Centrica, SSE top National Grid’s winter capacity tender

Centrica and SSE have secured the largest capacity contracts to help National Grid secure 2.5GW of additional reserve capacity to provide extra backup electricity needed to prevent a blackout this winter.

The results of the second tender round, revealed on Wednesday, show SSE secured contracts to provide 760MW of reserve capacity to National Grid, the highest in the second round of National Grid’s supplemental balancing reserve (SBR) scheme for this year.

In the second winter 2015/16 tender round National Grid tripled the amount of generation capacity contracts on offer compared to its first tender round at the beginning of the year to almost 1.8GW of capacity which will remain in reserve to be called on if needed.

The latest units contracted include SSE’s 675MW Peterhead power plant despite the plant failing a reliability test as part of the same contract last winter. SSE said that “major investment work” has been undertaken at Peterhead to improve the station’s flexibility and efficiency which will continue into the autumn.

In addition SSE secured contracts for 89MW of capacity from smaller units at its Fiddlers Ferry, Ferrybridge and Keadby stations which SSE says will have no bearing on its recent decisions to close Ferrybridge power station by 31 March 2016, or bring SSE’s Keadby CCGT plant out of deep mothball.

This follows a 600MW supply tender round earlier this year where National Grid offered contracts to two Centrica-owned gas-fired power plants, South Humber Bank and Barry, which will be contracted to provide 40MW and 227MW respectively. In the first round Centrica secured a contract for its 660MW Killingholme gas plant, bringing its total SBR capacity for this winter to almost 930MW.

Meanwhile, GDF Suez is set to provide 275MW through its 250MW Deeside unit and a 25MW unit from its Rugeley plant.

In addition Corby Power’s gas-fired plant was contracted in the first tender round to provide 353MW of power for next winter and the Uskmouth plant was picked up in the second tender for 100MW.

National Grid came under criticism last year that its blackout safeguard measures ignored demand-side options which could have proved a cheaper because less testing is required.

But this year the transmission system operator said it upped its demand-side balancing reserve from 84MW of derated capacity last year to 177MW (derated) this year.

In addition it has cut costs by half, spending £36.5million this year to secure a total of 2.56GW from both tender rounds compared to last year when around £31 million was needed for just 1.1GW, National Grid said.

The total cost for safeguard measures to cut the risk of blackouts this winter is £14/kW compared to £28/kW last year.