Electricity Margin Down To 4.1% Over Coming Winter Shows Energy Policy Is “A Shambles” Says GMB
We need planning to bring on stream enough capacity in the electricity sector which is a natural monopoly so market style solutions will fail or deliver power that is too expensive says GMB.
GMB, the union for energy workers, commented on the report from National Grid that this year electricity margins have decreased with the average cold spell margin expected to be 4.1%. This is due to planned generator closures, breakdowns and new plant not coming online as quickly to replace them. See notes to editors for copy of press release from National Grid.
Gary Smith, GMB National Secretary for Energy, said “This very tight margin shows that Government energy policy is in disarray. If there is a cold snap this winter the only way to keep the lights on is to shut down large swathes of British industry. This isn't a policy it is a shambles.
There needs to be a radical look at energy sector to take account of evidence that trying market style solutions, that invariably involve massive subsidies, have failed.
There has to be planning to bring on stream enough capacity in the electricity sector. It is a natural monopoly so market style solutions will fail or deliver power that is too expensive.
We need to get on with building the badly needed new nuclear fleet. There has to be a compulsory programme to insulate all the nation’s housing to the highest standards as voluntary attempts have failed.
Above all we have to appreciate that we face very serious and potentially very damaging national energy crisis.”
Contact: Gary Smith 07710 618909 or Phil Whitehurst 07966 338810 or Kathleen Walker Shaw 07841 181549 or GMB press office 079212 89880 or 07974 251 823
Notes to editors:
National Grid press release - Winter Outlook 2014/15 published 28/10/2014
Gas supply position strong. Market prepared for a range of scenarios.
Electricity margins are tighter but manageable, helped by new tools to balance system.
National Grid has published its 2014/15 Winter Outlook. The Outlook has been produced by National Grid in its role as electricity System Operator and as owner and operator of gas transmission infrastructure in Great Britain. The Outlook follows consultation with the energy industry, analysts, academics and energy policy experts.
On gas, supplies are in a strong position this winter, with gas supplies, storage and network capacity well in excess of maximum expected demand.
This year electricity margins have decreased compared to recent years, with the average cold spell (ACS) margin expected to be 4.1%. This is due to planned generator closures, breakdowns and new plant not coming online as quickly to replace them.
In response, National Grid is finalising contracts with three power stations to provide additional reserve under Supplemental Balancing Reserve (SBR); these are Littlebrook, Rye House CCGT and Peterhead CCGT.
Together with the Demand Side Balancing Reserve (DSBR) that National Grid has already contracted, these will provide an additional 1.1 GW of de-rated capacity to that assumed available in our base case, increasing the de-rated margin from 4.1% to 6.1%.
Cordi O’Hara, Director of Market Operation, said:
“The Winter Outlook Report provides the energy market with a snapshot of the potential gas and electricity picture for the coming winter.
“Our analysis shows gas supplies to be in a strong position. Supply sources are diverse, network capacity is healthy and gas storage is well stocked.
“The electricity margin has decreased compared to recent years, but the outlook remains manageable and well within the reliability standard set by Government.
“As System Operator, we have taken the sensible precaution to secure additional tools to bolster our response to tighter margins.
“We will continue to keep a close watching brief across both electricity and gas throughout the winter so that we’re strongly placed to respond to any unanticipated events.”
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Notes for Editors:
1. Read the Winter Outlook 2014/15 in full at http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/FES/Winter-Outlook?utm_source=website&utm_medium=pressrelease&utm_campaign=WOR
2. Average Cold Spell Margin numbers are a snapshot of the overall winter picture. Based on 30 years of historical weather data we can work out the probability of different peak demand levels occurring. So that we use a peak demand that has a real chance of occurring on any given day in winter, we use the one that has a 50% chance of being exceeded, known as the Average Cold Spell (ACS) demand. The ACS peak demand has historically only ever occurred in December or January, minus a two week period over Christmas.
3. Supplemental Balancing Reserve (SBR) is targeted at power stations that are able to offer additional capacity over and above that available in the electricity or balancing markets –e.g. plant that would otherwise be closed or mothballed that could provide ‘additional’ reserves to support us in balancing the transmission system. SBR plant will be required to be available on weekdays between 0600hrs and 2000hrs from the beginning of November to the end of February, and either have a gas connection or have sufficient fuel stocks available to run during the availability period for five consecutive service periods. National Grid is finalising contracts with Littlebrook (RWE), Rye House (Scottish Power) and Peterhead (SSE) power stations.
4. Demand Side Balancing Reserve (DSBR) will enable large energy users to reduce their demand or run other sources of generation during peak periods in return for a payment. The service will be available for short periods between 1600hrs and 2000hrs on weekday evenings between November and February. The award of contracts was announced in September 2014 http://www2.nationalgrid.com/mediacentral/uk-press-releases/2014/companies-win-contracts-for-reducing-power-demand/