean the equivalent of 8 million homes a year can be powered by interconnectors.

With the energisation of IFA2, National Grid now has four operational interconnectors – two to France (IFA and IFA2), one to the Netherlands (BritNed) and one to Belgium (Nemo Link). Two further projects are under construction - Norway (North Sea Link due to be operational in 2021) and Denmark (Viking Link due to be operational 2023).

Jon Butterworth, CEO of National Grid Ventures, said: “While the world is focused on the pandemic and managing the knock-on effects on our lives, we know that progress towards net zero can’t afford to falter and Britain needs to keep up the momentum in reducing harmful carbon emissions."

“The launch of the IFA2 interconnector, linking France and Britain’s power grids, is an important step in accelerating our progress to a cleaner, greener future.”

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The UK Government has committed to releasing a Net Zero Strategy for the UK before the re-scheduled COP26 climate change summit next year.

The plans were announced in its response to the Committee on Climate Change’s (CCC) report in the summer which urged the UK to seize a “once-in-a-lifetime opportunity” to address the challenge of climate change alongside economic recovery from Covid-19.

The Net Zero Strategy will be in addition to the long-awaiting Energy White Paper, Transport Decarbonisation Plan and Heat and Buildings Strategy.

“The strategy will set out the Government’s vision for transitioning to a net zero economy, making the most of new growth and employment opportunities across the UK,” said Business Secretary Alok Sharma and Energy Minister Kwasi Kwarteng in their foreword to the response.

“These will raise ambition as we outline our path to hit our 2050 target. As we continue to deal with the Covid-19 pandemic, we agree wholeheartedly with the CCC on the need to ensure that our recovery plans support our climate change response. By building back greener and better, we can achieve our climate goals, protect our biodiversity and natural capital, and sustain climate-resilient economic development, all in a fair and inclusive way.”

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