National Gas plans to pay thousands of customers and small businesses to reduce their demand this winter.
Utility Week understands the gas transmission system owner is currently in talks with energy suppliers about the feasibility of a trial involving around 10,000 domestic and small industrial & commercial (I&C) customers.
The initiative, which would be subject to regulatory approval and code modifications, is thought to be unlikely to happen before March.
It follows the success of the electricity system operator’s demand flexibility service (DFS) last winter, which saw 1.6 million provide 350MW of flexibility. However, while the DFS was centred around shifting demand out of two-hour peak windows, gas customers would be required to take part over longer periods – possibly several days.
National Gas has already been working with large I&C customers to improve demand side response options. This includes allowing them to contract directly rather than through their gas shipper and offering a product that gives five days notice of the need for demand reduction.
National Gas hinted at the plans in its Winter Outlook report, the first the organisation has produced since it was sold by National Grid.
This forecasts similar winter demand to last year, with an increase in residential demand expected to be offset by a reduction in gas use for generation. National Gas is also expecting to see a halving of gas exports to the European Union, with the block in a far more resilient position going into this winter compared to 2022.
Total winter demand is predicted to be 46.8 billion cubic metres (bcm), down from 50.1 over last winter. Domestic demand is expected to fluctuate more widely within the non-daily metered market (almost 8% up compared to last year) with metered customers expected to behave in a similar fashion to last year.
Peak day demand for this winter is estimated at 462 million cubic metres (mcm), down from 483mcm last year.
The report points out that gas demand for power generation has seen a steady decline over several years now as more renewables come online. Total forecast demand for generation this winter is 16% down on 2022, at 7.8bcm.
However, National Gas also stresses that as our weather becomes increasingly volatile gas will be increasingly needed to make up for any shortfall from renewable generation. The report highlights many of the options for providing this flexibility, including liquified natural gas (LNG) imports, the use of interconnectors and storage.
The reopening of the Centrica’s Rough facility has boosted the storage options available for National Gas. However, while the facility has a capacity of 1.5bcm, it is currently only able to deliver 8mcm of gas into the system per day – less than 2% of predicted peak day demand – because of a lack of compression equipment.
The report models a number of different scenarios for supply and demand. Under all of these Great Britain would be dependent on continued “substantial” imports of LNG and Norwegian gas this winter. In cold winter scenarios, imports from the EU would also be required.
It also cautions that disruptions to other markets could have an impact, especially in the second half of winter, adding: “Overall, whilst we have more confidence that the market will perform as expected, we shouldn’t discount the risk of events occurring, either in isolation or in combination, to put the EU and therefore by extension GB, under stress.
Ian Radley, system operations director at National Gas, said: “Britain benefits from diverse and flexible sources of gas, supported by pipeline infrastructure that has capacity exceeding anticipated peak demand.
“Based on our current market view we expect that LNG and GB storage will continue to act as the primary sources of flexible supply to Britain this winter, supplemented by significant UK continental shelf and Norwegian supplies.
“Whilst the outlook is generally more favourable than last winter, we remain alert to the risks that are present and will continue to monitor this international market.”