The transmission system operator will offer large energy users contracts to act as ‘balancing tools’ for the UK’s electricity system by reducing their grid demand.
In the first round, which ends 5 December, National Grid will offer contracts totaling 900MW, before the second tender runs over the spring of 2015 for a further 900MW.
The total demand side contracts offered for next winter is more than 5 times as large as the demand-side contracts offered to large energy users for the coming winter.
A spokeswoman for National Grid said the tender size had been determined based on the predicted availability of capacity within the market.
Winter 2015/16 had previously been predicted to bring a ‘capacity crunch’ due to the shutdown of older generating plant before new low carbon investment is deployed.
However, recent high-stake outages of nuclear, coal and gas-fired power plants have slashed supply margins for this winter, bringing the capacity crunch a year earlier than expected.
In Ofgem’s June outlook report the regulator estimated this winter’s peak demand at average weather conditions to be between 54- 55GW, with a ‘safety net’ of a 5-10 per cent supply margin on top of this.
But this margin could now shrink from an estimate of 5.5GW to just 2GW due to the unexpected loss of the nuclear and coal plant capacity, bringing margins in line with the estimated 2-5 per cent forecast for winter 2015/16.